Dow Jones futures fell slightly in extended trading, along with S&P 500 futures and Nasdaq futures. Lululemon, Costco and Broadcom reported earnings after the closing.
The stock market rebounded modestly on Thursday, but regained only a small fraction of the losses suffered over the past few days. Investors should still be cautious amid the flurry of market activity. The S&P 500 remains below its 200-day line with most indexes also holding resistance at their 21-day moving averages.
Semiconductor stocks did well, with the chipmaker Nvidia ( NVDA ) among the top performers in the S&P 500 on Thursday. But chip-makers are generally in better shape, with KLA Corp. (KLAC), Axcelis Technologies (ACLS) and Ultra Clean Holdings (UCTT) is flashing buy signals on Thursday. ASML (ASML) and Applied Materials (AMAT) are among those nearby shopping points.
Costco Wholesale (VALUE), Lululemon Athletica (LULU) and Broadcom (AVGO) announced late Thursday.
COST stock was little changed overnight after Costco’s earnings and sales just missed views. Costco shares lost some ground in Thursday’s regular session but are down almost 11% so far this month.
LULU’s stock fell in extended trading after the yoga wear retailer was slightly lower for the critical holiday quarter. Lululemon’s earnings slightly exceeded Q3 views. Lululemon stock rose 0.6% to 374.11 on Thursday, closing in line with a buy point of 370.56. But it is recommended to leave that shopping area.
AVGO stock rose modestly after hours as Broadcom’s earnings and guidance rose on views, with the chip-and-software giant also raising its stock. Broadcom stock rose 2.4 percent to 531.08, just below its 200-day line. Last week’s 552.42 level may offer some kind of entry.
LULU stock is on the IBD Leaderboard as an income options play. KLAC stock is on IBD’s Long-Term Leaders.
Dow Jones Futures Today
Dow Jones futures fell 0.1% against the benchmark. S&P 500 futures and Nasdaq 100 futures were down 0.1 percent.
Crude oil futures rose slightly.
Remember that overnight activity in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular market session.
Join IBD experts as they analyze active stocks in the market rally on IBD Live
Stock Market Rally
The stock market rally had a solid session, with the indices moving mostly in the opposite direction after the first hour of trading.
The Dow Jones Industrial Average rose 0.55% in Thursday’s stock market trading. The S&P 500 index rose 0.75%. The Nasdaq composite rose 1.1 percent. The small-cap Russell 2000 advanced 0.7%.
U.S. crude oil prices were down 0.8 percent at $71.46 a barrel, with some big intraday changes. Crude oil futures are now at levels where the Biden administration has signaled it will replenish the Strategic Petroleum Reserve, which was drawn this year to lower energy costs to long-term lows.
The 10-year Treasury yield fell 8 basis points to 3.49%, but that was one day after falling to 3.41% on Wednesday.
Among growth ETFs, the iShares Expanded Tech-Software ETF ( IGV ) rose 1.8%. VanEck Vectors Semiconductor ETF ( SMH ) rose 2.55%. Stock Nvidia, ASML, KLA and AMAT are all owned by SMH. In terms of speculative stocks, the ARK Innovation ETF (ARKK) is up 2.4% and the ARK Genomics ETF (ARKG) is up 2.2%.
The SPDR S&P Metals & Mining ETF ( XME ) rose 0.3% and the US Infrastructure Development ETF X Global ( PAVE ) advanced 0.8%. The US Global Jets ETF ( JETS ) fell 0.3%. The SPDR S&P Homebuilders ETF ( XHB ) rose 0.6%. The Energy Select SPDR ETF (XLE) and the Financial Select SPDR ETF (XLF) rose 0.1%. The SPDR Health Care Select Sector Fund ( XLV ) rose 0.9%.
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Chip Stocks Close to Buy Points
Many chip-gear manufacturers are located in or near shopping areas. In general, semiconductor equipment makers have some bleak forecasts for the coming year, but chip-gear stocks usually recover before businesses turn around.
KLAC stock rose 2 percent to 395.92, clearing some buying points between 392.60-396.02. Trading was very light, but there were a number of big gains in rising volume as KLA pulled out of market lows in October and November. The relative strength line is at a record high, even with stocks far from their January peak. KLA stock is a Long-term Leader, but the time to buy a stock like LTL is when it is near the 200 or 50-day lines.
ACLS stock rose 4.9 percent to 81.93, returning above an 80.34-cup-to-hand buy point, according to MarketSmith analysis. Axcelis is well extended above the 50-day line, but the 21-day line is higher. The RS range for ACLS stock is at a 15-year high.
UCTT stock climbed 5.6 percent to 36.59, hitting the 36.10 buy point on the bourse and hitting its best level since April. The foundation was built right on the bottom, with no further development. But the hand held mainly on the 200-day line. The RS range for UCTT stock is at an 8-month high.
ASML stock rose 0.9% to 606.89. Shares rallied from their Oct. 13 market low through Nov. 15. Since then, the Dutch semiconductor equipment giant has held comfortably above the 200-day line, at its best levels since April. The 21-day streak is about to close. A break above recent highs can offer an early entry. Ideally, the ASML will bounce back from the 21-day line or form a true base.
AMAT stock increased by 2.4 percent on Thursday and reached 108.61. Shares slightly above the 200-day line after the Oct. 13-Nov. 15 runs. Applied Materials has a tight three-week pattern, offering a buy point of 112.22. Investors can use a short-term trend line, perhaps with Thursday’s high of 109.43 as an extension, as a minor entry.
Meanwhile, chip giant Nvidia rose 6.5 percent to 171.69, retreating from its 21-day high. NVDA stock is currently below its 200-day line. An aggressive trader can use the decisive clearing of the 200-day line as a buy signal. But it might be better to wait for Nvidia stock to clear the 200-day and form some kind of consolidation, a la ASML or AMAT, to follow a safe entry.
Market Rally Analysis
The stock market has been on a recent losing streak with modest gains. But it did not fundamentally change the technical picture. Major indices are moving sideways, finding support at key levels but also hitting resistance.
The S&P 500 index just managed to hold above its 21-day moving average. The benchmark index should return to its 200-day moving average and its December 1 high.
The Nasdaq composite found support at its 50-day moving average, regaining the 11,000 level but closing just short of its 21-day. The Russell 2000, which dipped below its 200-day and 21-day lines earlier this week, retreated from its 21-day interior.
The Dow Jones, which closed just above its 21-day moving average on Wednesday, rose modestly on Thursday.
Markets may not make any decisive moves with the arrival of major news.
The November producer price index is out on Friday morning. Inflation should show a steady decline overall. But the real concern is in the service prices. The November CPI report is due for December 13, with the Fed’s year-end meeting the following day.
These events can be catalysts for large market moves up or down. Of course, last month the index had big movements around the October CPI, the speech of the Fed chairman Powell and more, but on the other hand, the broken activity continued.
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What to do now
Some stocks flashed buy signals on Wednesday, including KLAC, ACLS, United Rentals (URI) and Dexcom (DXCM). Investors could buy into some of these niches – or not.
General exposure should be kept low. The current market trend is sideways and bearish. It’s just a tough environment to make advanced trading stocks. If you make new purchases and make a decent profit, get partial profits quickly. Many promising stocks have clocked 5%, 10% gains in the past few weeks.
A number of stocks from various sectors are established. So update your watch lists and stay busy.
Read The Big Picture every day to stay in sync with market direction and leading companies and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.
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