Futures: Soft Landing Rally Faces Big Test;  Tesla Split OK'd

Dow Jones futures rose on Thursday morning, along with S&P 500 futures and Nasdaq futures, with fresh stimulus for China providing a boost ahead of Friday’s speech by Federal Reserve Chairman Jerome Powell. Nvidia (NVDA), Salesforce.com (CRM), Snowflake (SNOW) and Dollar General (DG) led overnight gains, while Tesla shares rose after a 3-for-1 split.


The stock market rally edged up slightly on Wednesday, even as the major indexes again hit resistance at their 21-day moving averages. Investors don’t want to commit seriously ahead of Friday’s speech by Fed chief Jerome Powell. The Jackson Hole Monetary Policy Symposium begins today.

Meanwhile, An apple (AAPL), Warren Buffett’s top investment holding Berkshire Hathaway (BRKB), rose on Wednesday. AAPL stock now has a valid daily chart handle.

Tesla (TSLA) rose modestly early on Thursday, testing key levels after reaching resistance on Wednesday. A 3-for-1 TSLA stock split took place overnight.

Key wins

Nvidia’s earnings offer insight into semiconductors, specifically the data center and gaming sectors. Salesforce gains signal demand for business software. So does analyst firm Snowflake, while SNOW’s stock market reaction gives an indication of investor demand for highly valued former tech leaders.

Nvidia’s earnings were about the same with lowered guidance as gaming revenue fell by a third but data center revenue jumped 61%. The chip giant is targeting lower Q3 revenue. Shares of NVDA fell 3% in premarket trading. Shares of Nvidia rose 0.2% on Wednesday to 172.22.

Earnings from Salesforce top views, but the software giant is guiding low for the current quarter. Despite a new $10 billion buyback program, CRM shares fell 8% in extended action. Shares of Salesforce.com rose 2.3% to 180.01 on Wednesday.

Snowflake reported a bigger-than-expected loss for Q2, but the profit of 83% wins. SNOW shares jumped 19% early Thursday. Shares of Snowflake jumped 4.2% to 160.28 on Wednesday, rebounding from the 50-day line after pulling back over the past few weeks.

Meanwhile, Splunk (SPLK), Box (A BOX) and Autodesk (ADSK) added to the busy software lineup after the shutdown, with a storage giant NetApp (NTAP) and retailer of household goods and furnishings Williams-Sonoma (WSM) also reporting. Shares of Autodesk, NetApp and WSM rose overnight. Splunk and Box went down.

early thursday Dollar General (DG) reported better-than-expected second-quarter earnings, with a rival Dollar tree (DLTR) cut the EPS guidelines. Shares of DG fell modestly after Dollar Tree reported, threatening to undercut a buy point. Shares of DLTR fell, set to knife below the 50-day line.

Dow Jones futures today

Dow Jones futures rose 0.3% to fair value, with CRM shares weighing on the blue chips. S&P 500 futures rose 0.6% and Nasdaq 100 futures rose 0.7%.

China unveiled new stimulus measures worth $44 billion to support an ailing economy under pressure from Covid and electricity restrictions.

Copper futures rose 1%. Crude oil rose.

Remember this night action in Dow futures and elsewhere does not necessarily become an actual trade in the next regular Stock Exchange session.

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Stock market rallies

The stock market rally saw weak to moderate gains on Thursday, but the major indexes hit resistance again.

The Dow Jones Industrial Average rose 0.2% on Wednesday Exchange Trading. The S&P 500 advanced 0.3%. The Nasdaq Composite gained 0.4%. The small-cap Russell 2000 rose 0.8%.

U.S. crude oil prices rose 1.2 percent to $94.89 a barrel. The US has rejected Iran’s terms for a renewed nuclear deal, meaning there is still no deal to put Iranian crude on world markets.

Natural gas prices rose by 1.5%. Natural gas futures fell 5% on Tuesday, retreating from 14-year highs.

The yield on the 10-year Treasury rose 5 basis points to 3.11%, the highest level since June 29. It rose 24 basis points in four sessions. Markets are leaning toward a third consecutive Fed rate hike of 75 basis points on September 21. Of course, Fed chief Powell will speak on Friday and plenty of economic data will be released before the Fed’s next rate decision.

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Avg the best ETFsInnovator IBD 50 ETF (FFTY) rose 1.4%, while the Innovator IBD Breakout Opportunities ETF (BOOTH) rose 0.4%. iShares Expanded Tech-Software Sector ETF (IGV) gained 0.6%. CRM shares are a key component of IGV. VanEck Vectors Semiconductor ETF (SMH) decreased by 0.1%. Nvidia stock is a major holding of SMH.

SPDR S&P Metals & Mining ETF (XME) rose 2.1%, and the Global X US Infrastructure Development ETF (PAVING) advanced by 0.6%. SPDR S&P Homebuilders ETF (XHB) rose 0.75%. Energy Select SPDR ETF (XLE) rose by 1.2%. Select Healthcare Sector SPDR Fund (XLV) rose 0.1%

Reflecting the more speculative stocks of history, the ARK Innovation ETF (ARKK) bounced 2.6% and the ARK Genomics ETF (ARKG) 3.5%. Tesla stock is a major holding in Ark Invest’s ETF.

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Apple Stock

Apple shares rose 0.2% to 167.53, finding support outside the 21-day line. Tech titan Dow Jones now has a buy point at 176.25 on the daily chart, and this entry is now available on the weekly chart. Apple has officially sent out invitations for an event on September 7, where the iPhone 14 is expected to be unveiled.

The line of relative strength hit new highs, reflecting the outperformance of AAPL shares against the S&P 500.

Berkshire Hathaway bought another 3.9 million shares in the second quarter for a total of nearly 895 million shares.

That stake in the iPhone maker was worth $122.3 billion as of June 30, but Apple’s stock has risen sharply since then. AAPL stock accounted for 41% of Berkshire’s portfolio at the end of Q2.

Tesla stock

Tesla shares rose 0.2% to 297.10 on Wednesday, but retreated after retracing the 200-day moving average intraday. Shares of TSLA had an aggressive entry at 314.87, just above near-term highs. The EV giant is far from the official buy point of 402.87.

Tesla stock prices have adjusted for the 3-for-1 stock split that happened overnight.

Shares of TSLA rose 2% before the open, suggesting a fresh move above the 200-day line.

Market Rally Analysis

After falling below the 21-day moving average on Monday, the major indexes are now hitting resistance at this short-term level. The small-cap Russell 2000 is back above its 21-day line.

While the major indexes may be wobbly on Thursday on Nvidia, Salesforce, Snowflake and other big gains, the market’s rally appears to be waiting for Fed chief Powell’s speech.

Stocks that have broken out or recovered on bullish signals over the past few days continue to hold up well. But many of them are extended.

Meanwhile, the recent market pullback is allowing many stocks, such as Apple, to rally.

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What should we do now

There are stocks that have flashed buy signals in recent days, particularly in the energy and EV providers space. However, the market’s rally is in retreat, hitting near-term resistance. Powell’s speech is likely to be a market catalyst. So investors should be careful about adding large exposure until then.

But be prepared. If the market’s rally picks up after Fed chief Powell’s comments, a number of buying opportunities could come to life. So an up-to-date watchlist will be key. If the market goes down, investors should be ready to short.

Read it The big picture every day to stay in sync with market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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