Dow Jones futures were mixed early Thursday, along with S&P 500 futures and Nasdaq futures, as a national rail strike was averted at the 11th hour. The stock market rally bounced Wednesday, but it was an uneven advance that only recaptured a sliver of Tuesday's huge sell-off.
Investors should keep exposure light until the major indexes regain their 50-day moving averages.
Energy stocks took the lead Wednesday, with crude oil prices up and natural gas futures jumping. Devon Energy cleared an early entry. Exxon Mobil is on the cusp of flashing a buy signal.
Tesla flirted with an aggressive entry Wednesday, reclaiming a key level.
Arista Networks and Pure Storage have a little work to do.
DVN stock is on IBD Leaderboard and SwingTrader. Devon Energy also was Wednesday's IBD Stock Of The Day. Tesla stock, Devon, Arista Networks and Pure Storage are all on the IBD 50. Arista Networks and XOM stock are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures were little changed vs. fair value. S&P 500 futures lost 0.2% and Nasdaq 100 futures declined 0.3%.
The 10-year Treasury yield rose 5 basis points to 3.46%, just below 11-year highs.
Crude oil futures fell more than 1% while natural gas prices sank nearly 6% after soaring Wednesday.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
News
The Biden administration said Thursday that there's a tentative deal between rail operators and workers. That averted a possible strike as soon as Friday that would disrupted supply chains once again.
CSX, Union Pacific and other rail operators rallied early Thursday after falling Wednesday. The tentative deal was cited as a reason for natural gas prices falling Thursday.
Adobe reported better-than-expected quarterly earnings and profit, releasing results before the open instead of after. That's because the software giant confirmed it's buying online design collaboration firm Figma for $20 billion in cash and stock.
ADBE stock fell sharply.
Investors will get a slew of economic data before Thursday's stock market open. August retail sales as well as the September Philadelphia Fed manufacturing index and New York Fed's Empire State index are due at 8:30 a.m. ET, in addition to weekly jobless claims data. August industrial production is set for 9:15 a.m. ET.
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Stock Market Rally
The stock market rally rebounded modestly Wednesday morning, then faded to turn negative before rebounding late to close higher.
The Dow Jones Industrial Average rose 0.1% in Wednesday's stock market trading. The S&P 500 index gained 0.3%. The Nasdaq composite advanced 0.7%. The small-cap Russell 2000 climbed 0.4%.
U.S. crude oil prices rose 1.3% to $88.48 a barrel, though that was off session highs. Natgas prices surged 9.2% to $9.114 British thermal units (BTUs)
The 10-year Treasury yield dipped 1 basis point to 3.41%. But it's just below the 11-year high of 3.48% set on June 14.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF popped 2.35% at the close Wednesday, helped by energy stocks on the list. The Innovator IBD Breakout Opportunities ETF climbed 0.65%. The iShares Expanded Tech-Software Sector ETF edged up 0.1%. The VanEck Vectors Semiconductor ETF rose 1.1%.
SPDR S&P Metals & Mining ETF tumbled 3.1% and the Global X U.S. Infrastructure Development ETF slid 1.7%. The Energy Select SPDR ETF, with XOM stock a massive holding and Devon Energy also in the XLE ETF, rose 2.8%. The Health Care Select Sector SPDR Fund inched up less than 0.1%.
Reflecting more-speculative story stocks, ARK Innovation ETF bounced 2.75% and ARK Genomics ETF 1.6%. TSLA stock is a major holding across Ark Invest's ETFs.
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DVN Stock
DVN stock rose 4.5% to 72.17, rebounding from its 21-day moving average, hitting 73.29 intraday. The oil and natural gas producer cleared Monday's high of 71.57, offering an early entry in a cup-with-handle base. The official buy point is 75.37.
DVN stock fell modestly early Thursday amid slumping energy prices and a JPMorgan downgrade.
XOM Stock
XOM stock climbed 2.45% to 97.67. Shares of the integrated oil giant are working on a 101.66 cup-with-handle buy point, according to MarketSmith analysis. Investors could use a move above Monday's high of 99.19 as an early entry.
Tesla Stock
Tesla stock rose 3.6% to 302.61, rebounding back above its 200-day moving average after undercutting that key level in Tuesday's market rout. Intraday, TSLA stock hit 306, just topping Monday's high of 305.49. That could have offered an aggressive entry, emphasis on aggressive. Investors may want to use 306.10 now as the trigger point.
The relative strength line for Tesla stock has improved significantly over the past week, hitting its best levels since late April.
ANET Stock
Arista Networks stock rose nearly 2% to 122.26, bouncing slightly from its 200-day line after tumbling 3.9% on Tuesday. ANET stock has a 132.97 buy point from double-bottom base with handle. But investors could use 126.80, just above Monday's high, as an early entry.
PSTG Stock
PSTG stock edged up 0.1% to 29.67 on Wednesday, trading around its 21-day moving average after skidding 3.8% on Tuesday. Pure Storage stock has a 31.62 cup-with-handle buy point. Investors could use 30.98, just topping Monday's high, as a slightly lower entry.
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Market Rally Analysis
The stock market rally got a bounce Wednesday, but it's barely a blip after the Nasdaq dived more than 5% on Tuesday.
Wednesday's relatively in-line producer price index reading likely gives the Federal Reserve a reason to stick with a third straight rate hike of 75 basis points on Sept. 21, though markets are pricing in a one-fourth chance of 100 basis points. Perhaps more importantly, the CME FedWatch tool now shows markets are predicting a year-end fed funds rate range of 4.25%-4.50%. That's 50 basis points higher than before Tuesday's hot consumer price index.
Wednesday's Nucor earnings warning is a reminder that negative preannouncements will likely begin heating up.
It took just a few minutes for the major indexes to crash below their 50-day moving averages Tuesday, but it could take significant time to get back above that key level. The stock market rally could hit resistance there, or at the nearby 21-day lines. Meanwhile, the S&P 500 and Nasdaq are close to last week's lows, with the Dow already undercutting those levels.
Energy stocks were winners Wednesday, but closed well off intraday highs. While oil and gas names move with commodity prices, they are also subject to stock market trends.
ANET stock and Pure Storage are not as close to being actionable, but there's an upside. They could flash buy signals as the major indexes rebound back above their 50-day moving averages.
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What To Do Now
But until the major indexes do get back above their 50-day lines, investors should be cautious about adding exposure. This is a market rally under significant pressure, not a powerful uptrend.
If you do take new positions, consider taking partial profits especially quickly.
All that being said, leading stocks overall look better than the market indexes. Investors should be building up their watchlists, looking for quality names setting up or flashing buy signals.
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