Futures: Apple Chipmaker In Buy Area; Tesla Runs Late On GM

Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures. DocuSign earnings and a Tesla charging deal with General Motors (GM) were in focus overnight.

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The stock market rally showed modest to solid gains Thursday on the major indexes, with the Nasdaq rebounding somewhat after Wednesday’s downside reversal. Meanwhile, small caps and midcaps fell slightly, coming well off lows and giving up just a portion of their recent advances.

Dow Jones giant Boeing (BA), Cardinal Health (CAH), Floor & Decor (FND) and TG Therapeutics (TGTX) are in buy areas.

So is Taiwan Semiconductor Manufacturing (TSM). Taiwan Semi is the world’s largest chip foundry, making semiconductors for Nvidia (NVDA), Apple (AAPL), Qualcomm (QCOM) and many others. Taiwan Semi reports May sales early Friday.

Tesla (TSLA) extended a record streak of up days in high volume Thursday. After the close, news broke that General Motors will use Tesla’s Superchargers and charging technology. That follows a similar deal with Ford Motor (F) announced in late May. TSLA stock and GM both rallied in extended trade.

DocuSign (DOCU) reported fiscal Q1 results late Thursday. DOCU stock rose solidly in extended trading on its earnings and guidance. The digital documents and e-signature software firm is working on a 69.45 bottoming-base buy point, retaking its 200-day line in late May. DocuSign stock rose 2.2% to 58.48 on Thursday.

Tesla stock and Nvidia are on IBD Leaderboard. BA stock was added to SwingTrader Thursday, joining FND stock. Floor & Decor was Thursday’s IBD Stock Of The Day.

Dow Jones Futures Today

Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures edged lower and Nasdaq 100 futures tilted higher. Tesla stock is a major S&P 500 and Nasdaq 100 member.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

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Stock Market Rally

The stock market rally gradually improved throughout Thursday, with indexes closing near session highs.

The Dow Jones Industrial Average rose 0.5% in Thursday’s stock market trading. The S&P 500 index climbed 0.6%. The Nasdaq composite popped 1.0%. The small-cap Russell 2000 fell 0.4%.

U.S. crude oil prices fell 1.7% to $71.29 a barrel.

The 10-year Treasury yield sank 7 basis points to 3.71%.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) rebounded 1.3%. The VanEck Vectors Semiconductor ETF (SMH) rose 1.2%. TSM stock is a huge SMH component, along with Nvidia.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rose 1% and ARK Genomics ETF (ARKG) dipped 0.1%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) dipped 0.2% and the Global X U.S. Infrastructure Development ETF (PAVE) edged down 0.1%. U.S. Global Jets ETF (JETS) ascended 0.6%. SPDR S&P Homebuilders ETF (XHB) fell 0.35%, with FND stock a notable XHB holding. The Energy Select SPDR ETF (XLE) gave up 0.4% and the Health Care Select Sector SPDR Fund (XLV) climbed 0.6%.

The Financial Select SPDR ETF (XLF) gave up 0.1%. The SPDR S&P Regional Banking ETF (KRE) retreated 1.2%.

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Stocks In Buy Areas

Boeing stock rose 2.9% to 218.11 on Thursday, moving above various short-term highs and a trendline, offering an early entry. Volume was robust. BA stock is closing in on a 221.33 buy point from a flat base going back almost four months. That followed a powerful move for the Dow aerospace giant from late September to mid-February.

CAH stock climbed 2.5% to 85.33, rebounding from the 21-day and 10-week lines and breaking a short downtrend in a little consolidation just above a five-month base cleared decisively in early May. Early Thursday, Cardinal Health slightly raised the midpoint of its 2023 earnings guidance and announced a $3.5 billion buyback of CAH stock.

TGTX stock bounced 7.3% to 28.98, moving off the 10-week line, reclaiming the 21-day and breaking a downtrend. Shares nearly doubled from a late March breakout to early March before pulling back. TG Therapeutics is still losing money. Sales skyrocketed 286% in the latest quarter, but only to $7.8 million. Investors may get some indication of monthly sales next week.

