Dow Jones futures fell modestly early Friday, along with S&P 500 futures and Nasdaq futures. The Nasdaq composite and S&P 500 rose Thursday, but it was a mixed session for the stock market rally, with weak breadth.
Megacaps were strong. Amazon.com took the lead as Amazon Web Services announced new artificial intelligence efforts. AMZN stock popped to a nine-month high after its AWS cloud unit unveiled a $100 million investment in generative AI to help clients. Loop Capital expects the AWS growth slowdown to "bottom" soon. That sentiment also could be good news for cloud rivals Microsoft, Google parent Alphabet, which both had solid sessions.
MongoDB, Super Micro Computer and Lam Research made bullish bounces Thursday. The trio offered aggressive entries, though they came off intraday highs.
A number of software and chip plays made solid moves Thursday.
C3.ai and Samsara, two AI stock plays, held investor day events. AI stock fell 4.1% Thursday, testing its 21-day line. IOT stock gained 1.2% after a four-day slide. But it's unclear if the investor day events had a significant impact on either stock. Analyst reaction could move C3.ai and IOT stock on Friday.
AI stock fell slightly early Friday. Deutsche Bank, which has a sell rating on C3.ai, said the company didn't differentiate itself from other AI companies at its investor day.
Bank stocks were noticeably weak Thursday, from PacWest Bancorp to JPMorgan Chase. There wasn't a clear trigger or obvious signs of renewed deposit flight, but banks face long-term issues that may curb profitability long term.
Don't overthink it. Thursday was likely a modest, mixed bounce within a modest pullback with solid, tech-led stock market rally.
MDB stock was added to IBD Leaderboard on Thursday and is on the IBD Big Cap 20. LRCX stock joined SwingTrader. MongoDB and IOT stock are on the IBD 50. Lam Research was Thursday's IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures fell 0.4% vs. fair value, even with 3M popping on a major settlement over chemicals in drinking water. S&P 500 futures slid 0.6% and Nasdaq 100 futures declined 0.7%.
Futures retreated as Asian markets tumbled overnight.
The 10-year Treasury yield slid to 3.72%.
Crude oil futures fell more than 1%. So did copper futures.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally had a mixed session as tech giants and AI plays rebounded. The Dow Jones Industrial Average closed a fraction lower in Thursday's stock market trading. The S&P 500 index climbed 0.4%. The Nasdaq composite gained 0.95%. The small-cap Russell 2000 fell 0.8%.
Amazon stock popped 4.3% to 130.15.
Apple, Microsoft, Google, Tesla, Taiwan Semiconductor and Salesforce.com all rose 1.5% to just above 2%.
U.S. crude oil prices tumbled 4.2% to $69.51 a barrel. The 10-year Treasury yield popped 8 basis points to 3.8%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF climbed 0.4%. The iShares Expanded Tech-Software Sector ETF rose 0.55%. The VanEck Vectors Semiconductor ETF advanced 0.55%. LRCX stock is a notable SMH holding.
Reflecting more-speculative story stocks, ARK Innovation ETF closed just above break-even and ARK Genomics ETF fell 1%.
SPDR S&P Metals & Mining ETF and the Global X U.S. Infrastructure Development ETF both sank 0.6%. U.S. Global Jets ETF maintained altitude. SPDR S&P Homebuilders ETF sank 0.5%. The Energy Select SPDR ETF retreated 1.3% and the Health Care Select Sector SPDR Fund rose 0.7%.
The Financial Select SPDR ETF sank 0.8%. JPM stock gave up 1.9%, near its 50-day line after testing a buy point Wednesday. The SPDR S&P Regional Banking ETF tumbled 3.2%, falling back below its 50-day line. PACW stock slumped 5.9%.
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Stocks To Watch
MDB stock rose 4.1% to 388.36 in heavy volume Thursday, breaking a trendline in a three-weeks-tight pattern in what could be a high tight flag. That offered an early entry around 385 or perhaps 389. That's after initially testing the low of its recent range since the huge earnings gap-up on June 2. MongoDB stock got as high as 396.84. The database software maker announced an expanded relationship with Google Cloud as well as several AI initiatives. MongoDB also works with Amazon Web Services, among others.
SMCI stock bounced 3% to 226.46, moving off its 21-day moving average in strong trading. An aggressive trader could have used a move above Wednesday's high of 227 as an early entry. However, shares hit resistance at the 10-day line, backing well off highs of 241.97 and closing just below the aggressive buy point.
LRCX stock rose 2.3% to 619.87 after initially undercutting the 21-day line and the 600 level. Investors could have used a move above Wednesday's high of 615.80 as an entry point. Shares backed off intraday highs of 624.48, right around a short-term trendline. LRCX stock, like MongoDB, is working on a three-weeks-tight with an official buy point of 644.60. Some other chip-gear giants bounced off their 21-day lines.
Market Rally Analysis
The stock market rally halted its recent slide with a narrow bounce Thursday. The Nasdaq and S&P 500 both bounced from their 10-day lines, led by Amazon and other growth giants.
So is the Nasdaq pullback over after three days? If so, it would quickly be extended again, raising expectations for another pullback. The Nasdaq closed Thursday at 7.8% above its 50-day line, with the Nasdaq 100 9.1%.
Breadth was noticeably weak given the solid Nasdaq bounce. Losers trumped winners by 2-to-1 on the NYSE and 8-to-5 on the Nasdaq.
The Dow Jones and Russell 2000 tested their 21-day lines Thursday.
The Invesco S&P 500 Equal Weight ETF dipped 0.4%, just above its 21-day, even as the S&P 500 had a modest gain. The First Trust Nasdaq 100 Equal Weighted Index ETF climbed 0.25%, well behind Nasdaq 100's 1.2% pop.
Hot tech stocks bounced off support levels, including MDB stock and SMCI. That's want you want to see when the Nasdaq is rising. If the Nasdaq resumes a slide, you want these names to resist the selling pressure.
Several stocks are consolidating around traditional buy points, such as Monday.com and Parker-Hannifin.
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What To Do Now
If you're an aggressive trader, you could have bought MongoDB, Lam Research, SMCI stock or a few other rebounding stocks Thursday. It's a lot less risky to be adding a few shares to an existing stake vs. starting a new position. If a Nasdaq pullback resumes, many of these leaders could fall back. If you buy a bounce near intraday highs, it doesn't take much to be underwater.
A swing trader mindset makes sense for new or add-on buys, cutting losses quickly and moving to take partial profits early to lock in some gains. If the stocks continue to power ahead, you could keep the remaining shares as position trades.
Whether you pull the trigger now or not, you definitely want to be watching big winners, looking for those that are holding or rebounding from support. Keep your watchlists up to date from a variety of sectors. Using early entries, and buying close to those entries, remains important.
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