Dow Jones Futures Contracts: Market Rally Closes Lows; Roku, AMD and Tesla lead 10 stocks with bullish reversals
Dow Jones futures were little changed Thursday night, as were S&P 500 futures and Nasdaq futures. The stock rally suffered large losses on Thursday, but the Nasdaq and S&P 500 found support around near-term moving averages.
Many titles have reversed from key levels. Roku (ROKU), Advanced micro-systems (AMD), Crocs (CROX), In Mode (INMD), Upwork (UPWK), Denbury Resources (LAIR) and Figs (Figs) tested their 21-day exponential moving averages, while Tempur-Sealy (TPX), Ford engine (F) and Tesla shares found support on their 50-day lines.
Roku, Crocs, InMode, Figs and Ford stocks arguably offered buying opportunities from their reversals. Stock AMD, Upwork, Denbury, Tempur-Sealy and You’re here (TSLA) found key support, but may have buying opportunities a bit later.
Until Friday, Taiwan Semiconductor (TSM) is expected to report June sales before the opening. TSM is the world’s largest chip foundry, manufacturing semiconductors for Apple (AAPL), Nvidia (NVDA), AMD and many more.
TSM stock plunged 0.3% to 117.89 on Thursday, rebounding from support at the 50-day line.
Dow Jones Futures Today
Futures contracts on Dow Jones were stable relative to fair value. S&P 500 and Nasdaq 100 futures fell slightly.
Keep in mind that overnight action on futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades in the next regular trading session.
Stock exchange rally
The stock rally suffered losses but hit lows as major indices and most major stocks did not suffer too much.
The Dow Jones Industrial Average fell 0.7% in Thursday’s stock trading. The S&P 500 index lost 0.9%. The Nasdaq composite slipped 0.7%. Small cap Russell 2000 lost 0.9%.
The 10-year Treasury yield fell 3 basis points to 1.29. The 10-year yield fell below 1.26% intraday. Even with reducing losses, the 10-year Treasury yield is down 14 basis points this week.
US crude oil futures rose 1% to $ 72.94 a barrel amid another large drop in domestic crude and gasoline inventories. Oil prices have fallen over the previous two days after OPEC + was unable to secure a production deal.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 2%, with a few big losers weighing in on FFTY. The Innovator IBD Breakout Opportunities ETF (COMBAT) fell 3.1%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.9%. The VanEck Vectors Semiconductor ETF (SMH) fell 1.3%. The AMD share is a notable stake of SMH.
SPDR S&P Metals and Mining ETF (XME) and Global X US Infrastructure Development ETF (PAVE) both fell by 2.2%. US Global Jets ETFs (JETS) fell by 1%. SPDR S&P Homebuilders ETF (XHB) divested 2.8%. The Energy Select SPDR ETF (XLE) edged down 0.5% and the Financial Select SPDR ETF (XLF) dropped nearly 2%.
Reflecting more speculative historical stocks, ARK Innovation ETF (ARKK) fell 0.8% and ARK Genomics ETF (ARKG) closed less than 0.1%. ARKK and ARKG either tested or reduced their 200-day intraday lines before rebounding. Tesla shares are number 1 among ARK Invest ETFs.
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Roku stock fell to 405.15, bouncing just above its 21-day line to climb 0.3% to 420.28. At the low, Roku stock was also slightly above an entry of 397.79 in what could be considered a double bottom buy point. There were therefore several reasons for starting a position. Roku stock now has a grip buy point of 463.09.
AMD stock fell to 87.45, almost touching its 21-day line, before recovering to close 0.9% at 89.74. AMD stock also tested and closed above an earlier early entry of 89.30, just above a near-term peak in late April. But after falling 4.2% on Wednesday, investors may want to wait for AMD stock to show more strength. It is poised to have a handle on a weekly chart after Friday, showing a buy point of 95.44.
