Dow Jones futures fell early Thursday, along with S&P 500 futures and Nasdaq futures. The stock market rally attempt showed resilience Wednesday. The major indexes fell sharply Wednesday morning as Treasury yields and the dollar rebounded, but the stock indexes rebounded to close only slightly lower.
The market rally still hasn't proven itself. That could happen soon, but patience — and cash — remain key.
Tesla continued to slide, with the Elon Musk-Twitter takeover saga still not entirely over. Enphase Energy plunged, breaking below recent lows on a bad day for solar plays.
Medical names held up well, including Vertex Pharmaceuticals, Cigna, Shockwave Medical, Sarepta Therapeutics, Cardinal Health, Option Care Health and Neurocrine Biosciences. Meanwhile, On Semiconductor, Impinj and Arista Networks are tech names holding up.
Oil stocks were strong, with OPEC+ agreeing to a sizable production cut at Wednesday's meeting. Exxon Mobil also signaled strong third-quarter results. XOM stock flashed a buy signal Wednesday.
VRTX stock and Neurocrine Biosciences are on the IBD Leaderboard, with PCTY stock and Shockwave on the watchlist. SWAV stock, Vertex, Paylocity, Sarepta and Onsemi are on the IBD 50. Arista Networks, Vertex, On Semiconductor and ENPH stock are on the IBD Big Cap 20. On Semi was Wednesday's IBD Stock Of The Day, with Paylocity, Enphase and ANET stocks also recent picks.
Dow Jones Futures Today
Dow Jones futures fell 0.5% vs. fair value. S&P 500 futures declined 0.5% and Nasdaq 100 futures lost 0.5%.
The 10-year Treasury yield was flat at 3.76%.
Crude oil futures edged lower. The Biden administration may ease sanctions on Venezuela, paving the way for Chevron and others to resume crude production there, potentially boosting U.S. supplies and lowering prices.
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 Wednesday
The stock market rally attempt tumbled Wednesday morning, but the major indexes came well off session lows, briefly turning positive before fading for slim losses.
The Dow Jones Industrial Average fell 0.1% in Wednesday's stock market trading. The S&P 500 index dipped 0.2%. The Nasdaq composite declined 0.25%. The small-cap Russell 2000 lost 0.6%
U.S. crude oil prices rose 1.4% to $87.76 a barrel, extending strong weekly gains. OPEC+ agreed to cut production quotas by 2 million barrels, at the high end of expectations heading into Wednesday's meeting.
The 10-year Treasury yield jumped 14 basis points to 3.76%, erasing most of this week's losses.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF fell 1%, while the Innovator IBD Breakout Opportunities ETF fell 0.4%. The iShares Expanded Tech-Software Sector ETF rose 0.45%. The VanEck Vectors Semiconductor ETF gained 1%.
SPDR S&P Metals & Mining ETF dipped 0.3%. The Energy Select SPDR ETF rose 2.1%, with XOM stock a massive holding. The Health Care Select Sector SPDR Fund edged up 0.3%.
Reflecting more-speculative story stocks, ARK Innovation ETF sank 1.8% and ARK Genomics ETF 1.9%. Tesla stock remains a top holding across Ark Invest's ETFs.
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Exxon Stock
XOM stock rose 4% to 99.12, extending a move above the 50-day line, now up 14% for the week. Exxon stock broke a downward-sloping trendline in a four-month consolidation. Investors could use 101.66 as another early entry, with 105.67 as the official buy point. The relative strength line for XOM stock is already at a new high.
Rising energy prices are fueling the latest revival in Exxon stock. Late Tuesday, Exxon signaled strong third-quarter results.
Stocks Holding Up
VRTX stock, Neurocrine Bio and Option Care Health are all near buy points and arguably actionable now. SWAV stock, Cigna and Sarepta are all very close to being actionable from trendline entries. So are ANET stock and On Semiconductor, which flashed early buy signals, though on light volume. PI stock is close.
