Equity rally collapses again; Ford announces profit breakout – .

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Market rally retreats, except here; Tesla, Home Depot, CrowdStrike Hit; Target profit due – .


Dow Jones futures rose Wednesday night, along with S&P 500 and Nasdaq futures, after the stock rally closed near session lows for a second straight session. Service now (NOW) and Ford engine (F) were key gains overnight. But investors are already looking to Apple (AAPL) earnings Thursday night.



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The stock rally ended badly again, with the Dow Jones and S&P 500 retreating. Nasdaq composite closed essentially flat, even with shares of Microsoft, parent Google Alphabet (GOOGL) and, to a lesser extent, Tesla (TSLA) providing a boost. Microsoft (MSFT) is approaching the market cap of Apple stock, while Google stock has broken down and approached a valuation of $ 2,000 billion. But many executives showed wild action, while the breadth of the market was small.

The 10-year Treasury yield fell sharply, extending recent declines, while crude and copper prices fell sharply.

Key gains

NOW stock, Ford, Upwork (UPWK), eBay (EBAY), Edwards Life Sciences (EW) et Twilio (TWLO) reported profit after the close. ServiceNow, Ford and UPWK shares had all pulled out of purchase points after briefly breaking out over the past week. EBay action closed in the buy range. EW and Twilio shares were close to the first potential entries.

Ford stock stood out, jumping 9% on strong earnings, raised expectations and a renewed dividend, despite the lack of income. The F-share signals that it will post at least an early entry and likely an outright breakout on Thursday. This came after it retreated slightly in Wednesday’s session on mixed results and weak guidance for the fourth quarter of General Motors (GM).

ServiceNow profits peaked, but NOW stock fell sharply amid the extended trading. UPWK stock fell sharply despite a beat-and-raise report. EW stock edged down after Edwards narrowly beat Q3 EPS guidance on earnings roughly in line, while staying low on Q4 EPS. EBAY stock fell overnight due to weak revenue forecasts. TWLO stock plunged despite the software maker reporting a surprise third quarter profit, as the fourth quarter forecast was mixed and the COO will come out.

Apple loom

On Thursday evening, Apple will release its results and sales for the fourth fiscal quarter. Apple stock fell 0.3% to 148.85, slightly above its 50-day line. The stocks are aiming for a buy point of 157.36 from a cup basis, according to MarketSmith analysis. AAPL stock has the world’s best market capitalization of $ 2.46 trillion.

But Microsoft stock is at $ 2.44 trillion. Shares jumped 4.2% on Wednesday to 323.17, a record high but extended from any point of purchase. Meanwhile, Google stock jumped 5% to 2,924.35 on earnings, coming out of a flat base with a buy point of 2,925.17. GOOGL stock has a market cap of $ 1.96 trillion.

Tesla stock closed near session lows for a second straight day after hitting 1,070.87 during the day, but was up nearly 2% to 1,038.31. TSLA stock now has a valuation of $ 1.04 trillion.

Tesla, ServiceNow, Google, and Microsoft stocks all feature in the IBD rankings. The Google action is on SwingTrader and was the IBD action of the day Wednesday. NOW Google and Microsoft are all long term IBD leaders. Tesla stock is on the IBD 50.

Dow Jones Futures Today

Futures contracts on Dow Jones increased 0.1% from fair value. Futures on the S&P 500 also climbed 0.1%. Futures on the Nasdaq 100 rose.

Dow futures and Treasury yields will likely move based on economic data on Thursday morning. At 8:30 a.m. ET, the Commerce Department will offer its initial estimate of third-quarter GDP growth. Economists cut the third-quarter forecast amid the Covid Delta wave as well as supply chain and workforce issues. The Ministry of Labor will also publish weekly unemployment claims.

Keep in mind that overnight action on futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades during the next regular trading session.


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Stock exchange rally

The stock rally was mixed with the Dow Jones falling as the Nasdaq rallied on mega-cap stocks.

The Dow Jones Industrial Average lost 0.7% in stock trading on Wednesday. The S&P 500 Index fell 0.5%. The Nasdaq composite closed in less than a point. The large-cap Nasdaq 100 gained 0.3%, thanks to shares Tesla, Microsoft and Google. Small cap Russell 2000 fell 1.9%, again approaching its 50 and 200 day lines.

The 10-year Treasury yield fell 9 basis points to 1.53%, bringing the four-day decline to 14 basis points. Crude oil and copper fell more than 2%.

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 1.2%. The iShares Expanded Tech-Software Sector (IGV) ETF slipped 0.9%, with the main holdings of Microsoft and NOW shares. ETF VanEck Vectors Semiconductor (SMH) lost 0.8%.

The SPDR S&P Metals & Mining ETF (XME) fell 3.5% and the Global X US Infrastructure Development ETF (PAVE) fell 1.8%. The US Global Jets ETF (JETS) was down 1.7%. The S&P Homebuilders (XHB) SPDR ETF fell 0.4% after initially jumping on declining rates. The Energy Select SPDR ETF (XLE) lost 2.9% and the Financial Select SPDR ETF (XLF) lost 1.65%.

Reflecting more speculative stocks, ARK Innovation ETF (ARKK) and ARK Genomics ETF (ARKG) both fell 2.1%. Tesla shares are number 1 among ARK Invest ETFs.


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Market rally analysis

Tesla, Microsoft and Google stocks briefly pushed the Nasdaq 100 to an all-time high intraday. But closing at session lows is not a good sign for a stock rally. The losers beat the winners by more than 2 to 1 on the Nasdaq and the NYSE.

Yes, Enphase Energy (ENPH) soared past a buy point on earnings, leading solar stocks. But many leaders have shown savage action, including nasty setbacks like ZipRecruiter (ZIP *: FRENCH).

A number of recent failures or failures quickly suggest a lack of institutional support. Retail investors can trigger breakouts, but if the big sums of money don’t support the moves, they won’t last. If institutions aren’t backing growth stocks, beyond a handful of mega-capitalized stocks, that’s a negative sign for the market recovery.

From a practical point of view, this is not an ideal environment to buy stocks, when the individual names got it wrong and the market closes badly.

Treasury yields are shrinking, squeezing bank lending margins and sending a signal to the economy. The 10-year Treasury yield is falling rapidly, suggesting lower expectations for economic growth and possibly inflation. The two-year Treasury yield increases ahead of the Federal Reserve’s expected decision next week to start cutting bond purchases.

The narrowing of the yield spread is not good news for financials. Meanwhile, commodity games fell as crude oil prices plummeted.


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What to do now

The stock rally is trying to decide where to go next, with the Nasdaq just below record highs and major stocks becoming volatile.

Perhaps Apple’s earnings report will provide clear direction, but next week investors will have the Fed meeting’s taper decision along with big economic data, including the jobs report. of October.

Individual investors may want to limit further buying, especially in growth tech names, until the Nasdaq breaks new heights and large institutions commit. You may also need to cut some losses or consider taking partial profits on some winners.

Overall, the market rally does not justify a substantial reduction in exposure. But if you cut some holdings without adding new positions, your exposure will gradually decrease.

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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