Dow Jones futures rose slightly late on Thursday, along with S&P 500 futures and Nasdaq futures. The stock market rally had a wild session on Thursday with the major indices undermining further support levels before rebounding to close higher.
The Federal Reserve said that large financial firms like JPMorgan Chase (JPM) and Bank of America (BAC) can initiate buybacks and dividend increases on June 30, assuming they pass the latest round of stress tests. Previously, the Fed had said that those higher returns to shareholders could start in the first quarter. But JPM and BofA shares were slightly higher.
Investors should look for stocks that hold up well in today’s market, have strong fundamentals or at least good earnings prospects. This stock market rally is as fun as a spinal hit, so here are 11 stocks for your watchlists: ASML (ASML), General motors (GM), Facebook (FULL BOARD), Scotts Miracle-Gro (SMG), Ubiquiti (User interface), Disney (DIS), Aim (TGT), Lowe’s (UNDER), Mosaic (MOS), Deere (DE) and ArcelorMittal (MOUNTAIN).
GM and ArcelorMittal shares are on IBD’s leaderboard. Deere, ASML and Scotts-Miracle-Gro shares are at IBD 50. ASML shares are on the watch list for IBD’s long-term leaders. Deere shares are at IBD Big Cap 20. Lowe’s shares were IBD shares for the day.
Dow Jones Futures Today
Dow Jones futures were up 0.2% against fair value. S&P 500 futures advanced 0.3% and Nasdaq 100 futures rose 0.4%.
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 discuss actionable stocks in the stock market rally on IBD Live.
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Stock market rally
The stock market rally had a wild session, falling sharply for the day before rebounding to the upside.
The Dow Jones Industrial Average rose 0.6% in trading on Thursday. The S&P 500 Index was up 0.5%. The Nasdaq compound was up 0.1%. Intraday, the Nasdaq fell 1.35% after drifting 2% on Wednesday. The Russell 2000, with a strong intraday decline, rose 2.2%
Among the best ETFs, the Innovator IBD 50 (FFTY) ETF was up 1.3% and the Innovator IBD Breakout Opportunities (BOUT) ETF was up 0.65% after two big losses for growth ETFs. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.4%. The VanEck vectors Semiconductor ETF (SMH) was up 0.3%. SMH includes shares of ASML and many other chip-gear manufacturers that have held up relatively well.
SPDR S&P Metals & Mining ETF (XME) rose 2.2% and Global X US Infrastructure Development ETF (PAVE) 2.1%. The US Global Jets ETF (JETS) rose 2.5% after several losses.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) fell 0.3% and ARK Genomics ETF (ARKG) was up 0.3%.
Stock of the day in purchase area as renewals increase
Facebook, ASML and GM actions are actions to watch out for
So why consider stocks from ASML, GM, Facebook, SMG, Ubiquiti, Disney, Target, Lowe’s, Mosaic, Deere, and ArcelorMittal for your watchlist? They are holding up reasonably well, with strong or at least improving lines of relative strength. Many are showing rebounding earnings with strong growth prospects ahead.
Shares of Ubiquiti and SMG are forming attractive foundations, especially impressive given the choppy market conditions. A couple of these stocks are technically in buy zones, including ArcelorMittal, Lowe’s and Disney stocks. Some others could be seen as “actionable” in a better market, such as Facebook, GM or ASML stocks. But it is not a good market. Recent outbreaks continue to struggle or collapse, while former growth leaders head toward their March lows or higher.
But they are all worth seeing and offer a window into a variety of positive sectors. It’s unclear which stocks or sectors will lead the next strong stock market rally, so you want to launch a wide net. Definitely consider many rivals and pairs from the 11 stocks above, as well as from other sectors. Home builders, oil producers, and finance companies, including JPMorgan and BAC stocks, are also worth considering.
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Market rally analysis
The stock market rally moved into “uptrend under pressure” on Wednesday and volatile action on Thursday did not change that. Intraday, the Dow Jones undermined its 21-day exponential moving average, while the S&P 500 fell below its 50-day average and the Russell 2000 nearly undermined its March lows. It is positive that they rallied to move higher from strong intraday losses, with the S&P 500 retreating above its 21-day line.
At least market conditions did not worsen. But they are not materially better.
The Nasdaq Composite has work to do to break above its 21-day line. The High Tech Index won’t look really healthy until it is back above its 50-day line and its short-term high on March 16. The Dow Jones and the S&P 500 should continue to maintain key levels.
Most importantly, the recent outbreaks have not worked. Many stock charts appear damaged and take weeks, perhaps months, to repair. Sure, it’s good that MT stocks were in a buy zone on Thursday, but many stocks have been reluctant to sell until they resisted.
If you have a couple of long-term pilot or winning spots, that’s fine. But investors should be largely in cash and shouldn’t think about new purchases.
Perhaps Thursday’s intraday lows usher in a bold new bullish era. But this could be a brief respite before the major indices dip below recent lows. If a renewed rally in the stock market has legs, there will be plenty of opportunity to jump in.
As famous IBD founder Bill O’Neil said, all stocks are bad unless they go up. There haven’t been many good deeds lately.
Read The Big Picture every day to stay in sync with the direction of the market and top stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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