Dow Jones futures fell modestly early Friday, along with S&P 500 futures and Nasdaq futures. The Nasdaq Composite and the S&P 500 rose on Thursday, but it was a mixed session for the stock market rally, with weak breadth.
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Megacaps were strong. Amazon.com (AMZN) took the lead when Amazon Web Services announced new AI efforts. AMZN stock soared to a nine-month high after its cloud unit AWS unveiled a $100 million investment in generative AI to help customers. Loop Capital expects slowing AWS growth to hit “low” soon. This sentiment could also be good news for cloud rivals Microsoft (MSFT), parent of Google Alphabet (GOOGL), which have had solid sessions.
MongoDB (MDB), Super Micro Computers (SMCI) e Search Lam (LRCX) rebounded bullish on Thursday. The trio offered aggressive entries, even as they exited off intraday highs.
A number of software and chip plays made solid moves on Thursday.
C3.ai (IA) andsamsara (IOT), two AI stock games, held investor day events. AI stock fell 4.1% on Thursday, testing its 21-day line. IoT shares gained 1.2% after a four-day slide. But it’s unclear whether Investor Day’s events had a significant impact on either stock. Analyst reaction could move C3.ai and IOT stocks on Friday.
Bank stocks were noticeably weak, from PacWest Bancorp (PACW) a JPMorgan Chase (JPM). There hasn’t been a clear trigger or obvious signs of renewed deposit flight, but banks face long-term issues that could be holding back long-term profitability.
Don’t think too much about it. Thursday was likely a modest and mixed bounce within a modest pullback with a solid tech-led stock market rally.
MDB stock was added to the IBD leaderboard on Thursday and is on the IBD Big Cap 20. LRCX stock has joined SwingTrader. MongoDB and IOT shares are on the IBD 50. Lam Research was the IBD Stock of the Day on Thursday.
Dow Jones Futures today
Dow Jones futures are down 0.4% from fair value, even with 3M (MMM) breaking out in a major deal on chemicals in drinking water. S&P 500 futures fell 0.45% and Nasdaq 100 futures fell 0.5%.
Futures fell as Asian markets tumbled overnight.
The yield on the 10-year Treasury fell to 3.78%.
Crude oil futures fell 1%.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session of the stock market.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rebound
The stock market rally had a mixed session as tech giants and AI plays rebounded. The Dow Jones Industrial Average closed slightly lower in the stock market on Thursday. The S&P 500 index rose 0.4%. The Nasdaq composite gained 0.95%. The small-cap Russell 2000 fell 0.8%.
Amazon stock rose 4.3% to 130.15.
Apple (AAPL), Microsoft, Google, Tesla (TSLA), Taiwan semiconductor (TSM) and Salesforce.com (CRM) all climbed 1.5% to just above 2%.
US crude oil prices tumbled 4.2% to $69.51 a barrel. The 10-year Treasury yield rose 8 basis points to 3.8%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) was up 0.4%. The iShares Expanded Tech-Software Sector (IGV) ETF was up 0.55%. The VanEck Vector Semiconductor (SMH) ETF advanced 0.55%. LRCX stock is a notable holding of SMH.
Reflecting stocks in more speculative history, ARK Innovation ETF (ARKK) closed just above breakeven and ARK Genomics ETF (ARKG) fell 1%.
SPDR S&P Metals & Mining ETF (XME) and Global X US Infrastructure Development ETF (PAVE) both lost 0.6%. The US Global Jets ETF (JETS) held its share. SPDR S&P Homebuilders ETF (XHB) fell 0.5%. The Energy Select SPDR ETF (XLE) was down 1.3% and the Health Care Select Sector SPDR Fund (XLV) was up 0.7%.
The SPDR Financial Select ETF (XLF) fell 0.8%. JPM stock fell 1.9%, near its 50-day line after testing a buy point on Wednesday. The SPDR S&P Regional Banking (KRE) ETF tumbled 3.2%, falling below its 50-day line. PACW shares tumbled 5.9%.
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Actions to watch
MDB stock rose 4.1% to 388.36 on heavy volume on Thursday, breaking a trendline in a tight three-week pattern in what could be a tight high flag. This has offered an early entry around 385 or perhaps 389. This is after initially testing the low of its recent range since the huge gains gap on June 2nd. MongoDB stock went as high as 396.84. The database software maker announced an expanded relationship with Google Cloud and several AI initiatives. MongoDB also works with Amazon Web Services, among others.
SMCI stock rebounded 3% to 226.46, moving off its 21-day moving average in strong trading. An aggressive trader could have used a move above Wednesday’s high of 227 as an early entry. However, the shares met resistance at the 10-day line, pulling back nicely from the highs of 241.97 and closing just below the aggressive buy point.
LRCX stock is up 2.3% to 619.87 after initially undercutting the 21-day line and the 600 level. Investors could have used a move above Wednesday’s high of 615.80 as an entry point. Shares have pulled back from intraday highs of 624.48, right around a short-term trendline. LRCX stock, like MongoDB, is running three weeks with an official buy point of 644.60. A few other chip-gear giants bounced off their 21-day lines.
Analysis of market rallies
The stock market rally ended its recent decline with a limited rebound on Thursday. The Nasdaq and the S&P 500 both rebounded off their 10-day lines, led by Amazon and other growth giants.
So did the Nasdaq pullback end after three days? If so, it would quickly be extended again, raising expectations for another pullback. The Nasdaq closed Thursday 7.8% above its 50-day line, with the Nasdaq 100 up 9.1%.
The breadth was noticeably weak due to the solid rebound in the Nasdaq. The losers beat the winners 2 to 1 on the NYSE and 8 to 5 on the Nasdaq.
The Dow Jones and Russell 2000 tested their 21-day lines on Thursday.
The Invesco S&P 500 Equal Weight ETF (RSP) fell 0.4%, just above its 21-day mark, even as the S&P 500 posted a modest gain. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) rose 0.25%, well below the Nasdaq 100’s 1.2%.
High tech stocks bounced off support levels, including MDB and SMCI stocks. This is what you want to see when the Nasdaq goes up. If the Nasdaq starts sliding again, you want these names to resist the selling pressure.
Several stocks are consolidating around traditional buying points, such as Monday.com (MNDY) e Parker-Hannifin (PH).
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what to do now
If you are an aggressive trader, you could have bought MongoDB stock, Lam Research, SMCI or some other rebound stock on Thursday. It is much less risky to add some shares to an existing share than it is to start a new position. If a Nasdaq pullback resumes, many of these leaders could fall back. If you buy a bounce near the intraday highs, it doesn’t take long to be under water.
A swing trader mindset makes sense for new or additional purchases, cutting losses quickly and moving to partial profits early to lock in some gains. If the stock continues to move forward, you may hold the remaining stock while the position trades.
Whether you pull the trigger now or not, you definitely want to be looking at the big winners, looking for the ones that hold or bounce off the stand. Keep your watch lists from a variety of industries up-to-date. Using early entries and buying close to those entries remains important.
Read The Big Picture daily to stay abreast of market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarsonfor stock market updates and more.
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