Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures, with Cisco earnings and BBBY stock news in focus.
The stock market rally pulled back on Wednesday amid key resistance. Major indexes initially pared losses after the Fed released minutes from its July 27-28 meeting, but faded again by the close.
An apple (AAPL) cleared a trendline entry, with megacap stocks technically viable before an official breakout.
Lithium giant Sociedad Kimica and Minera de Chile (SQM), a chip design firm Synopsis (SNPS) and tech laggard Dow Jones Cisco Systems (CSCO), reported late Wednesday. Shares of SNPS edged higher and Cisco shares advanced in extended action on strong earnings and guidance. SQM earnings are still there.
BJ’s Wholesale (BJ), rival of Costco Wholesale (PRICE), reports ahead of Thursday’s open. BJ’s stock is not far from a buy point, while Costco is right at a buy point.
BBBY shares have belatedly collapsed
Meanwhile, a recently revived stock of memes Bed Bath & Beyond (BBBY) was down 19% in late trading. Shares of BBBY rose 12% to 23.08 in Wednesday’s session, but closed near the session’s bottom after hitting a five-month high of 30 intraday.
Shares jumped 29% on huge volume Tuesday as GameStop (GME) Chairman Ryan Cohen revealed that he still owns BBBY shares along with significant out-of-the-money options.
But late Wednesday, Cohen revealed his intention to exit BBBY shares altogether.
Shares of GME, the original meme stock, retreated overnight after falling 4% on Wednesday. AMC Entertainment (AMC), another meme stock, fell 14% in the regular session.
Federal Reserve policymakers at a meeting in late July agreed that further rate hikes were needed, according to recently released Fed minutes.
The reduction in commodity prices, including energy, is not enough, according to the minutes from the Fed, with policymakers stressing that inflationary pressures are broad-based. But they also worried about slowing the economy too much.
They did not seem concerned that financial conditions have eased since the June meeting, including lower government bond yields and a stock market rally.
Generally, The Fed minutes did not bring any hawkish surprisesslightly easing expectations for a rate hike.
Still, markets now see a 64.5% chance of a 50 basis point Fed rate hike on September 21. Earlier Wednesday, ahead of the release of the Fed minutes, odds were roughly evenly split between a half-point move or a third straight 75-bps move.
Costco stock included IBD ranking and SwingTrader. SNPS shares included IBD long-term leaders. Synopsys and SQM stocks are at IBD 50.
Dow Jones futures today
Dow Jones futures lost about 0.1% to fair value. S&P 500 futures fell 0.15 percent and Nasdaq 100 futures fell 0.2 percent. CSCO stock is a member of the Dow Jones, S&P 500 and Nasdaq composite.
Remember this night action in Dow futures and elsewhere does not necessarily become an actual trade in the next regular Stock Exchange session.
Join IBD’s experts as they analyze active stocks on IBD Live’s stock market rally
Stock market rallies Wednesday
The stock market rally saw losses among the major indexes after a mixed outing on Tuesday.
The Fed’s minutes ultimately didn’t change the major indexes much.
July retail sales were unchanged, the Commerce Department said before Wednesday’s open. This was a bit below par. But sales excluding autos and gasoline rose 0.7 percent, bolstering expectations that the U.S. economy returned to growth in the third quarter.
The Dow Jones Industrial Average fell 0.5% on Wednesday Exchange Trading. The S&P 500 lost 0.7%. The Nasdaq Composite dropped 1.25%. The small-cap Russell 2000 fell 1.7%.
U.S. crude oil prices rose 1.8 percent to $88.11 a barrel, ending a three-day losing streak. U.S. crude oil and gasoline inventories fell sharply in the past week, much more than expected. Gasoline demand in the past four weeks has hit a 2022 high.
The yield on the 10-year Treasury note jumped 10 basis points to 2.89%. This is a four-week high, but still below the 50-day line.
Avg the best ETFsInnovator IBD 50 ETF (FFTY) fell just over 1%, while the Innovator IBD Breakout Opportunities ETF (BOOTH) shed 0.5%. iShares Expanded Tech-Software Sector ETF (IGV) fell by 1.7%. VanEck Vectors Semiconductor ETF (SMH) declined by 2.15%. SNPS shares are in the IGV and SMH ETFs.