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Stock of fangs
CROX stock fell to 116.20 intraday, just off its 50-day line, before rebounding to gain 0.6% to 113.45. Investors could have bought Crocs on the 50-day rebound or as it recovered a flat base buy point of 110.01.
InMode stock fell to 86.21 intraday, then retreated from its 50-day line for a 2% rise to 92.96. This intraday dive for INMD stocks also tested a buy point of 87.10 from a short cup base with handle.
Figs share fell 1.3% to 44.56, but that was after dropping to 41.39 during the day, testing its 21-day moving average for the first time. This offered an aggressive point to start or add stocks to during Figs’ recent IPO.
Ford stock fell to 13.73, testing its 50-day line and an earlier buy point of 13.72 cups, but cut losses. Ford lost 1.2% to 14.06.
Upwork stock slipped to 53.15 during the day, rebounding from its 21-day line to end down 1.9% to 55.36. Intraday, UPWK stock was back in the early entry range below 52. But, certainly at this point, investors should probably look to the handle cup buy point of 61.31. , according to MarketSmith analysis.
Denbury stock rose 1.1% to 71.45 after falling to 68.05, rebounding from its 10 week line. The first or second test of the 50 days / 10 weeks line can be a buy opportunity for a stock. But DEN stock has rebounded just above its 10 week line on several occasions during its huge run. While Thursday’s stock was bullish, investors who don’t own Denbury stock may have to wait for a new base.
Tempur-Sealy stock fell to 37.79, undercut its 50-day line before rebounding to close 3.2% lower at 39.24. TPX stock broke a fixed buy point of 41.13 last week, but reversed from a record high of 42.60 on Tuesday. Investors could use 41.13 or 42.70 as entry points.
Tesla stock fell to 620.46 on Thursday morning, undermining its converging lines at 50 and 200 days. But TSLA stock rebounded, rising 1.3% to 652.81 for the day. At the end of June, Tesla stock recovered its 50-day line and broke a descending trendline, offering an aggressive entry. At this point, investors should probably wait for 700.10, just above the peak of a recent mini-consolidation, as an aggressive new entry. A more “traditional” early entry is 780.89, just above the short-term peak for Tesla stock in April.
The China Passenger Car Association reported Thursday that Tesla had sold 33,155 Chinese-made vehicles in June. This includes 28,138 local sales, up from 21,936 in May and up sharply from April. Tesla exported 5,017 vehicles, down from April and May. However, Tesla’s local sales fell 16% sequentially from the first quarter, even as production of the Chinese-made Model Y accelerated since launch in early January.
Tesla on Thursday unveiled a shorter-range, Chinese-made Model Y, around 20% cheaper than the longer-range version available.
The next supply crunch could be even worse for car inventories
Market rally analysis
The stock rally finally saw a pullback, but it didn’t last long. The Nasdaq and S&P 500 found support just above their 21-day lines, while the large-cap Nasdaq 100 only tested its 10-day line. Meanwhile, the Dow Jones closed above its 50 and 21 day lines. The Russell 2000 fell even further below its 50 day line. The major indices came out of their lows well, although they did fade somewhat towards the close.
Ideally, the Nasdaq would test or slash its 21-day line – either by another day or two of weakness or by a longer sideways break – before moving up again. If the Nasdaq returns to new highs in the coming days, it will be about to be extended again. At Thursday’s close, the Nasdaq was 4.6% above its 50-day line, down from 5.5%. The Nasdaq 100 is still 6% above the key level.
It was encouraging to see many top stocks reversing from their lows, including Roku, AMD, Figs and Tesla stock.
Press the gas upside down?
If you haven’t played Roku action, figs, or other twists on Thursday, that’s okay. Successful reversals seem obvious in hindsight, but reversals can quickly fizzle out, especially when major indexes move quickly. And just because a stock rebounds strongly today doesn’t mean it will hold up the next day or next week.
There is nothing wrong with staying calm and taking no immediate action when the market opens significantly lower and then cuts losses.
Read The Big Picture every day to stay in tune with the market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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