Dow Jones futures rose slightly Thursday night, along with S&P 500 futures and Nasdaq futures. The stock market rally made a strong move on Thursday, with the S&P 500 and Nasdaq posting their best gains in months while growth stocks continued to advance.
Alcoa (AA) reported better-than-expected gains after Thursday’s close of trading, while also announcing a new dividend and buyback of AA shares.
Microsoft stock, Nvidia (NVDA), service now (NOW) and Google Parents alphabet (Googl) made bullish moves from their 50-day moving averages. Freeport-McMoRan (FCX) collapsed higher at high volume, while Snowflake (SNOW) cleared a handle buy point.
Alcoa stock could be actionable on Friday, although it may be out of reach. The aluminum giant jumped into the expanded trade after profit and shareholder feedback. AA shares rose 0.4% to 48.60 on Thursday, 4.4% above their 10-week line.
Meanwhile, several other stocks made big moves, including Upstart stocks (UPST) and Ambarella (AMBA). But they could now be viewed as extended.
Microsoft (MSFT), Nvidia, ServiceNow, Google and SNOW-Aktien are all on the IBD leaderboard along with Upstart. The Nvidia share is on SwingTrader. Microsoft, ServiceNow and Google stocks are all IBD Long-Term Leaders. UPST-share, Taskus, Ambarella and Google are at IBD 50. Microsoft was the IBD-share of the day.
The video embedded in this article analyzes an important market day as well as Google, Nvidia and AMN healthcare (AMN).
Dow Jones Futures today
Dow Jones futures rose 0.1% from fair value. S&P 500 futures rose 0.1%. Nasdaq 100 futures rose 0.15%.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily result in an actual trade in the next regular trading session.
Join the IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally started strong and closed on a broad spike near the highs.
The Dow Jones Industrial Average rose 1.55% in trading on Thursday. The S&P 500 index rose 1.7%, the best increase since March. The Nasdaq Composite also rose 1.7%, the largest increase since May. The small-cap Russell 2000 rose 1.4%.
Nasdaq volume was modestly higher than on Wednesday. According to preliminary figures, the NYSE volume was unchanged or perhaps even a fraction higher.
This is an important day for reading The Big Picture.
The 10-year government bond yield fell 3 basis points to 1.52%, the third decline in a row that gave tailwind to the broader market rally and especially growth stocks. Income from Taiwan semiconductor (TSM), UnitedHealth (UNH), Bank of America (BAC) and other major banks also contributed. The copper prices and the oil prices also rose sharply again and reached multi-year highs.
ETFs show broad profits
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.65%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.9%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1.6%. Microsoft and NOW stocks are big IGV components. The VanEck Vectors Semiconductor ETF (SMH) was up%. Taiwan Semiconductor and Nvidia stocks are major SMH components, but chip names fared well.
SPDR S&P Metals & Mining ETF (XME) was up 0.6% with stocks of Alcoa and FCX held large. The Global X US Infrastructure Development ETF (PAVE) gained 2.15%. The US Global Jets ETF (JETS) gained 0.7%. SPDR S&P Homebuilders ETF (XHB) rose 2.8%. The Energy Select SPDR ETF (XLE) climbed [email protected] and the Financial Select SPDR ETF (XLF) gained 1.7%.
The ARK Innovation ETF (ARKK) rose 1.9% and the ARK Genomics ETF (ARKG) rose 2.4%, reflecting more speculative story stocks.
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Shares in buy zones
Microsoft stock rose 2.2% to 302.75 and rebounded from its 50-day line with above-average volume. MSFT stock broke a trend line on a weekly chart. The relative strength line is just below a record high and signals the strong Microsoft share performance compared to the S&P 500 index. The official buy point according to MarketSmith analysis is 305.94 from a flat base. But it is already feasible.
Google stock climbed 2.6% to 2,823.02, pulling back from its 50-day line and breaking a short trend line. Volume was higher than normal. Much like MSFT stock, the internet giant operates on a flat basis with a buy point of 2,925.17. The RS line is also close to a record high.
NOW stock rose 2.1% to 653.03, breaking a short trend line and is still near the 50-day line. But stocks completed highs. ServiceNow stock has a flat base buy point of 681.20, although 670.59 is another resistance point.
Nvidia stock jumped 3.85% to 217.46 and convincingly hit the 50-day line after encountering resistance there on October 8th. Similar to MSFT stock, an investor could also see a break in the trend line. The official buy point is 230.53 from a flat base. Nvidia’s move comes as a rival modern micro devices (AMD) extended Wednesday’s move above its 50-day line and towards an official buy point.
The SNOW share rose 1.3% to 332.12, making an entry of 328.16 clear, which could be viewed as a grip on a very low 10-month basis. The stocks hit their intraday highs. Volume was below average, but that followed Wednesday’s 4.8% move in the strongest trade in weeks.
FCX stock rose 3.7% to 37.13, the third increase in above-average volume in the last four sessions. After moving back above the 50- and 200-day lines on Wednesday, Freeport-McMoRan stock rose above Monday’s intraday high of 36.57. Investors could use this as an aggressive entry. FCX stock is up this week as copper prices rose sharply. Note that earnings are due on October 21st.
Time-the-market with IBD’s ETF market strategy
Analysis of the market rally
Typically, in a market rally attempt, some leading stocks begin to break out or make early entries a day or two before the actual next day. But this time a number of growth names were actionable or several days. That’s because this was a flat market correction. But many growth stocks made impressive moves even on days when major indices fizzled out.
Now this dichotomy could come to an end. The Nasdaq composite jumped above its 21-day moving average and last week’s highs, moving just below its 50-day line. The S&P 500 and Dow Jones rallied back above their 21-day line and closed just above the 50-day line.
The higher Nasdaq volume on Thursday signaled institutional support for the new market rally.
Meanwhile, leading stocks continued to do well. Some stocks just look feasible, while many others are already slightly or heavily expanded. While last week’s big winners were growth stocks last week, energy and financial stocks are holding up well, with some mining and metals stocks showing buy signals or starting to establish themselves.
The major indices have now broken recent downtrends and around their 50-day lines. Pay close attention here. Much like Microsoft, Google, and Nvidia stocks last week, the indices could rise higher, get rejected, or pause at those levels for some time before moving significantly higher or lower.
Why this IBD tool makes finding top stocks easy
For investors who have stayed on the sidelines over the past few weeks, Thursday was an opportunity to add exposure. These can be individual stocks or broad or sector ETFs.
If you’ve already added some stocks, Thursday was an opportunity to keep topping up depending on your exposure. You can do this in the days ahead as well, assuming healthy market conditions.
But don’t chase extended stocks. A number of hot growth stocks have risen 10%, 15%, or more in the past few days and could be prone to retreat. Some of the recent winners pulled back on Thursday despite the overall strength of the market.
Other stocks could move into position in the next few days, while a number of institutional quality stocks like Google stock are for sale right now.
But a word of caution. The main indices are still at key levels. Government bond yields could rise again and weigh on growth stocks. The winning season could derail the market rally or your individual positions.
So keep an eye out for major indices and pay attention to what the market is telling you right now. Don’t get lost in a bullish or bearish mindset or fixate on yourself or on any particular stock. Flexibility is crucial for long-term investment success.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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