Dow Jones futures rose overnight, as did S&P 500 and Nasdaq futures. The stock market rally rebounded on Wednesday, but in lower volume than the previous session. The main indexes are down for the week and down sharply in April.
FTNT action, Marriott International (MAR), Raymond James Financial (RJF), Merck (MRK) and Ultimate beauty (ULTA) are five non-market games to watch. Fortinet (FTNT), Marriott and RJF stock are working on the handles, just around the aggressive entries. Merck stock may form a handle, while ULTA stock has broken above a buy point.
Among the megacaps, Apple (AAPL) and Tesla shares are trying to rise in the handles.
UnitedHealth (UNH) reports ahead of the open, kicking off Medicare revenue. The UNH stock is slightly extended by a buy zone, with its rival Anthem (ANTM). Hundreds (CNC) and Molina Health (MOH) are in buy zones.
Goldman Sachs (GS), Wells Fargo (WFC) and Citigroup (C) report early Thursday. All three were little changed on Wednesday after JPMorgan Chase (JPM) released mixed first quarter results.
You’re here (TSLA) and ANTM shares are on the IBD rating. FTNT stock is on IBD Long-Term Leaders. Tesla and Fortinet stocks are on the IBD 50. Raymond James Financial was the IBD stock of the day on Wednesday and added to SwingTrader.
The video embedded in this article discusses Wednesday’s market rally and analyzes Lululemon Athletica (LULU), Raymond James and MAR shares.
Join the experts at IBD as they analyze actionable stocks in the stock market rally on IBD Live
Dow Jones Futures Today
Dow Jones futures rose slightly from fair value. S&P 500 futures tilted higher and Nasdaq 100 futures climbed 0.2%.
Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Stock market rally
The stock market rally that started on Wednesday was little changed but steadily improved throughout the session.
The Dow Jones Industrial Average rose 1% in trading on Wednesday. The S&P 500 index climbed 1.1%. The Nasdaq composite jumped 2%. The small-cap Russell 2000 jumped 1.9%.
The producer price index showed wholesale inflation jumped 11.2% in March from a year earlier, a new record high. This follows Tuesday’s report showing consumer inflation hit a 40-year high of 8.5%.
But the 10-year Treasury yield fell for the second straight day, down 4 basis points to 2.69%.
U.S. crude oil prices jumped 3.6% to $104.25 a barrel.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) climbed 2.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 1.4%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 2.2%. ETF VanEck Vectors Semiconductor (SMH) rebounded 2.4%.
The SPDR S&P Metals & Mining ETF (XME) jumped 4.5% and the Global X US Infrastructure Development ETF (PAVE) gained 1.8%.
The US Global Jets ETF (JETS) climbed 5.3%. Airlines and other travel stocks rallied on Delta Airlines (DAL) earnings results and forecasts. DAL inventory and American airlines (AAL) has moved back above its 200-day lines.
The SPDR S&P Homebuilders ETF (XHB) climbed 1.7%. The Energy Select SPDR (XLE) ETF rose 1.5% and the Financial Select SPDR (XLF) ETF was flat. The SPDR health care sector fund (XLV) edged up 0.5%. UNH and Merck shares are XLV’s top holdings.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) rose 3.2% and ARK Genomics ETF (ARKG) rose 2.6%. Tesla stock is the top position among Ark Invest’s ETFs.
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Stocks to Watch
FTNT stock rose 3.3% to 340.86, rebounding from a 21-day moving average. The cybersecurity firm has a buy point of 353.08. On Wednesday, stocks hit a short descending trendline in the handle. Moving above that would offer early entry. Fortinet stock has seen some wild moves in its consolidation, but has traded tightly over the past few weeks. While growth stocks have struggled, cybersecurity is one area that has done reasonably well. Palo Alto Networks (PANW) and Qualys (QLYS) burst and private equity continues to buy various players.
MAR stock jumped 7.5% to 175.54 in above-average volume, rising above its 50-day line as travel stocks rebounded on Delta earnings. Shares of Marriott and a few other hotel coins made bullish moves in late March, but then fell sharply. The MAR stock now has a buy point of 179.40 cups with handle. Stocks have already broken the downtrend of the handle, offering an early entry.
RJF stock rose 3.2% to 111.64, rebounding from its 50-day line and breaking a downtrend in its handle, offering early entry. Raymond James has an official cup buy point with a handle of 114.10, according to MarketSmith analysis.
MRK stock edged up 0.6% to 86.13, after two sessions of declines. Monday’s downward reversal ended a steady rise since late February for the Dow Jones component. Merck stock has a cup basis with a buy point of 91.50, but appears to be running on a handful.
ULTA stock rose 2.4% to 415.50, closing above a buy point of 408.83 cup with handle after trying to break in the previous two sessions. The relative strength line has risen sharply this month, hitting 52-week highs in recent sessions.
Apple, Tesla shares
Apple stock rose 1.6% to 170.40, rebounding from its 50-day high and reaching around its 21-day line. The iPhone giant has a buy point of 179.71. It’s safe to say that AAPL stock is breaking a downtrend in this handle, but investors might want to see a little more strength.
Tesla stock soared 3.6% to 1,022.37, topping its 21-day line. The stock is running on a buy point of 1,152.97 handle cups. At 10.7% above its 50-day line, this is not an attractive early entry for TSLA stocks. Highly-rated growth stocks rebounded strongly on Wednesday, but are still struggling overall. Meanwhile, Tesla Shanghai has been closed since March 28 due to Covid restrictions and could be suspended for several weeks.
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Market rally analysis
The stock market rally rebounded on Wednesday, paring weekly losses. The Dow Jones and S&P 500 indices have recovered to their 50-day lines, but are below their 200-day averages.
The Nasdaq and Russell 2000 are still below their 50-day lines, although the small cap index is closing in.
Even with their 2% gains, the Nasdaq and the Russell 2000 had days inside from Tuesday’s range. Meanwhile, NYSE and Nasdaq volume fell from Tuesday, following two straight trading days.
Growth stocks had a strong session, but with a few exceptions such as FTNT, Apple and Tesla stocks, they are generally struggling with damaged charts.
Even more so than with the major indices, growth stocks need to post sustained gains before investors get carried away.
The commodities sector remains strong, as do defense stocks and medical stocks such as UnitedHealth and MRK. Travel games are trying to regain momentum, with MAR stock posting an early entry.
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What to do now
When the major indices register a solid gain, even if these movements do not change the charts noticeably, investors will begin to speculate on possible gains. But a strong day in a bad or choppy market is neither surprising nor particularly encouraging.
The market recovery remains under pressure.
Investors should have a modest overall exposure at most, largely or entirely concentrated in commodities, medical and defense stocks. Outside of these strong sectors, there is very little widespread strength.
If you venture beyond these areas, keep positions very small and certainly don’t focus too much on these areas.
Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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