SPDR S&P Metals & Mining ETF (XME) fell 2.7%, and the Global X US Infrastructure Development ETF (PAVING) sank 1.1%. US Global Jets ETF (STREAMS) fell by 2.5%. SPDR S&P Homebuilders ETF (XHB) lost 1.7%. Energy Select SPDR ETF (XLE) gained 0.8%, and the Financial Select SPDR ETF (XLF) fell by 0.5%. Select Healthcare Sector SPDR Fund (XLV) fell by 0.6%.
Reflecting the more speculative stocks of history, the ARK Innovation ETF (ARKK) tumbled 5.3%, and the ARK Genomics ETF (ARKG) 5.1%.
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Shares of Apple, a member of the Dow Jones, S&P 500 and Nasdaq composite, rose 0.9 percent to 174.55 on Wednesday. AAPL shares have moved above a downtrend line that dates back to early January. This offers an opportunity to buy.
The official one point of purchase is 183.04, acc MarketSmith analysis. Investors could view Apple’s stock chart as uncomfortable double bottom base with 179.71 entries.
Shares of AAPL rose on volume that was slightly above normal. But most of its strong uptrend over the past two months has been trading below the average. The tech titan may need a break. A hold would create a lower buy point and allow the moving averages to catch up.
Apple stock is outperforming other mega-caps and the broader market: It’s line of relative strengththe blue line in the charts provided, has been reaching record highs for several weeks.
Earnings from SQM were not yet out as of Wednesday evening. Shares fell 1.2% to 104.42 in the regular session on Wednesday after falling 5.1% on Tuesday in a downward reversal. SQM shares are working on a 115.86 buy point after reaching 99.84 early entry last week from a too-low handle. A proper handle would be perfect for SQM stock.
Lithium Rivals Albemarle (ALB) and Livent (LTHM) both reported strong earnings earlier this month, with industrial giant Albemarle once again sharply raising guidance.
Synopsys earnings beat views while the leadership was also strong. Shares in SNPS rose in late trading. Shares fell 1.2 percent to 381, holding above the official buy point of 377.70. Synopsys shares have already cleared some early records in late July and are still well above their 50-day line. If the stock stops near the top of the base, it could create a buying opportunity.
Rival Cadence Design Systems (CDNS), also above an official buy point, having rallied of late.
Cisco topped the outlook for the fiscal quarter and targeted for Q1. Shares of CSCO rose steadily in extended trading. Shares were down 0.2% at 46.66 on Wednesday. Cisco shares have rallied modestly from early July lows, but are well below their bearish 200-day line.
Before Thursday morning’s earnings, BJ’s shares lost 0.2% to 69.13 on Wednesday, not far from a 71.10 buy point. Shares of COST rose 0.6% to 556.32 on Wednesday, holding above a 552.81 cup-handled buy point.
Market Rally Analysis
A day after the S&P 500 settled just below its 200-day moving average, the major indexes retreated on Wednesday. Minutes from the Fed moved stocks, but they ended up closing roughly where they were at 2:00 PM ET.
Small caps and highly valued growth stocks were the biggest losers, but declines were broad-based outside of energy.
The Dow Jones held support at its 200-day line. The Russell 2000 is breaking this key level. The S&P 500 and Nasdaq have fallen short.
The market’s rally has come a long way since its June lows, with the 200-day line a clear area of resistance. So this is an obvious time and place for the major indices to stop or pull back.
For now, the market rally seems reluctant to give up much ground. Arguably, a little more backtracking would be constructive. This would allow Apple and other stocks that have climbed the right side of the bases to rest and form handles.
But the market will do what it will do. Indices can quickly break through the 200-day line or pull back sharply to the 50-day line, or worse.
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What should we do now
Stocks tend to follow market and industry trends. That’s why it’s so important to pay attention to the overall market, adding exposure to confirmed uptrends and moving largely or entirely to cashing in on corrections.
As the market hits resistance at the 200-day line, investors should wait before adding to net exposure. They could consider taking some partial profits.
But keep working on the watchlists. A break in the market that refreshes can create great opportunities.
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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