Dow Jones futures rose slightly Thursday morning, while S&P 500 futures and Nasdaq futures were little changed. Tesla CEO Elon Musk offered to buy 100% of Twitter, while Dow components UnitedHealth and Goldman Sachs headlined premarket earnings.
The stock market rally rebounded Wednesday, but in lower volume than the prior session. The major indexes are down for the week and off sharply in April.
FTNT stock, Marriott International, Raymond James Financial, Merck and Ulta Beauty are five non-commodity plays to watch. Fortinet, Marriott and RJF stock are working on handles, right around aggressive entries. Merck stock could be forming a handle, while ULTA stock broke out past a buy point.
Among megacaps, Apple and Tesla stock are trying to rise within handles.
Musk Offers To Buy Twitter
On Thursday morning, Elon Musk offered to buy out Twitter for $54.20 a share, saying "I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company."
Twitter's board said it will "carefully review the proposal."
TWTR stock closed Wednesday at 45.85 a share. Musk belatedly disclosed a 9.1% stake on April 4, sending shares soaring 27%. TWTR stock rose as high as 54.57 the following session as Twitter said Musk would join its board of directors and agree to limit his TWTR stake to 14.9%. But last weekend, Twitter said Musk would not join the board.
TWTR stock popped 6% to nearly 49, but off premarket highs.
Tesla stock fell modestly, perhaps on concerns that Musk will be distracted with yet another company.
Key Earnings
UnitedHealth reported better-than-expected first-quarter results, kicking off health insurer earnings. UNH stock rose a fraction early Thursday. It's already slightly extended from a buy zone, along with rival Anthem. Centene and Molina Health are in buy zones.
Wells Fargo reported mixed Q1 results, while Goldman Sachs, Morgan Stanley and Citigroup beat. WFC stock fell modestly in premarket trading, while Morgan Stanley, Goldman and Citigroup rose. All were little changed Wednesday after JPMorgan Chase reported mixed Q1 results.
Taiwan Semiconductor, the chip foundry giant, easily beat Q1 views and gave upbeat guidance. TSM stock rose modestly.
Tesla and ANTM stock are on IBD Leaderboard. FTNT stock is on IBD Long-Term Leaders. Tesla and Fortinet stock are on the IBD 50. Raymond James Financial was Wednesday's IBD Stock Of The Day and added to SwingTrader.
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Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value, with UNH stock and Goldman both Dow components. S&P 500 futures tilted lower and Nasdaq 100 futures edged higher.
Crude oil prices fell more than 1%.
The 10-year Treasury yield fell 2 basis points to 2.67%.
The European Central Bank confirmed it will end bond purchases in Q3, citing soaring inflation. That could pave the way for ECB rate hikes.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Stock Market Rally
The stock market rally started Wednesday little changed but steadily improved throughout the session.
The Dow Jones Industrial Average rose 1% in Wednesday's stock market trading. The S&P 500 index climbed 1.1%. The Nasdaq composite jumped 2%. The small-cap Russell 2000 leapt 1.9%.
The producer price index showed wholesale inflation surged 11.2% in March vs. a year earlier, a new record. That follows Tuesday's report showing consumer inflation hitting a 40-year high of 8.5%.
But the 10-year Treasury yield fell for a second straight day, down 4 basis points to 2.69%.
U.S. crude oil prices popped 3.6% to $104.25 a barrel.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF climbed 2.4%, while the Innovator IBD Breakout Opportunities ETF advanced 1.4%. The iShares Expanded Tech-Software Sector ETF rose 2.2%. The VanEck Vectors Semiconductor ETF bounced 2.4%.
SPDR S&P Metals & Mining ETF jumped 4.5% and the Global X U.S. Infrastructure Development ETF added 1.8%.
U.S. Global Jets ETF soared 5.3%. Airlines and other travel stocks rebounded on Delta Air Lines earnings results and guidance. DAL stock and American Airlines moved back above their 200-day lines.