FND stock fell 1.2% to 96.55 in light volume Thursday. But that followed a 5.1% jump Wednesday in heavy trade, reclaiming the 50-day line. The flooring retailer is still actionable from that. Floor & Decor stock also has a 101.49 cup-with-handle buy point.

TSM stock edged down 0.35% to 99.94, still above a 98.99 consolidation buy point, according to MarketSmith analysis. Taiwan Semi initially jumped into a buy zone on May 25, following Nvidia’s blowout earnings and guidance. On Monday, Taiwan Semi stock fell to nearly the 21-day line before slashing losses. Taiwan Semiconductor will report May sales early Friday.

Meanwhile, Nvidia stock rose 2.8% to 385.10, continuing to trade in a range after the May 25 earnings gap-up. NVDA stock does not currently have a buying opportunity, though a tight pattern or pullback to, say, the 21-day line could provide chances to add shares.

Tesla Stock

Tesla stock rallied 4.6% on Thursday to 234.86, the highest in seven months. The EV giant has now rallied for 10 sessions, the longest win streak since 11 sessions in January 2021. But it’s a record nine straight gains in above-average volume. TSLA stock is increasingly extended from a 207.79 buy point.

Tesla-GM Charging Deal

In the Thursday night Tesla-GM deal, General Motors will gain access to 12,000 SuperChargers via an adapter next year. GM also will begin using a charging port used by Tesla starting in 2025 models. The deal will offer a boost to Tesla’s revenue, but also substantially boost charging options for GM and Ford as they ramp up EV production.

Tesla stock jumped more than 5% late in active trade.

GM stock climbed 4% overnight, signaling a move back above the 200-day line.

Market Rally Analysis

The stock market rally had another constructive day, with Wednesday’s losers generally finding support while recent big winners resisted significant retreats.

The Nasdaq bounced from above its 10-day line after leading Wednesday’s retreat. But it’s unclear if it can make a big move without a longer pause or pullback. The composite and the Nasdaq 100 are no longer extended from their 50-day lines, but it wouldn’t take much to look stretched once again.

The S&P 500 is trading right at 2023 highs and just below a 52-week peak. The Dow Jones nudged past last week’s highs and is not too far from the year’s best levels.

Overall, winners and losers were roughly even, after advancers decisively won in the prior two sessions.

The Russell 2000 and S&P MidCap 400 held nearly all of Wednesday’s strong gains.

The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) rose 0.85%, still right around 52-week highs.

The Invesco S&P 500 Equal Weight ETF (RSP) eked out a tiny gain after back-to-back 0.7% wins.

Ideally, the Nasdaq and many leading tech stocks would pause or pull back modestly for a time, while other sectors take over amid wider breadth. There are signs of that over the past week, but that may not last.

Leadership may be rotating, or it may be expanding. Right now there aren’t a lot of stocks flashing buy signals.

Software took a pounding Wednesday, though the chart damage depended on whether the individual names were extended or were recent breakouts hovering around buy points. Some of these names may quickly recover, but others may not. Chipmakers, which generally fared better Wednesday, have a number of stocks showing constructive action.

Housing stocks generally are showing strength. Travel is on the move, but not many stocks look actionable right now. BA stock is among several aerospace names showing strength, along with machinery and industrial plays generally. Some biomed and medical product makers are doing relatively well.

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What To Do Now

The stock market rally is in a confirmed uptrend, with the Nasdaq and S&P 500 at 2023 highs and some signs of improving breadth. So investors can be looking to add exposure, though buying opportunities are limited.

A number of stocks from a wide variety of sectors are setting up or potentially doing so, by coming up to buy points and pulling back bullishly. Keep your watchlists up to date.

Adjust to market conditions and leadership as they are, not what you want them to be.

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.

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