Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures. trade desk (TTD) plummeted overnight based on guidance.
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The stock market rally has finally reversed, with the S&P 500 and Nasdaq Composite on long winning streaks. Government bond yields have soared due to the failure of the 30-year government bond auction. Federal Reserve Chairman Jerome Powell followed suit, saying he was “not confident” the central bank was doing enough to curb inflation.
Thursday also saw a number of earnings gap ups, including: Duolingo (Duor) and Affirm Holdings (AFRM).
Nvidia (NVDA) broke out on Thursday morning, but pared its gains. tesla (TSLA) fell from key levels.
On the other hand, China lee auto (Lee) reported strong earnings, but the EV and battery giant BYD (BYDDF) has launched its first off-road vehicle through its new F brand. LI stock and BYD both fell on Thursday, but were close to early entries.
Overall, the market decline is likely constructive, with major indexes and major stocks holding their breath. Palantir Technologies (PLTR) and mercadolibre (Meri) is moving closer to forged handles after recent earnings disparities.
The Trade Desk’s earnings and sales were slightly ahead of its third-quarter outlook after the close. However, the digital advertising platform’s fourth quarter revenue was weak. TTD stock plunged more than 25% in overnight trading. The stock fell 2.6% in Thursday trading, falling below its 50-day line.
Meanwhile, ANET stock fell steadily in extended trading, although it was off its after-hours low. late thursday, Arista Networks (ANET) reported 2024 revenue growth slightly below consensus at the Cloud and AI Innovators event.
Nvidia stock is on IBD Leaderboard. Shares of Li Auto, Nvidia, Trade Desk, MercadoLibre, Arista Networks, and DUOL are listed. IBD50.
Dow Jones futures today
Dow Jones futures rose 0.1% to fair value. S&P 500 futures trended higher, while Nasdaq 100 futures fell 0.1%.
The yield on the 10-year US Treasury note fell slightly to 4.61%.
Please note that overnight trades such as Dow futures do not necessarily translate into actual trades in the next regular stock market.
IBD experts analyze leading stocks and markets on IBD Live.
stock market rise
Stock market gains receded, with the S&P 500 snapping an eight-session winning streak and the Nasdaq falling for the first time in 10 sessions.
The Dow Jones Industrial Average fell 0.65% in stock market trading on Thursday. The S&P 500 index fell 0.8%. The Nasdaq Composite fell 0.9%.
The index stalled in the afternoon on weak investor demand for the 30-year Treasury auction, and yields soared. Fed Chairman Jerome Powell said policymakers are committed to getting inflation back to 2%, but he is “not confident” they have done enough to achieve that goal. But Powell also gave no indication that the Fed plans to raise rates again, reiterating that the Fed will act “with caution.”
The market sees a low chance of rate hikes in the next few meetings.
At the very least, the bond auctions and Fed Chairman Jerome Powell may have given investors an excuse to take profits.
The Nasdaq and S&P 500 are just below their October highs, and the Dow Jones is right around that level. It’s a natural place to meet resistance.
Ideally, the major indexes would hold their 50-day lines and rise after a few days.
Breadth, however, was weak, with decliners outnumbering advancers almost 3-to-1 on the NYSE and Nasdaq.
The small-cap Russell 2000 fell 1.5%.
Invesco S&P 500 Equal Weight ETF (RSP) fell 0.85%.
The First Trust Nasdaq 100 Equal Weight Index ETF (QQEW) fell 0.9% and hit the 50-day resistance again.
Market breadth remains a challenge, but market leadership remains strong. Technology, especially software, is doing well. But so do many aerospace companies, some financial companies, and some discount retailers.
DUOL stock, affirmative, transdigm (TDG) and software manufacturers vertex (Varks) was the latest to have a revenue gap. DUOL stock and Vertex appear to be extended beyond Thursday. AFRM stock closed between entries and TransDigme closed in buy range, but investors may want to wait a few days to see if the stock maintains Thursday’s gains.
The 10-year Treasury yield rose 12 basis points to 4.63%, again above its 50-day line. Plummeting U.S. Treasury yields have been the main driver of the market recovery.
Crude oil futures rose 0.5% to $75.74 per barrel.
ETF
Among growth ETFs, iShares Expanded Technology Software Sector ETF (IGV) gave up 0.8%. VanEck Vectors Semiconductor ETF (SMH) fell 0.2%. NVDA stock is his No. 1 holding in SMH.