SPDR S&P Homebuilders ETF climbed 1.7%. The Energy Select SPDR ETF rose 1.5%. The Financial Select SPDR ETF was flat, with JPMorgan, Goldman, Wells Fargo and Citigroup all major components. The Health Care Select Sector SPDR Fund edged up 0.5%. UNH stock and Merck are major XLV holdings.
Reflecting more-speculative story stocks, ARK Innovation ETF ran up 3.2% and ARK Genomics ETF 2.6%. Tesla stock is the No. 1 holding across 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 353.08 handle buy point. On Wednesday, shares came right up to a short downward-sloping trend line in the handle. Moving above that would offer an early entry. Fortinet stock has had wild moves in its consolidation, but has traded tightly in the past few weeks. While growth stocks have struggled, cybersecurity is one area that's done reasonably well. Palo Alto Networks and Qualys are breaking out and private equity continues to buy up various players.
MAR stock jumped 7.5% to 175.54 in above-average volume, ramping back above its 50-day line as travel stocks rebounded on Delta earnings. Marriott stock and a few other hotel plays made bullish moves in late March, but then fell sharply. MAR stock now has a 179.40 cup-with-handle buy point. Shares 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 an early entry. Raymond James has an official cup-with-handle buy point of 114.10, according to MarketSmith analysis.
MRK stock edged up 0.6% to 86.13, following two down sessions. Monday's downside reversal ended a steady move up from late February for the Dow Jones component. Merck stock has a cup base with a 91.50 buy point, but appears to be working on a handle.
ULTA stock rose 2.4% to 415.50, closing above a 408.83 cup-with-handle buy point after trying to break out in the prior two sessions. The relative strength line has been rising sharply this month, hitting 52-week highs in recent sessions.
Apple, Tesla Stock
Apple stock rose 1.6% to 170.40, rebounding from its 50-day and coming up to around its 21-day line. The iPhone giant has a 179.71 handle buy point. Arguably, AAPL stock is breaking a downtrend in that handle, but investors might want to see a little more strength.
Tesla stock climbed 3.6% to 1,022.37, moving above its 21-day line. Shares are working on a 1,152.97 cup-with-handle buy point. At 10.7% above its 50-day line, this is not an attractive early entry for TSLA stock. Highly valued growth stocks had a strong bounce Wednesday, but are still struggling overall. Meanwhile, Tesla Shanghai has been shut since March 28 due to Covid restrictions and could be on hold for several more weeks.
TSLA stock fell 2% early Thursday on the Musk-Twitter news.
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Market Rally Analysis
The stock market rally rebounded Wednesday, paring weekly losses. The Dow Jones and S&P 500 index reclaimed their 50-day lines, but are below their 200-day averages.
The Nasdaq and Russell 2000 are still below their 50-day lines, though the small-cap index is getting close.
Even with their 2% gains, the Nasdaq and Russell 2000 had inside days vs. Tuesday's range. Meanwhile, NYSE and Nasdaq volume fell vs. Tuesday, after two straight distribution days.
Growth stocks had a strong session, but with a few exceptions such as FTNT stock, Apple and Tesla, they are generally struggling with damaged charts.
Even more than with the major indexes, growth stocks need to show sustained gains before investors get excited.
The commodity sector remains strong, along with defense stocks and medicals such as UnitedHealth and MRK stock. Travel plays are trying to regain momentum, with MAR stock flashing an early entry.
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What To Do Now
When the major indexes have a solid gain, even if those moves don't notably change the charts, investors will start speculating about possible gains. But one strong day in a bad or choppy market is neither surprising nor especially encouraging.
The market rally remains under pressure.
Investors should have modest overall exposure at most, largely or entirely focused on commodity, medical and defense stocks. Aside from those strong sectors, there is very little broad-based strength.
If you do venture beyond those areas, keep positions very small, and definitely don't get too concentrated into these areas.
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.
