S&P 500, Dow Jones, and Nasdaq futures all increased Friday morning as the dollar fell and tech stocks DocuSign (DOCU) and Zscaler (ZS) surged on strong earnings reports.
Last Thursday’s stock market rise ended at the session highs, setting up a significant challenge to the 50-day moving averages.
On Thursday, shares of Vertex Pharmaceuticals (VRTX), Neurocrine Biosciences (NBIX), BioMarin Pharmaceuticals (BMRN), Axonics (AXNX), and Centene (CNC), flashed buy signals.
These five stocks may be at the top of the market, but they are not immune to fluctuations. Vertex and NBIX stock remained tradable until the close despite having retreated from intraday highs as the indices swung from their greatest levels.
Centene stock fell and might need some reinforcements. BMRN stock was active, finishing around the day’s high despite the little trading volume. The only stock to end with a significant gain was AXNX due to positive publicity around an important product achievement by Axonics.
Apple (AAPL) fell the day after rising optimism about the new Apple iPhone 14 and other items.
The major stock indexes are now trading lower than their 200-day moving averages, reflecting the underperformance of large companies in the present market. Only Tesla (TSLA) is threatening to break above its 200-day M-A.
After the closing of trading, DocuSign and cybersecurity company Zscaler posted quarterly earnings and an outlook above expectations. Overnight, ZS stock rose while DOCU shares rose sharply. Although the previous leaders are far off their highs and in no position to act, the stories encourage news for software stocks and IT expenditures.
NBIX and Vertex Pharmaceuticals both have positions on the IBD Leaderboard. Among the IBD 50 are Tesla and Axonics.
Dow Jones Futures
The Dow Jones futures increased today by 0.6% over fair value. The S&P index rose by 0.6%. In the futures market, the Nasdaq 100 rose 0.9%. At the outset, the S&P and Russell 2000 are expected to rise above their 50-day M-A, while the Nasdaq and Dow are expected to remain around their respective 50-day moving averages.
The dollar’s decline from recent highs is helping futures prices. The 10-year Treasuries yield fell by two basis points to 3.27%. Price expectations for both gas and oil futures rose by around 2%. The cost of copper saw a 1.5% increase.
Remember that the movements of the Dow futures and other stock market futures the night before may not always reflect the real trading of the following usual market session.
Increase in stock prices
A robust surge on Wednesday was followed by a volatile session on Thursday, with the stock market falling at the outset, then rising again.
Chairman of Federal Reserve, Jerome Powell, said he is “fully committed” to combatting inflation before September 21. This has bolstered expectations for a 3rd consecutive rate rise of 75 points. The ECB had just increased its benchmark rate by 75 points before that. After that, ECB insiders suggested that another 75 points may be coming in October.
Meanwhile, contrary to expectations, new jobless claims fell for a fourth consecutive week, confirming to Fed head Powell that the labor market is very tight.
The Dow and the Nasdaq gained 0.6% on Thursday, a positive day for the stock market. An increase of 0.7% was seen in the S&P. The Russell 2000, which tracks stocks of smaller companies, gained 0.8%, the most.
On Thursday, U.S. crude oil prices rebounded from their lowest point since early January to settle at $83.54 a barrel.
With this increase, the yield on 10-year Treasuries now stands at 3.29%, up three basis points from yesterday.
The Innovation ETF (ARKK) rose 3%, and the ARK ETF (ARKG) rose 3.6%, both in line with the gains seen in more speculative story equities. Among Ark Invest’s exchange-traded funds, Tesla stock is a prominent stake.
Shares of Apple
On Thursday, Apple’s shares dropped 1 percent to $154.45 per share. Since late July, share prices have not been this low. The relative strength line has lately reached all-time highs on August 17.
However, it is presently rapidly falling. Since AAPL is the most valuable U.S. listed business and a component of the S&P, Dow, and Nasdaq composite, a drop in AAPL stock makes it difficult for the main indexes to advance. Even the other mega-cap stocks are having a hard time.
On Friday morning, Apple and other mega caps rose in value.
Investing in Tesla stock
Tesla stock is not part of the mega-cap gloom, with an almost 2% increase to 289.26. This week’s gain of 7% brings it back above its 50-day simple moving average. This week’s gains, however, have been on low volume.
As a result, TSLA stock has been unable to break above its rising 50-day line. An early opportunity would present itself on a sustained rise over the 200-day line, including a break above the 300 position or the 314.64 high seen on August 14.
Reportedly, German authorities have demanded that Tesla make adjustments to Autopilot due to “abnormalities.” At the same time, Tesla is planning to construct a lithium processing factory in Texas and is lobbying for financial support from the Lone Star State.
Before the market opened, TSLA shares were up by 1 percent.
Recent stock market analysis.
Unwilling to give up Wednesday’s strong gains, the market rise brushed off early substantial losses. As a result, despite significant intraday volatility, the main indices all finished around their day’s highs.
The Russell 2000 and S&P both seemed to meet resistance near their morning up positions before closing barely below their 50-day M-A. Be mindful that the current rally peaked on August 16 when the S&P was within one position of its 200-day line, and the small-cap Russell was barely over the level. The Russell 2000 and S&P both reached their 50-day line on September 2 and then retreated sharply.
In other words, the 50-day M.A is more than simply a line on a graph. A strong break above that positions would be positive. The 21-day M.A is rapidly approaching the 50-day M.A across all the major indices.
According to market futures, both the S&P and the Russell 2000 is expected to start the day around their respective 50-day M.A. In the end, maintaining that level and sweeping that region clean is what counts most.
A market rise above those levels may have some opportunity to grow, but the 200-day M.A average would be the true litmus test.
As a general rule, investors should focus on the performance of the market’s most liquid and widely held equities.
These days, top stocks have been doing better than the market averages.
Even while the S&P 500, Nasdaq, and Dow Jones closed around Thursday’s greatest levels, Centene, Neurocrine, and Vertex dropped off highs when the market first met resistance. Most equities will go down in price along with the main indices if they start to decline.
The solar energy industry and companies working to reduce pollution have been doing well recently. There are many medical terms from the pharmaceutical, medical device, and health care insurance industries. Plays on lithium are red hot, but their fluctuating charts make them tricky to manage.
A few tech stocks are establishing themselves, but the market as a whole is not yet giving out buy signals. However, if the market keeps rising, many other types of companies, not just tech, might reach their buy targets.
Even if large-cap companies like Apple aren’t driving a market rally, their participation is still important.
What’s next for investors?
At least for the short term, more equities are displaying buy signs. So it’s logical that traders would test the waters with fresh bets to get in on the first floor of price explosions. Until the main indices make a convincing break higher, it is riskier to enter a new level now that they are so near to their 50-day lines.
Forecasts for the S&P indicate it will start higher than its 50-day M.A. That’s an excellent indication, but it’s not quite the same as breaking over that crucial barrier.
In the meantime, it’s best to start with modest position size and be prepared to grab gains quickly and reduce losses decisively. If the market show signs of recovery after you’ve decided to hold off on opening any new positions, there will be other chances to purchase. Many equities are either immediately tradable or within striking distance.
Create some effective watchlists. Stay sharp and move quickly.