Dow Jones futures fell solidly Thursday morning, along with S&P 500 futures and Nasdaq futures, while crude oil prices bounced back somewhat. High-level Russia-Ukraine talks held in Turkey ended in failure with Ukraine's foreign minister saying Russia officials "live in their own reality."
Amazon rallied on a big stock split and buyback, while the February consumer inflation report looms.
The stock market rally attempt had big price gains on Wednesday, but none of the major indexes had a follow-through day. Crude oil prices plunged, while many other commodities retreated after massive gains in recent days and weeks.
In many ways, Wednesday's action was ideal. A follow-through day confirming the new market rally would have come with a slew of caveats. The major indexes moving up to or past key resistance levels before a follow-through day would be more meaningful.
Apple stock, Arista Networks, Anthem, Google parent Alphabet, and Eli Lilly are five stocks that are showing some positive signals, but are not yet in buy zones. Anthem and LLY stock are above their 50-day moving averages, but Apple, Google and ANET stock are not.
Tesla, meanwhile, continues to hold up better than most EV rivals and aggressive growth plays, though Wednesday's rebound was relatively modest. Shares rose 4.2% to 858.97. Tesla stock remains a fraction below its 21-day exponential moving average, with other key resistance levels close by.
Late Wednesday, Amazon.com announced a 20-for-1 stock split. The e-commerce and cloud-computing giant also will buyback $10 billion of Amazon stock. AMZN stock rose 5% early Thursday. Shares climbed 2.4% to 2,785.58 on Wednesday. Intraday Tuesday, Amazon stock hit its lowest level since July 2020.
Consumer Inflation Report
The February consumer price index is due before Thursday's market open.
Economists expect consumer prices to rise 0.7% vs. January and 7.9% vs. a year earlier, exceeding January's 39-year high of 7.5%. Core CPI, which excludes food and energy, is expected to climbed 0.5% vs. January. Core inflation should accelerate to 6.4% from 6%.
With crude oil and many commodity prices soaring amid Russia's Ukraine invasion and Western sanctions — despite Wednesday's sell-offs — inflation may continue to climb in the near term.
The consumer inflation data will come just ahead of next week's Federal Reserve meeting, when policymakers are expected to begin a big rate-hike cycle. Surging inflation could conceivably spur a half-point move.
Fed chief Jerome Powell said last week that he favored a quarter-point rate hike at the March 15-16 meeting.
Tesla and ANTM stock are on IBD Leaderboard, while LLY stock is on the Leaderboard watchlist. Google stock is on IBD Long-Term Leaders.
The video embedded in this article highlights Wednesday's price-and-volume market action, as well as analyzing ANET stock, Google and Eli Lilly.
Dow Jones Futures Today
Dow Jones futures fell 1.15% vs. fair value. S&P 500 futures retreated 1.15%. Nasdaq 100 futures sank 1.5%, even with Amazon stock offering a boost.
The CPI report is due out Thursday morning at 8:30 a.m. ET. That will likely swing Dow futures before the open.
U.S. crude oil futures rose 3% after Wednesday's plunge. Gold rebounded somewhat as well, while Bitcoin fell back.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally started Wednesday strong and closed near session highs. The Dow Jones Industrial Average rose 2% in Wednesday's stock market trading. The S&P 500 index popped 2.6%. The Nasdaq composite surged 3.6%. The small-cap Russell 2000 leapt 2.8%.
Crude oil prices plunged 12.1% to $108.70 a barrel. The United Arab Emirates urged OPEC+ to boost crude production further, while various comments about Russia-Ukraine diplomacy also weighed on oil prices and many other commodities. Crude oil futures have skyrocketed in recent weeks, along with base metals, wheat and gold, so a pullback was arguably overdue.
The 10-year Treasury yield popped 8 basis points to 1.95%.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF ran up 3.1%, while the Innovator IBD Breakout Opportunities ETF edged up 0.5%. The iShares Expanded Tech-Software Sector ETF jumped 4.85%. The VanEck Vectors Semiconductor ETF popped 4.3%.
