Dow Jones futures rose solidly Friday morning, along with S&P 500 futures and Nasdaq futures. Super Micro Computer jumped overnight on strong preliminary results.
The stock market rally rose Thursday, shrugging off rising Treasury yields and fresh Fed comments signaling slower rate cuts. Techs led the way, with the Nasdaq 100 hitting a record high.
Taiwan Semiconductor led chips higher on bullish 2024 guidance. Apple had a solid gain, reclaiming its market cap crown from Microsoft which edged up in a buy zone.
TSM stock blasted out of a base. Recent chip IPO Arm Holdings flashed buy signals. So did DraftKings and AppLovin.
However, Tesla undercut recent lows as Model 3 and Model Y prices invert. Humana guided lower on Q4 and 2023 earnings per share, citing higher medical costs. HUM stock plunged while Dow giant UnitedHealth and other health insurers retreated.
ARM stock is on IBD Leaderboard. Microsoft stock is on SwingTrader as well as Long-Term Leaders. SMCI stock and Microsoft are on the IBD 50. DraftKings was Thursday's IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures climbed 0.65% vs. fair value, buoyed by Travelers on strong earnings. S&P 500 futures advanced 0.6%. Nasdaq 100 futures rose 0.8%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Super Micro Earnings
Super Micro sees earnings for the December-ended fiscal second quarter at $5.40-$5.55 a share vs. analyst estimates of $4.51. Revenue was $3.6 billion to $3.65 billion with consensus of $2.8 billion. That would be a 68% EPS gain with revenue up 101% at their respective midpoints.
Supermicro cited a "strong market and end customer demand for our rack-scale, AI and total IT solutions" for the raised guidance
SMCI stock jumped 11% early Friday to around 345. Shares fell 2.1% to 311.44 in Thursday's session, but did hold the 21-day line. Super Micro stock is down 8.3% for the week. Investors could use 357.99 as a handle entry.
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Stock Market Rally
The stock market rally wobbled midday, as Atlanta Fed President Raphael Bostic said he sees rate cuts starting in the third quarter, much later than markets expected. That followed similar go-slow comments from Fed Gov. Christopher Waller on Tuesday. European Central Bank officials also have tempered expectations for quick, aggressive easing.
The Dow Jones Industrial Average rose 0.5% in Thursday's stock market trading. Apple stock gave it a lift. So did Boeing, which rebounded 4.2% Thursday but is still down 18.8% in 2024.
The S&P 500 index climbed 0.9%. The Nasdaq composite leapt 1.35%, closing above the 15,000 level for the first time in 2024. The Nasdaq 100, led by Apple, Nvidia and other megacaps, jumped 1.5% to a record high.
Market breadth was slightly positive after losers dominated in the prior two sessions.
The small-cap Russell 2000 rose 0.55%, rebounding from near the 50-day line. The Invesco S&P 500 Equal Weight ETF climbed 0.5%, but below its 21-day line.
The First Trust Nasdaq 100 Equal Weighted Index ETF lagged the Nasdaq 100 but popped 1.15%, rebounding from the 21-day line. That's a sign that tech leadership remains relatively healthy.
Besides tech, a number of travel, industrial and housing/construction plays are setting up or flashing buy signals along with tech names.
The 10-year Treasury yield gained four basis points to 4.14%, or 19 basis points so far this week. Jobless claims fell to the lowest since late 2022, the latest in a series of mixed but generally strong economic reports.
Investors are still leaning toward the first Fed rate cut being in March, but the odds have fallen from a week earlier.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF gained 1%. The VanEck Vectors Semiconductor ETF leapt 3.25%. TSM stock is a major SMH holding, with NVDA the largest.
Reflecting more-speculative story stocks, ARK Innovation ETF slipped 0.6% and ARK Genomics ETF fell 0.5%. Tesla stock is a key holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF rebounded 1.1%. SPDR S&P Homebuilders ETF climbed 1.4%. The Energy Select SPDR ETF dipped 0.2%.
The Health Care Select Sector SPDR Fund closed a fraction lower. UNH stock is a major XLV holding, with Humana and several other health insurers in the ETF.
The Industrial Select Sector SPDR Fund gained 1.35%. The Financial Select SPDR ETF edged up 0.1%.
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Taiwan Semi Stock
TSM stock gapped up 9.8% to 113.03, blasting above a 105.52 buy point from a cup-with-handle base to its best level in nearly two years. Investors could have bought Taiwan Semi on the gap-up. At this point, investors may want to see if TSM stock consolidates for a few days.
Taiwan Semiconductor's earnings fell 19% while revenue was flat, both slightly beating. But the chip foundry giant sees a return to growth in Q1 with revenue rising over 20% in 2024, fueled by AI chips.
Taiwan Semi makes chips for Nvidia, Apple and many others. It's also a big chip-equipment buyer.
NVDA stock rose 1.9% Thursdsay, up 15.3% in 2024.
Chip-gear makers Applied Materials, Lam Research, KLA and ASML popped more than 4% Thursday, rebounding from key levels. All but AMAT will report earnings next week.
ARM Stock
Wireless chip design leader ARM leapt 6.3% to 74.3, breaking a steep trendline and continuing Wednesday's rebound from the 10-week line. This is a place to buy shares, though perhaps more as an add-on entry.
DraftKings Stock
DKNG stock raced 7% to 37.54, gapping above the 50-day after Wednesday's 4.2% gain. Clearing the 50-day offered a buying opportunity, though DraftKings stock did hit resistance at a downward-sloping trendline. Investors could use Thursday's high of 37.87 as an entry. The online sports betting giant has an official 39.35 buy point.
AppLovin Stock
APP stock popped 4.6% to 43.09, continuing Wednesday's move off the 50-day. Shares also cleared a short-term high of 42.03, flashing an early entry. AppLovin stock has a 44.57 buy point from a cup-with-handle base.
Apple Vs. Microsoft
Apple stock gained 3.3% to 188.63, rebounding from near the 200-day line toward the 50-day. A decisive move above the 50-day could be an early entry, though there has been a lot of downside volume recently. The relative strength line, the blue line in the charts provided, has been lagging since mid-2023 and especially since early December.
Bank of America upgraded AAPL stock, citing AI and the upcoming VisionPro mixed-reality headset as growth drivers. Several analysts had downgraded the Dow tech titan this year, with Apple offering rare discounts on its latest iPhones in China.
Apple stock now has a market cap of $2.934 trillion. Microsoft stock, with a $2.927 trillion valuation, is again the second-most valuable company after a two-day reign. MSFT stock climbed 1.1% on Thursday to a record close of 393.87. That's still within a buy zone, according to MarketSmith analysis.
Amazon.com, Meta Platforms and Google parent Alphabet rose 1%-2%.
All five tech titans report earnings in about two weeks.
Tesla Stock
Tesla stock fell 1.7% to 211.88, a fresh two-month low. Shares have plunged 14.7% so far in 2024, amid Tesla price cuts and other discounts.
Tesla earnings for Q4 2023 are due Jan. 24, with the focus on 2024 guidance for deliveries and profit margins.
What To Do Now
The market rally emphasized the positive and shrugged off the negative on Thursday. The major indexes are still in a range with market breadth weakening.
Some stocks are flashing buy signals. With the Nasdaq above 15,000, perhaps it's the start of another run. Or, it could just be an up day in a sideways market.
Investors can choose to add incrementally, or wait for a little more market strength.
Earnings season will ramp up next week and hit full force the following week, so that's a reason to be cautious with new buys. But earnings could be the catalyst for the market and many stocks to break higher.
So have watchlists and your exit strategies ready.
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