Dow Jones futures rose slightly Thursday night, along with S&P 500 futures and Nasdaq futures. The stock market rally had a strong session on Thursday, as the Nasdaq continues to gain momentum with growth plays joining tech megacaps. Taiwan Semiconductor (TSM) will be in focus on Friday.
The split market rally is over, with the Nasdaq racing to all-time highs and more and more tech stocks breaking, offering early entries or making other bullish moves.
Apple stock is building the right side of its base, along with Amazon.com (AMZN), Adobe (ADBE) and Nvidia shares. Shopify (STORE) an anticipated entry flashes. Meanwhile, Microsoft (MSFT), Facebook (FB) and father of Google Alphabet (GOOGL) are at record levels, in buying zones.
IBD 50 Shares Etsy (ETSY), Square (SQ), Pinterest (LEGS), Wayfair (W) and HubSpot (HUBS) are establishing themselves on a bullish basis. Etsy and Square stocks are offering advance tickets, while PINS and HUBS have already done so.
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Semiconductor sales expiration in Taiwan
Taiwan Semiconductor will likely report March sales on Friday morning, with quarterly gains next week. The world’s largest chip foundry will provide clues to customer demand, including Apple (AAPL) and Nvidia (NVDA).
TSM shares rose 2.95% to 123.43 on Thursday, closing just below its 50-day line. A move above 50 days, and last week’s high of 127.40, could offer early entry as TSM shares build the right side of a base with a buy point of 142.29.
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Leader of the tech giants
Shares of Apple rose 1.9% to 130.36, a day after resuming its 50-day line. Arguably, that offered an early entry, although the weak relative strength line of AAPL shares did not provide a solid reason for an aggressive buy. Nvidia was up 1.2%, working on the right side of its base after moving laterally for several months.
Microsoft shares rose 1.3%. Shares of Google advanced 0.5% while those of Facebook fell 7 cents. Those three titans are up 4.5%, 5.6% and 4.8%, respectively, so far this week.
Shares of Amazon rose 0.6% on Thursday, moving toward an early entry. Adobe shares advanced 1.3%, hitting resistance near an anticipated entry of 506.61. SHOP shares rose 5.45% to 1,222.69, recovering its 50-day line after recovering from its 21-day line.
One potential weakness is that some of these recovering technologies, including Apple and Amazon stocks, have risen with little volume.
Shares of Square, Nvidia, Microsoft and Taiwan Semi are on IBD’s leaderboard. The Shopify shares are in SwingTrader. MSFT and Adobe shares are on IBD’s long-term leaders list. In addition to the five cited above, GOOGL stocks are also in that elite IBD 50.
Dow Jones Futures Today
Dow Jones futures were up 0.1% against fair value. S&P 500 futures advanced 0.15% and Nasdaq 100 futures rose 0.2%.
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.
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Coronavirus cases worldwide reached 134.47 million. Deaths from Covid-19 exceeded 2.91 million.
Coronavirus cases in the US have reached 31.71 million, with deaths above 573,000.
Thursday stock rally
The stock market rally performed well, with major indices closing at session highs Fed Chief Jerome Powell spoke to the IMF on Thursday, reiterating once again his desire for strong job growth and a rebound in inflation in the short term.
The Dow Jones Industrial Average was up 0.2% in trading on Thursday. The S&P 500 Index was up 0.2%. The Nasdaq composite was up 1%. The Russell 2000 advanced 0.85%, recovering its 50-day line.
The 10-year Treasury yield fell 2 basis points to 1.63%, the lowest since March 25.
Economic reopening and recovery activities declined, including steel, energy, travel and industrial stocks, but many reduced initial losses.
Among the best ETFs, the Innovator IBD 50 (FFTY) ETF rallied 1.3%, while the Innovator IBD Breakout Opportunities (BOUT) ETF rallied 1.9%. The iShares Expanded Tech-Software Sector ETF (IGV) was up 1.85%, above its 50-day line. The VanEck vectors Semiconductor (SMH) ETF gained 1.4%, just below all-time highs. TSM shares are SMH’s main holding with Nvidia as a key component.
SPDR S&P Metals & Mining ETF (XME) fell 0.2% and the Global X US Infrastructure Development ETF (PAVE) held steady. The US Global Jets ETF (JETS) was down 0.3%. All three ETFs closed well from morning lows.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) jumped 2.75%, with SQ stocks a key position. ARK Genomics ETF (ARKG) was up 1.1%.
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Creation of IBD 50 shares
Square shares rose 5.4% to 258.37, topping a short-term high of 252.60. That’s another early entry after picking up the 50-day line and breaking a downtrend on Wednesday. SQ shares have an official purchase point of 283.29.
Shares of Etsy rose 5.6% to 215.39, the best performance of the S&P 500 on Thursday. It regained its 50-day average and broke a downtrend, giving two reasons to start a position. The arts and crafts e-commerce leader also has 231.44 as another potential early entry. The official purchase point for Etsy shares is 251.96.
Pinterest shares rose 2.5% to 85.98. It is approaching a buying point of 90. PINS shares offered early entry when they broke a downtrend last week and passed their 50 days.
Shares of Wayfair rose 1.9% to 332.22. It has a handle purchase point of 356.06.
Shares of HubSpot were up 6% to 514.18. HUBS stock has a buy point of 547.57 after crossing its 50-day line and a trend line last week.
Market rally analysis
The stock market rally had a positive session, with growth stocks taking the lead.
The S&P 500 is at a record high, the Dow Jones holding just below Monday’s all-time high while the Nasdaq is quick to join them. The Russell 2000 is now the laggard, but working a control around the 50-day line not far from the all-time highs isn’t too bad either.
The split market rally, with the Nasdaq and growth stocks in a de facto correction, appears to be over. Chip stocks led the tech resurgence, followed by Microsoft, Facebook and Google on Monday. Now software, medical technology works, and other growing industries are coming.
More stocks are establishing themselves and showing anticipated entries, especially from growth sectors that had struggled for several weeks.
But many of the big stocks of 2020 are still well below their 50-day lines, including Tesla (TSLA), Teladoc Health (TDOC) and Video zoom (ZM). Maybe they will recover. Don’t assume a previous big winner will bounce back.
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What to do now
The February and late March sell-offs on the big tech winners may have put off some investors. But in the last two weeks, the stock market recovery has clearly improved, offering a lot of breakouts.
It is an important lesson for investors. When the market is choppy or correcting, investors need to reduce exposure or turn to cash. But they should stay committed. Pay attention to the market action and create watch lists. That way, you’ll be ready when a new market rally occurs.
Investors should take advantage of this market rally, increasing exposure in recent weeks and avoiding being overweight in a particular stock, sector or issue. While reopening and recovery plays were generally delayed Thursday, many still have strong
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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