Dow Jones futures fell slightly Thursday night, along with S&P 500 futures and Nasdaq futures. The stock market rally suffered significant losses Thursday, but the Nasdaq and S&P 500 found support around short-term moving averages.
Many stocks reversed off key levels. Roku (ROKU), Advanced Micro Devices (AMD), Crocs (CROX), InMode (INMD), Upwork (UPWK), Denbury Resources (DEN) and Figs (FIGS) tested their 21-day exponential moving averages, while Tempur Sealy (TPX), Ford Motor (F) and Tesla stock found support at their 50-day lines.
Roku stock, Crocs, InMode, Figs and Ford arguably offered buying opportunities from their reversals. AMD stock, Upwork, Denbury, Tempur Sealy and Tesla (TSLA) found key support, but might have buying opportunities a little later.
Looking ahead to Friday, Taiwan Semiconductor (TSM) is expected to report June sales before the open. TSM is the world’s largest chip foundry, making semiconductors for Apple (AAPL), Nvidia (NVDA), AMD and many others.
TSM stock dipped 0.3% to 117.89 on Thursday, rebounding from 50-day line support.
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures dipped 0.1%. Nasdaq 100 futures were just below break-even.
Stock Market Rally
The stock market rally suffered losses, but came off lows with the major indexes and most leading stocks not suffering too much damage.
The Dow Jones Industrial Average fell 0.7% in Thursday’s stock market trading. The S&P 500 index lost 0.9%. The Nasdaq composite slid 0.7%. The small-cap Russell 2000 sank 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 paring losses, the 10-year Treasury yield is down 14 basis points this week.
U.S. crude oil futures rose 1% to $72.94 a barrel amid another hefty decline in domestic crude and gasoline stockpiles. Oil prices fell in the prior two days after OPEC+ was unable to reach a production deal.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) 2%, with a couple huge losers weighing on FFTY. The Innovator IBD Breakout Opportunities ETF (BOUT) slumped 3.1%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.9%. The VanEck Vectors Semiconductor ETF (SMH) retreated 1.3%. AMD stock is a notable SMH holding.
SPDR S&P Metals & Mining ETF (XME) and Global X U.S. Infrastructure Development ETF (PAVE) both fell 2.2%. U.S. Global Jets ETF (JETS) descended 1%. SPDR S&P Homebuilders ETF (XHB) gave up 2.8%. The Energy Select SPDR ETF (XLE) edged down 0.5% and the Financial Select SPDR ETF (XLF) gave up nearly 2%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 0.8% and ARK Genomics ETF (ARKG) closed down less than 0.1%. ARKK and ARKG tested or undercut their 200-day lines intraday before rebounding. Tesla stock is the No. 1 holding across the ARK Invest ETFs.
Roku stock fell as low as 405.15, rebounding from just above its 21-day line to edge up 0.3% to 420.28. At the low, Roku stock was also slightly above a 397.79 entry in what could be seen a double-bottom buy point. So there were a couple of reasons to start a position. Roku stock now has a handle buy point of 463.09.
AMD stock fell as low as 87.45, nearly touching its 21-day line, before rallying to close off 0.9% at 89.74. AMD stock also tested and closed above a prior early entry of 89.30, just above a late April short-term peak. But after tumbling 4.2% on Wednesday, investors may want to wait for AMD stock to show more strength. It’s on track to have a handle on a weekly chart after Friday, presenting a 95.44 buy point.
CROX stock tumbled to 116.20 intraday, right at its 50-day line, before rebounding to gain 0.6% at 113.45. Investors could have bought Crocs on the 50-day bounce or as it reclaimed a 110.01 flat-base buy point.
InMode stock sank to 86.21 intraday, then raced back from its 50-day line for a 2% rise to 92.96. That intraday dive for INMD stock also tested an 87.10 buy point from a short cup-with-handle base.
Figs stock fell 1.3% to 44.56, but that’s after sinking to 41.39 intraday, testing its 21-day moving average for the first time. That offered an aggressive point to start or add shares in the recent Figs IPO.
Ford stock sank to 13.73, testing its 50-day line and a prior 13.72 cup-base buy point, but pared losses. Ford lost 1.2% to 14.06.
Upwork stock slid to 53.15 intraday, rebounding from its 21-day line to finish 1.9% to 55.36. Intraday, UPWK stock was back in range of an early entry below 52. But, certainly at this point, investors likely should turn to the cup-with-handle 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-day/10-week line can be a buying opportunity for a stock. But DEN stock has rebounded from just above its 10-week line several times on its huge run. While Thursday’s action was bullish, investors who don’t own Denbury stock perhaps should wait for a new base.
Tempur-Sealy stock sank to 37.79, undercutting its 50-day line before rebounding to close down 3.2% to 39.24. TPX stock broke out past a 41.13 flat-base buy point last week, but reversed from a record 42.60 on Tuesday. Investors could use 41.13 or 42.70 as entry points.
Tesla stock retreated to 620.46 Thursday morning, undercutting its converging 50-day and 200-day lines. But TSLA stock rebounded, rising 1.3% to 652.81. In late June, Tesla stock reclaimed its 50-day line and broke above a downward-sloping trend line, offering an aggressive entry. At this point, investors should probably wait for 700.10, just above the top of a recent mini-consolidation, as a new aggressive entry. A more “traditional” early entry is 780.89, just above Tesla stock’s short-term April peak.
The China Passenger Car Association reported Thursday that Tesla sold 33,155 made-in-China vehicles in June. That 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 Q1, even with made-in-China Model Y production ramping up from the early January launch.
On Thursday, Tesla unveiled a shorter-range made-in-China Model Y that’s about 20% cheaper than the longer-range version that’s been available.
Market Rally Analysis
The stock market rally finally had a pullback, but it didn’t last for long The Nasdaq and S&P 500 found support just above their 21-day lines, while the big-cap Nasdaq 100 only tested its 10-day line. Meanwhile, the Dow Jones closed above its 50-day and 21-day lines. The Russell 2000 fell further below its 50-day line. The major indexes came well off lows, though they faded somewhat into the close.
Ideally, the Nasdaq would test or undercut its 21-day line — either through another day or two of weakness or through a longer sideways pause — before moving higher again. If the Nasdaq returns to new highs in the next couple of days, it’ll be on the edge of being extended once 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 leading stocks stage reversals off lows, including Roku stock, AMD, Figs and Tesla.
Hit The Gas On Reverse?
If you didn’t play Roku stock, Figs, or other reversals on Thursday, that’s OK. Successful reversals look obvious in hindsight, but reversals can quickly fizzle, especially when the major indexes are moving fast. And just because a stock rebounds bullishly today doesn’t mean it’ll hold the next day or next week.
There is nothing wrong with remaining calm and taking no immediate action when the market opens sharply lower and then pares losses.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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