Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures, with Fed chief Jerome Powell set to deliver his much-anticipated Jackson Hole policy speech on Friday morning.
The stock market rally had a strong session on Thursday, with major indexes rising again above a key near-term level despite concerns that Fed chief Powell will signal the need for tighter monetary policy in the longer term.
Ultra beauty (ULTA) was actionable on Thursday but took gains after the close. ULTA shares rose modestly on strong results and guidance. Shares closed up 1.75% on Thursday at 419.25, clearing buy points at 417.08 and 418.89.
working day (WAY) and Confirm holdings (AFRM) is also reported. Shares of WDAY jumped 10% overnight but were still below the 200-day line. AFRM shares fell more than 10%. heavy losses and weak leadership.
Axcelis and STLD shares joined IBD ranking in Thursday. GFS and Steel Dynamics shares are new players SwingTrader. ACLS shares are at IBD 50. Shares of Steel Dynamics are Thursday IBD Stock of the Day.
The video embedded in the article discusses Thursday’s market rally and what to expect from Fed boss Powell. He also analyzed shares of Axcelis, Steel Dynamics and PODD.
Fed chief Powell’s speech is seen hawkishly
Fed chief Powell, who is scheduled to speak at 10 a.m. ET Friday at the Jackson Hole Symposium, likely won’t give much insight into the size of the Fed’s September rate hike. Instead, it is expected to highlight longer-term inflationary pressures. This would include chronic labor shortages, but perhaps also persistently higher energy and commodity prices, rising trade barriers and limited housing supply.
All of this suggests that the Federal Reserve will need to raise interest rates significantly — and keep them there for the foreseeable future. Federal Reserve Chairman Powell may even hint that it will take a recession or a long period of lower growth for unemployment to rise to limit inflationary pressures on wages.
That could mean weak demand, a strong dollar and persistently higher yields on government bonds. This could weigh on profitability and valuations of companies, especially the highly valued growth.
Just a few weeks ago, markets saw interest rate hikes cooling off quickly after September and perhaps reversing downward sometime next year.
Dow Jones futures today
Dow Jones futures were down 0.2% at fair value. S&P 500 futures fell 0.2 percent and Nasdaq 100 futures fell 0.2 percent.
Before Powell’s speech and the opening bell, the Commerce Department will release its July earnings and spending report. This report includes the Personal Consumer Expenditure Index, the Fed’s favorite gauge of inflation.
Stock market rallies
The stock market rally had a solid session, especially for technology and small caps, returning above some key levels despite mixed earnings and guidance from some notable companies.
The Dow Jones Industrial Average rose 1% on Thursday Exchange Tradingeven with Salesforce.com (CRM) falls solidly on revenue. The S&P 500 jumped 1.4%. The Nasdaq composite jumped 1.7%. The small-cap Russell 2000 advanced 1.55%.
U.S. crude oil prices fell 2.5 percent to $92.52 a barrel.
The yield on the 10-year Treasury note fell 8 basis points to 3.03% after rising 23 basis points over the previous four sessions.
Avg the best ETFsInnovator IBD 50 ETF (FFTY) rose 1.7%, while the Innovator IBD Breakout Opportunities ETF (BOOTH) rose 1.1%. iShares Expanded Tech-Software Sector ETF (IGV) gained 0.8%, although CRM shares are a large component. VanEck Vectors Semiconductor ETF (SMH) jumped 3.4%.
SPDR S&P Metals & Mining ETF (XME) jumped 2.6%, with STLD shares a major holding. SPDR S&P Homebuilders ETF (XHB) grew by 1.8%. Energy Select SPDR ETF (XLE) grew by 0.8%. Select Healthcare Sector SPDR Fund (XLV) advanced by 1.1%.
Stocks in Buy Zones
Shares of ACLS exploded on huge volume, jumping 13% to 81.73. Shares of Axcelis first broke above the bearish trend handle, then crossed the official cup handle buy point of 79.93, according to MarketSmith analysis. The line of relative strength hit new high, bullish signal on breakout as ACLS stock outperforms S&P 500.
Shares of GFS rose 6.8% to 64.50 in heavy trade, snapping a downtrend. The official handle point of purchase is 66.06 as part of a very deep consolidation similar to a double bottom. GlobalFoundries shares went public in October 2021.
Shares of Steel Dynamics rose 6.6% to 86.76, breaking the downtrend on the handle and the official 86.04 cup-with-handle point of purchase. The volume was well above normal. Nucor (NUE) and Commercial metals (CMC) also broke the downtrend handle, but in a smaller volume.
On Wednesday, Cleveland-Cliffs (CLF) announced a price increase of at least $75 per ton for carbon steel products.
Shares of PODD rose 3.35% to 282.86, clearing a buy point of 276.48. Volume was slightly below normal, but shares of Insulet recovered from their 21-day line on Wednesday in above-average trading.
RPM shares rose 5.6% to 97.83, clearing a 95.80 entry from a “handle” that needed another day to be correct. The RS line for RPM stock hit a new high.
Market Rally Analysis
Fed boss who? The stock market rally came in strong Thursday despite Friday’s big news.
The Dow Jones, S&P 500 and Nasdaq composite returned above their 21-day moving averages after hitting resistance there in the previous two sessions. The small-cap Russell 2000 and S&P Midcap 400, which reclaimed the 21-day line on Wednesday, are targeting the 200-day line.
Even better, a growing number of stocks are flashing buy signals, and across sectors. The moves in shares of ACLS, Steel Dynamics and others reflected the handles that developed or extended during the pullback of the market rally.
Earlier breakouts still work.
So there is a lot of positive action. But it comes right before Powell’s speech.
Powell may or may not be particularly hawkish, but ultimately the market’s reaction is what matters. The good news is that markets are bracing for hawkish talk.
Fed boss Powell could push the major indexes higher, giving a turbo boost to top stocks and potential leaders that are establishing themselves. But a negative reaction to Powell’s speech could push the market’s rally sharply lower, erasing strong gains in gainers.
What should we do now
Well, now we wait. Thursday’s breakouts and buy signals certainly gave investors reasons to take some new positions. If you decided that discretion was the better part of valor in Powell’s speech, that’s OK. If the market continues to advance in the coming days, a number of setups will soon become buy signals.
Create your watchlists. Be sure to cast a wide net to find leading stocks from a range of industries. Pay special attention to a select group in or near purchasing areas.
Be ready to act on Friday. A market rally may hit Powell’s speech, but at some point you may want to add or reduce exposure.
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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