ARK Innovation ETF (Arkku) fell 3.1%, ARK Genomics ETF (arcg) fell 4.3%. TSLA stock remains a major component of Ark Invest’s overall ETF portfolio.
SPDR S&P Metals & Mining ETF (XME) fell 0.8%. SPDR S&P Home Builders ETF (XHB) fell 1.3%. Energy Select SPDR ETF (XLE) fell 0.3%, while the Healthcare Select Sector SPDR Fund (XLV) fell 2.1%.
Industrial Select Sector SPDR Fund (XLI) fell 0.2%. Financial Select SPDR ETF (XLF) fell 0.4%.
Top 5 Chinese stocks to watch right now
nvidia stock
Nvidia stock reached 482.30 just before noon, clearing a double-bottom buy point at 476.09. However, the stock fell, closing just 0.8% lower at 469.59. The previous day, NVDA stock broke above the downtrend line.
Thursday was the first day in more than two months that stocks rose on above-average volume. But some of that is offset by a weaker closing price.
The relative force line has updated its highest value. The RS line (the blue line on the chart provided) tracks the stock’s performance relative to the S&P 500 index. It is a bullish sign when the RS line makes new highs at or before a stock’s breakout. That’s why MarketSmith marks such stock charts with a blue dot at the end of the RS line.
According to various sources, NVIDIA plans to launch new chips for the Chinese market after the US government restricted the export of the company’s high-end AI chips.
mercadolibre stock
MELI stock fell 1.9% to 1,341.38, a much-needed shakeout. Since Friday, MercadoLibre stock should gain a handle on a cup basis, giving it a buy point of 1,398.15. MELI stock rose 15.6% last week after the Latin American e-commerce and payments giant reported strong financial results.
palantir stock
PLTR stock fell 1.1% to 18.29 on Thursday. It has only been two days since the stock price became available for handling on the daily chart. However, Palantir stock is on track for weekly trading with a buy point of 19.17. Last week, the data analytics software maker jumped 25% in revenue, clearing several important milestones.
tesla stock
Tesla stock fell 5.5% to 209.98, down from its 200-day line. Perhaps this move created a short selling opportunity Thursday morning, but it probably doesn’t anymore.
HSBC initiated a “reduce” rating on TSLA stock, with a price target of 146 points.
As expected, Tesla has raised the prices of its Model 3 and Model Y long-range models in China. However, the price increase was very small. Tesla also left the door open to remove these token increases, presumably with the aim of bringing demand forward.
President Joe Biden on Thursday supported the United Auto Workers union’s efforts to unionize Tesla and other nonunion U.S. factories. Toyota (TM).
China EV stocks
Li Auto reported better-than-expected third-quarter profits, with EPS increasing significantly each quarter. Sales soared 262% for his fourth consecutive quarter of accelerating growth. The hybrid SUV maker is expected to post record deliveries in the third quarter as well, hinting at some pricing pressure.
LI stock fell 4.3% to 37.65 on Thursday. The stock rose 8.4% on Monday, rebounding above its 50-day line. Investors could use the day’s high of 40.12 as an early entry. Li Auto’s official buying point is 47.33 points.
BYD’s new Fang Cheng Bao brand has officially launched its first vehicle, the off-road Bao 5 hybrid. Prices start at RMB 289,800 ($39,780), which is cheaper than expected. The Bao 5 will begin deliveries this month alongside the BYD Song L crossover. BYD is working hard to reach 3 million vehicle deliveries in 2023, and will likely usurp the all-electric vehicle (BEV) crown from Tesla in the fourth quarter.
On Thursday, BYD stock fell 1% to 31.09, a penny below its 50-day line. Although the stock price is far from the consolidated buy point of 36.27, investors could use the October 18 high of 32.76 as an early entry. BYD stock is trading very closely on the weekly chart.
Timing the Market with IBD’s ETF Market Strategy
what to do now
Thursday’s pullback is reason enough for investors to gradually add exposure to avoid exposure.
There are still plenty of reasons to be bullish. A modest decline would give the major indexes a breather and allow major stocks like Palantir to take control.
But don’t bet on that scenario. Wait for market movements to unfold.
Work on your watchlist. Over the past few days, some stocks have extended trading, while others are now executable or moving into position. You want to keep a close eye on a select group of names, tracking a broad range of stocks that exhibit relative strength.
Read The Big Picture every day to stay on top of market direction and key stocks and sectors.
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