Dow Jones futures were little changed Thursday night, along with S&P 500 futures and Nasdaq futures. The stock market rally shrugged off a hot inflation report, with the S&P 500 index hitting a record high and Treasury yields hitting fresh lows.
XTesla stock is trading near key levels ahead of tonight's Tesla (TSLA) Model S Plaid delivery event.
Several stocks broke out or flashed buy signals, including RH (RH), Signet Jewelers (SIG), Zscaler (ZS), CrowdStrike (CRWD), Google parent Alphabet (GOOGL) and Adobe (ADBE).
Meme stocks sold off, including GameStop (GME), AMC Entertainment (AMC), Clover Health (CLOV), Bed Bath & Beyond (BBBY) and Workhorse Group (WKHS).
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Homebuilders fell sharply, including Century Communities (CCS), LGI Homes (LGIH) and D.R. Horton (DHI). That continues their weak performance despite sliding Treasury yields.
Several hot stocks sold off as share offerings priced, after the sale plans knocked them earlier this week. Those include Celsius (CELH), PLBY Group (PLBY) and Rev Group (REVG). All three lost 15% or more. CELH stock has a clearly failed breakout while PLBY stock wiped out an early entry. REVG stock broke below the low of a base.
Adobe and Google stock are on IBD Leaderboard and Long-Term Leaders. Google, CELH stock and CRWD stock are on IBD 50.
Dow Jones Futures Today
Dow Jones futures were even with fair value. S&P 500 futures were just above fair value and Nasdaq 100 futures up 0.1%.
A bipartisan group of 10 senators — five from each party — say they've reached a "tentative understanding" on an infrastructure spending deal without explicit tax increases. The package reportedly includes $579 billion in additional spending. Including baseline outlays, spending would be $974 billion over five years or $1.2 trillion over eight. The senators suggest indexing the gas tax to inflation, providing a de facto increase, and using unused Covid funds.
But it's unclear if President Biden or congressional leaders from either party will go back it.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally rallied at Thursday's open but then pulled back in late morning, with the Nasdaq briefly turning negative. But the major indexes rebounded.
The 10-year Treasury yield initially rose modestly on the hot inflation report, but reversed lower to 1.44%, setting new three-month lows. Bond traders do not appear concerned with inflation or the Federal Reserve, which meets next week.
The Dow Jones Industrial Average edged up 0.1% in Thursday's stock market trading, with Apple (AAPL) and Caterpillar (CAT) weighing on blue chips. The S&P 500 index climbed 0.5%. The Nasdaq composite advanced 0.8%. The small-cap Russell 2000 retreated 0.8%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) retreated 1.7% due to some sharp individual losers. The Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1.8%. ADBE stock is the No. 1 component in IGV, which also owns CRWD and ZS stock. The VanEck Vectors Semiconductor ETF (SMH) rose 1.3%.
SPDR S&P Metals & Mining ETF (XME) dipped 0.4% and Global X U.S. Infrastructure Development ETF (PAVE) slid 1%. U.S. Global Jets ETF (JETS) also fell 1%. SPDR S&P Homebuilders ETF (XHB) retreated 1.1%, with the ETF losses minimized because RH stock is the No. 1 component.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) popped 1.9% and ARK Genomics ETF (ARKG) 2.7%. ARKK closed just below its 50-day and 200-day lines, while ARKG reclaimed those levels on Wednesday. Tesla stock is the No. 1 holding for ARK Invest across its ETFs.
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Tesla Model S Plaid Event
Tesla will hold an event starting at 7 p.m. PT touting the start of deliveries for the Model S Plaid, the revamped version of the luxury electric sedan. The EV giant paused Model S and X production for months as it switched over to "Plaid" versions.
Tesla says the Model S Plaid can go from a rolling start to 60 miles per hour in just under two seconds.
On Wednesday, Tesla raised the price of its high-end Plaid by $10,000 to $129,990.
The Model S Plaid event comes days after Elon Musk canceled the Plaid Plus, saying the Plaid is "so good." The Plaid Plus, which was priced well above the Plaid, was supposed to have a range above 500 miles.
The Model S Plaid Plus cancellation could reflect further trouble with mass producing 4680 battery cells. If so, that would be a bad sign for the Tesla Semi and Cybertruck, both of which are slated to use the 4680 cells.
The Model S Plaid event takes place well past after-hours trading, so Tesla stock investors won't weigh in until Friday's premarket.
On Thursday, Tesla stock popped 1.9% to 610.12, reclaiming its 200-day line. TSLA stock remains below its sliding 50-day line.
RH Stock
RH stock surged 16% to 707.14, rebounding from its 50-day line and breaking a trend line. The upscale furniture retailer reported booming earnings and revenue growth, guiding higher on sales and margins. RH stock is 8.1% above its 10-week line, so it's actionable here. But investors could wait to see if it forms a handle. RH stock is on track to have a base with a 733.15 buy point after Friday.