Enphase Stock
Enphase stock plunged 9.25% to 261.60, breaking far below recent lows in the heaviest volume since the July 27 earnings gap up. ENPH stock, which peeked above its 50-day line and flashed a buy signal Tuesday, is now decisively below that key level, according to MarketSmith analysis. Shares did bounce off the intraday low of 248.13, but closed in the lower half of its range.
First Solar, which gapped above a short consolidation Tuesday, tumbled 5.9% on Wednesday, with several other solar plays selling off.
Tesla Stock
Tesla stock fell 3.5% to 240.81, but did come off its intraday low of 233.27. For the week, TSLA stock has tumbled 9.2%, extending significant losses since reversing lower on Sept. 21. Shares are still reeling from Sunday's weak third-quarter deliveries, which reflected weak China demand.
Meanwhile, CEO Elon Musk's professed intention to go ahead with the $44 billion Twitter deal raises concerns that he'll sell more TSLA stock to help pay for it.
Tesla sank 1% in premarket trade.
The Musk-Twitter takeover saga isn't quite over. While Musk says he's willing to go ahead with the original $54.20-a-share deal, Twitter isn't going to just take him at his word and agree to halt trial proceedings. The two sides are in talks with the aim of agreeing to terms that provide real assurances.
Musk could own Twitter in just a few days. But, for now, the Musk-Twitter takeover trial is still set to start Oct. 17.
TWTR stock declined 2% early Thursday, amid a growing realization Musk's Twitter takeover is not a done deal.
Twitter stock fell 1.35% to 51.30 on Wednesday. That's after spiking 22% to 52 on Tuesday, following Musk backing down.
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Market Rally Analysis
The stock market rally attempt is at a key juncture. Is this the start of a meaningful uptrend or just a short-lived bounce from oversold conditions?
Wednesday's action didn't answer those questions, but it was encouraging.
The market made big gains on Monday and Tuesday. On Wednesday, bulls showed that they weren't going to give up at the first sign of trouble. Of course, just because stocks slashes losses on one day doesn't mean they'll continue to hold, and advance, in the days ahead.
The Dow Jones, S&P 500 and Nasdaq tumbled from near their 21-day moving averages at the open, soon giving up the bulk of Tuesday's gains. But they steadily pared losses and turned positive before a last-minute move back into the red.
The Dow Jones and S&P 500 briefly peeked above their 21-day lines while the Nasdaq composite got close.
The Russell 2000 managed to hold its 21-day, which is shaping up to be a key short-term level for all the indexes.
Losers easily beat winners on Wednesday, as market breadth was weaker than the indexes' close would suggest.
Meanwhile, a declining 10-year yield and sliding greenback were big catalysts for the Monday-Tuesday market rally. So it's no surprise that stocks sold off Wednesday morning with Treasury yields and the dollar roaring back.
The major indexes slashed losses despite yields staying near session highs. That can happen on a specific day. But over time, stocks are unlikely to advance meaningfully, or even hold up, if Treasury yields move higher.
Key Sectors
Oil, gas and coal stocks such as Exxon are advancing, thanks to reviving energy prices.
Medical names such as Vertex and Option Care Health held up relatively well, even at the market's intraday low. So did Arista, PCTY and ON stock. A few agricultural and metals plays are shaping up.
A number of leading stocks fell sharply, at least intraday. Some still have decent charts, while others like ENPH stock suffered significant damage.
Investors can now look for a follow-through day to confirm the new rally. Friday's jobs report could be the catalyst for a strong market rally or sell-off.
A follow-through day would be a positive signal, but not a guarantee. For now, it's still a stock market rally attempt within a sharp bear market.
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What To Do Now
Investors need to be patient. A market rally attempt has had some strong gains this week, with a number of leading stocks triggering or nearing buy points. But it hasn't done anything to signal it has staying power.
Being all in cash, or with minimal exposure, remains a sound strategy. If this turns out to be a meaningful market rally, there will be plenty of opportunities after a follow-through day.
For investors who have tiptoed into some promising names this week, be ready to step out if trades turn against them.
All that said, a confirmed stock market rally could come at any time. A number of stocks are showing strength and would likely be actionable with further market strength. So investors need to stay engaged and working on their watchlists.
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.