SPDR S&P Metals & Mining ETF closed flat and the Global X U.S. Infrastructure Development ETF advanced 2%. U.S. Global Jets ETF ascended 5.5%. SPDR S&P Homebuilders ETF rallied 3.7%. The Energy Select SPDR ETF slumped 3.1% and the Financial Select SPDR ETF climbed 3.7%. The Health Care Select Sector SPDR Fund rose 1.9%.
Reflecting more-speculative story stocks, ARK Innovation ETF jumped 5.3% and ARK Genomics ETF 5.2%. Tesla stock remains the No. 1 holding across Ark Invest's ETFs.
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Stocks Setting Up
Arista Networks stock rallied 5.2% to 120.61, but hit some resistance near its 21-day line. ANET stock is working on a 148.67 consolidation buy point. But investors could use a trendline entry just above the 50-day moving average. Another early entry — with some double-bottom case characteristics — would be 133.97, above the February short-term high. The relative strength line for ANET stock has been holding near highs for a few months. Another positive is that Juniper Networks and Cisco Systems also are holding up relative well.
Apple stock rose 3.5% to 162.95, a solid gain on below-average volume. Shares are working on a 176.75 double-bottom buy point. Investors could use a trendline break around the 50-day line as an aggressive entry. The RS line for AAPL stock has been holding at highs.
Google stock popped 5% to 2668.40. Shares will soon have a new base with a 3,031.03 buy point, but they've been consolidating since mid-November or even earlier. As a Long-Term Leader, investors could use a move above the 50-day and 200-day lines as a buying opportunity. The RS line for GOOGL stock has gone sideways for nearly six months, but isn't far off highs.
Anthem stock rose 2% to 465.37. That's just below buy points at either 470.12 or 472.12. Shares broke out last Friday and pulled back Monday, but have found support at the 50-day line. The RS line for ANTM stock has been hitting new highs for weeks. Several other health insurers are acting well. Anthem plans to change its name to Elevance, the Wall Street Journal reported Thursday.
Eli Lilly stock climbed 1.1% to 262.79. LLY stock is working on a consolidation next to a failed cup-with-handle base. The buy point is 284. Ideally, LLY stock would form a handle before hitting new highs. The RS line for Eli Lilly is already at highs.
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Market Rally Analysis
The stock market rally attempt powered ahead Wednesday, ending several days of losses. While the major indexes' price gains were more than enough to qualify as a follow-through day, NYSE and Nasdaq volume was substantially lower than on Tuesday.
That's probably for the best. Follow-through days where the indexes close below the 10-day moving average and the close of first day of the rally attempt have a poor track record.
Getting above the 21-day moving average and the early March peaks would offer more evidence that the current market rally has legs. There are several other key hurdles above those initial resistance areas.
In other sign that the market rally attempt wasn't "ready" to be a confirmed uptrend, there weren't many actionable stocks Wednesday.
Aggressive growth stocks generally led Wednesday's gains, but are nowhere close to buying opportunities. Datadog, which was setting up a week earlier, surged 12% on Wednesday but is still far from actionable.
Tesla stock bulls, meanwhile, probably could talk themselves into buying into the EV leader with even a sliver of additional strength, but the 50-day line and February peaks likely offer a slightly safer, but still aggressive entry.
Other tech names with less-lofty P-E ratios, such as Google stock and Arista Networks, still need another big day or two before they could offer even early entries.
A number of medical stocks, including Anthem and LLY stock, are setting up, but didn't flash buy signals.
Shipping firms were mixed, with Zim Integrated Shipping popping on earnings and a big dividend.
Energy stocks retreated with crude oil prices. Fertilizer stocks also extended recent pullbacks, but came off morning lows. Steel and metal mining firms reversed higher, with a few briefly offering entries.
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What To Do Now
The stock market rally attempt has not yet staged a follow-through day, and there weren't many buying opportunities. There's no reason to increase your exposure under those circumstances.
The stock market has not been kind in recent months to investors who rush in at the first positive signals.
Being an active investor requires a lot of work, and that doesn't just mean a lot of trading. Controlling your emotions and being prepared are critical. So stay patient and do your homework. Keep working on those watchlists and stay engaged.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