Signet Stock
Signet stock vaulted from its 50-day line to a record high, clearing a flat base with a buy point of 68.39/68.46. Shares hit an intraday high of 74.80 but then slashed gains before rebounding somewhat. Signet stock closed up 14% to 69.58.
The relative strength line for SIG stock hit a new high. The RS line, the blue line in the charts provided, tracks a stock's performance vs. the S&P 500 index.
Zscaler Stock
Zscaler stock popped 4.55% to 204.91, moving above a double-bottom buy point of 199.60, after hitting resistance multiple times at just below 200. The last time was on May 26, following strong Zscaler earnings. ZS stock broke a tiny trend line earlier in the week.
The RS line for Zscaler stock is off the February peak but is at a three-month high.
CrowdStrike Stock
CrowdStrike, another cybersecurity play with a similar chart to ZS, jumped 6.85% to 228.60, breaking past resistance right around 227. CRWD stock was actionable from a short trend line break; again, much like ZS stock. The official buy for CRWD stock is 251.38.
Adobe Stock
Adobe stock rose just over 4% to 535.52, a record close and clearing a 525.54 early entry in a nine-month consolidation. ADBE stock is 5.8% above its 10-week line, which can be an attractive buying area for Long-Term Leaders. But, Adobe earnings are due June 17, giving new investors little time build a cushion in ADBE stock.
The RS line for Adobe stock is trending higher again, but has fallen significantly since last September.
Google Stock
Google stock edged up 1.1% to 2,435.13, edging past a 2,431.48 buy point from a flat base. The RS line hit a record high along with GOOGL stock, giving the weekly MarketSmith chart a very bullish blue dot.
GME Stock
GME stock plunged 27% to 220.39. GameStop stock is now down 11% for the week despite rising in the prior three sessions.
Late Wednesday, GameStop topped earnings views and named two Amazon execs to be its CEO and CFO. But it also said it might sell 5 million shares of GME stock, at a time when investors are punishing stock offerings. GameStop also disclosed an SEC probe related to trading in the stock.
Executives also again didn't take questions in a brief GameStop earnings call.
Other Meme Stocks
Clovis Health slumped 15% to 14.34 after reversing from record highs Wednesday to close down 24%. While CLOV stock hasn't erased Tuesday's 86% gap-up surge, it has fallen below that day's low. So anyone who actually bought CLOV stock on Tuesday is now down.
AMC stock skidded 13% to 42.81. Since the wild June 2 gap up, AMC stock has remained within that day's trading range.
WKHS stock slid 11%. BBBY stock fell 8%.
Most investors should avoid meme stocks. The wild moves offer the potential for huge gains but also massive losses. Given the weak fundamentals and often-poor company prospects, most of these stocks are likely to see huge declines over time.
But if you're going to play meme stocks, buy them as they clear some plausible resistance on a chart. Do not chase them. Consider using options so you can size your potential loss up front. Consider at least partial profits quickly and be ready to cash out before seeing a massive gain turn into a loss.
Market Rally Analysis
The S&P 500 index finally moved above its early May peak to an all-time high, despite the late morning wobble. The Dow Jones and Nasdaq are closing in on record territory. The Russell 2000 is pulling back but after a strong run.
However, the S&P 500 has been nudging higher, not showing real power in the past couple of weeks. Tracking volume on the major indexes is tricky when meme stocks are in play, with CLOV stock trading more than 700 million shares on Tuesday.
But new buying opportunities continue to appear, as RH, Zscaler and even Adobe stock show. Some stocks rebounded bullishly from early losses, including Roblox (RBLX). Miners and many other stocks are quietly forming positive consolidations.
Chip-gear makers and many medicals had solid sessions.
But it's still a tricky stock market rally.
Homebuilders are breaking down despite falling Treasury yields. Financials are struggling. After opening higher as the 10-year yield nudged up, they retreated once again as interest rates hit fresh lows.
The brutal sell-offs in CELH stock and others announcing and pricing share offerings is something to note. Sometimes, stocks quickly shake off share offering news, but not always. With a lot of new IPOs in recent months, investors have to be ready for share offerings and lock up expirations.
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What To Do Now
Buying as close to the buy point as possible, at least with your initial position, is crucial in the current market environment. As a stock gets extended, don't chase it.
To avoid missing out, do your homework. Build up those watchlists, taking a closer look at a select handful of nearly actionable stocks. Stay engaged with the market, using alerts when possible to catch breakouts as they're happening. That way, you can buy the right stocks at the right time.
Even if you do everything right, some of your buys are going to struggle or fail. The key is to keep those losses small.
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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