Dow Jones futures turned slightly higher Thursday morning, along with S&P 500 futures and Nasdaq futures, as crude oil price continue to run higher. The stock market rally attempt showed strong gains Wednesday. Fed chief Jerome Powell vowed to be "nimble" with rate hikes, while a possible new round of Russia-Ukraine peace talks also helped.
SNOW stock crashed overnight. Richly valued, unprofitable cloud-based data warehouse company Snowflake beat views, but revenue growth is slowing while its fiscal 2023 guidance was not good enough to satisfy investors. On Feb. 10-11, Snowflake stock tried to move above its 50-day line, but was turned away. Now SNOW stock could test its May 2021 post-IPO low.
Micron Technology and Rambus flashed early buy signals in Wednesday's session, while Axcelis Technologies is on the verge of doing so. Other chip plays close to being actionable include Alpha & Omega Semiconductor and Broadcom, which reports earnings late Thursday.
Meanwhile, Apple stock rose solidly, moving toward its 50-day line and various buy points. Apple on Wednesday announced a March 8 product event, with a lower-cost 5G iPhone among the expected offerings.
Fed chief Powell told Congress he still favors a March rate hike but promised to "be nimble" amid "highly uncertain" economic impacts from the Ukraine crisis. Powell also said he backs a quarter-point move at the March 15-16 Fed meeting, seeming to take a half-point hike off the table.
Russia and Ukraine are scheduled to resume peace talks, but neither side seems poised to settle. Russia continues to expand its Ukraine invasion, while indiscriminate bombing is increasing civilian deaths in major cities. Fuel, food and other logistics remain a major problem for Russia's invasion force, according to U.S. defense officials. Russian troops and equipment appear to have suffered significant losses, in no small part because of logistics shortcomings.
MU stock is on IBD Leaderboard. Alpha & Omega and ACLS stock are on the IBD 50 list. Micron and AOSL stock were IBD Stock Of The Day selections this week.
The video embedded in this article discusses today's strong market price gains while also analyzing Oneok, Mosaic and Micron stock.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures climbed 0.12%. Nasdaq 100 futures just edged higher. While SNOW stock is NYSE-listed, its overnight meltdown triggered losses in a number of other highly valued software stocks, including Bill.com and Datadog.
U.S. crude oil futures rose almost 3% to nearly $113 a barrel. There is growing sentiment to cut off Russian energy imports in the U.S. and Europe, though that would send prices even higher.
Wheat futures continued to soar.
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 once again started with modest moves but got rolling, this time to the upside. Fed chief Powell, stressing flexibility and modest policy moves amid hot inflation and Ukraine war uncertainty, helped buoy stocks.
The Dow Jones Industrial Average rose 1.8% in Wednesday's stock market trading. The S&P 500 index popped 1.9%. The Nasdaq composite climbed 1.6%. The small-cap Russell 2000 jumped 2.4%.
Crude oil prices rose nearly 7% to $110.60 a barrel, hitting $112.51 intraday. That's it's highest level since 2011.
Russia is having trouble finding buyers or shippers for its crude oil and other commodities, even at big discounts, raising global supply concerns. OPEC+ agreed to keep slowly unwinding pandemic-era production cuts.
The 10-year Treasury yield rebounded 18 basis points to 1.865% after tumbling 12 basis points on Tuesday.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF popped 2.7%, while the Innovator IBD Breakout Opportunities ETF ran up 3%. The iShares Expanded Tech-Software Sector ETF advanced 1.5%. The VanEck Vectors Semiconductor ETF jumped 3.3%. Micron and AVGO stock are notable SMH holdings.
SPDR S&P Metals & Mining ETF kept climbing, adding 3.8%. The Global X U.S. Infrastructure Development ETF rose 3.3%. U.S. Global Jets ETF ascended 1.7%. SPDR S&P Homebuilders ETF gained 2.9%. The Energy Select SPDR ETF advanced 2.3% and the Financial Select SPDR ETF 2.6%. The Health Care Select Sector SPDR Fund climbed 1.5%.
Reflecting more-speculative story stocks, ARK Innovation ETF sank 1.1% and ARK Genomics ETF 1.45%.
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Chip Stocks In, Near Buy Zones
Micron stock shot up 8.2% to 93.30 on Wednesday, rebounding back above its 50-day line in above-average volume. MU stock has a 96.60 cup-with-handle official buy point. But investors could have used the breaking of a short trendline within the handle as an early entry. The cup-with-handle pattern formed next to a much-longer cup-with-handle consolidation, which had a short-lived breakout in December.
Rambus stock popped 5% to 28.01 on modestly higher volume. The chip technology firm ended just below a 28.32 cup-with-handle buy point, according to MarketSmith. But investors could have bought RMBS stock as it rebounded from the 50-day line and broke a trendline starting from the Dec. 28 peak of 28.89. The relative strength line is already at a high while Rambus stock is still basing. That's a bullish sign and marked by a blue dot at the end of the RS line.
ACLS stock popped 7.3% to 71.59, also rebounding from the 50-day line. Investors could use 71.79, just above Monday's high, as an early entry. The official buy point is 75.10 from a loose handle in a cup base. The RS line for ACLS stock is already at a new high. Axcelis makes specialized chip equipment such as ion implantation systems and high-energy implanters
AOSL stock rose 4.6% to 53.39, moving off its 50-day line. Shares of the power-management-chip maker have a 59.48 entry. But investors could use a move above Tuesday's high of 55.73 + 10 cents as an early entry.
AVGO stock rose 2.75% to 585.78. Shares of the wireless-chip maker and software maker need to get above the 50-day line, with 614.74 a possible early entry. The official buy point for AVGO stock is 677.86. Broadcom earnings are due Thursday night.
All of these chip names have relatively modest price-to-earnings ratios, a positive element in the current rate-rising environment. RMBS stock has the highest P-E ratio at 43, but that's not extreme for a growth stock, especially one that's expected to more than double profit in 2022.
In addition to these names, a number of other chip plays are not far from being interesting, including Qualcomm and Marvell Technology.
Apple Stock
Apple stock climbed 2.1% to 166.56, but stopped short at its 21-day line. Investors could view AAPL stock as having a double-bottom base with a 176.75 buy point. Investors could use a trendline from the early January all-time high to find slightly early entry modestly above the 50-day line. The RS line for Apple stock is just below record levels.
Market Rally Analysis
The stock market rally attempt had a strong move Wednesday, with big price gains on the Dow Jones, S&P 500 index and Nasdaq.
However, volume fell vs. Tuesday on both the NYSE and Nasdaq exchanges. That means none of the indexes had a follow-through day to confirm the new rally.
That may be for the best. The major indexes are all still below their 21-day moving averages, which has acted as a resistance level for most of 2022. Clearing that level decisively would seem like a bare minimum for investor confidence. Beyond the 21-day line, the major indexes still have their February highs as well as their 50-day and 200-day lines as key levels, not necessarily in that order.
The Russell 2000 is back above its 21-day line, but the February peaks and the 50-day loom.
The market remains extremely news-driven. The market direction can quickly shift up or down based on the latest headline.
One positive: Sentiment is turning bearish. Just 29.9% of investment newsletters are bullish, below the pandemic crash low. Meanwhile, 34.5% are bearish. When bears outnumber bulls, it's a strong sign that at least a short-term bottom looms, though not necessarily right away.
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What To Do Now
The stock market rally attempt bounced back strongly from Tuesday's sell-off, though on lighter volume.
Investors could add slightly to their exposure, perhaps branching from the energy/commodity sectors that have performed well in 2022. Unlike in late January and early February, a decent number of stocks are setting up or flashing buy signals.
While this article highlighted Micron stock and other chip plays, health insurers, cybersecurity, building products and shipping firms are also shaping up, along with some more energy, mining and metals plays.
But until the major indexes reclaim their 21-day line and the market rally has a follow-through day, you should keep your exposure modest. The downside risks remain high.
This is an important time to be working on your watchlists. Cast a wide net for stocks in bases with strong RS lines. Then focus on a select list of names that are actionable or nearly so that you see as potential big winners.
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