Dow Jones futures titled higher Thursday night, along with S&P 500 futures and Nasdaq futures, with the September jobs report on tap. The stock market rally attempt had a solid Thursday, but the major indexes backed off key levels while volume declined.
XBottom line: It remains a stock market correction. Friday could be a pivotal day, with the September jobs report due before the open.
Sea Limited (SE), Ford Motor (F), Advanced Micro Devices (AMD) and Zscaler (ZS) were among a slew of stocks flashing buy signals. SE stock, AMD stock and ZS stock broke trend lines as they rebounded from their 50-day lines. Ford stock cleared a handle that was fractionally too low to be considered an official buy point.
Investors also should keep a close eye on Microsoft stock, Nvidia (NVDA) and Google parent Alphabet (GOOGL). These three institutional-quality stocks all moved back to their 50-day lines as they work on bases. If they can push higher, that would offer early entries. If they get turned away, they could be possible shorts.
Meanwhile, Tesla (TSLA) is holding its annual shareholder meeting Thursday afternoon at its new factory near Austin, Texas. Elon Musk confirmed that there will be no Tesla Cybertruck or other new models over the next year. He also indicated that 4680 battery cells are not yet ready.
Tesla stock edged lower overnight after settling at its best close in nearly eight months.
The Tesla shareholder meeting comes as recent news from General Motors (GM), Lucid Motors (LCID), Rivian Automotive suggest they could erode Tesla's enviable status, while Ford also is stepping up in electric vehicles. In addition to Ford, GM flashed an early entry from its 200-day line. LCID stock is working on a handle in a bottoming base.
Tesla stock is on IBD Leaderboard, along with Microsoft (MSFT), Google, AMD and Nvidia stock. AMD stock is on SwingTrader. Microsoft and Google stock are on IBD Long-Term Leaders. Google and ZS stock are on the IBD 50, which has a number of actionable names right now.
The video embedded in this article analyzed AMD stock, Zscaler and eBay (EBAY), and reviewed an interesting session.
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Jobs Report
Economists expect the September jobs report to show a nonfarm payrolls gain of 475,000, with the jobless rate dipping to 5.1%.
Investors will want to see a pickup in hiring from August's 235,000 jobs to show that the economic recovery is on track. But too-fast hiring could send Treasury yields sharply higher and raise expectations for a faster Fed bond taper.
Dow Jones Futures Today
Dow Jones futures were 0.3% above fair value. S&P 500 futures climbed 0.2% and Nasdaq 100 futures rose 0.25%.
Crude oil futures rose slightly overnight after reversing higher Thursday. The 10-year Treasury yield extended Thursday's gains overnight, edging up to 1.59%.
The jobs report will be out at 8:30 a.m. ET. That will be sure to swing Dow futures and Treasury yields, and it could take a while before the market decides if the jobs report was bullish or bearish.
The Senate voted Thursday night to raise the debt limit into December, as Democrats went along with Senate Minority Leader Mitch McConnell's offer for a short-term debt hike. The House must OK the measure and send it to President Joe Biden to head off a government default.
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 started off strong, then backed off somewhat from intraday highs.
The Dow Jones Industrial Average rose 1% in Thursday's stock market trading. The S&P 500 index climbed 0.8%. The Nasdaq composite advanced just over 1%. The small-cap Russell 2000 popped 1.6%
The 10-year Treasury yield gained five basis points to 1.57%, the highest point since mid-June.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 1.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) popped 2.1%. The iShares Expanded Tech-Software Sector ETF (IGV) advanced 1.2%, with MSFT stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) also added 1.2%, with Nvidia stock and AMD key components.
SPDR S&P Metals & Mining ETF (XME) rebounded 1.7% and Global X U.S. Infrastructure Development ETF (PAVE) 1.1%. U.S. Global Jets ETF (JETS) retreated 0.9%. SPDR S&P Homebuilders ETF (XHB) advanced 1.8%. The Energy Select SPDR ETF (XLE) climbed 0.8% and the Financial Select SPDR ETF (XLF) 0.6%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rallied 2.4% and ARK Genomics ETF (ARKG) 2.5%. Tesla stock remains the top holding across ARK Invest's ETFs, but Cathie Wood has sold a significant share of ARK's TSLA stock over the past month.
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Tesla Shareholder Meeting
At the Tesla shareholder meeting Thursday night, CEO Elon Musk said the comapny is moving its headquarters to Austin, Texas. But he said Tesla still aims to significantly boost production at its Fremont, California, plant.
The company said it's targeting sales of 20 million vehicles in 2030. For perspective, global auto sales were 77.5 million in 2019, before the coronavirus and chip shortages of the past two years.
Musk said the goal is to have the Cybertruck in production starting at the end of 2022, with the Semi and Roaster coming in 2023. That's not too different from what was already known. That means no new vehicles delivered over the next year, with no significant new markets remaining for its existing products.
Musk said production of 4680 batteries could happen at the Austin factory next year, indicating that some technical issues remain. Getting those 4680 batteries — with promised specs and cost savings — into mass production is key to making the Tesla Cybertruck, Semi and Roadster viable.
Musk tweeted earlier Thursday that Tesla will begin rolling out its FSD Beta software to Full Self-Driving owners Friday at midnight, with 1,000 per day starting with drivers who had great safety scores in a recent test. The rollout is high risk, high reward. If the FSD Beta release goes well, that could boost Tesla revenue and burnish its driver-assist credentials. But if drivers complain about the still-in-progress Level 2 system, or if a number of accidents occur, the backlash could be severe.
On Saturday, Tesla will hold an event at its unfinished factory near Berlin. CEO Elon Musk this summer made comments that suggested production could begin in October, but the factory may not open until 2022.
All this comes days after Tesla reported deliveries of 141,300 EVs in the third quarter, yet another record and beating views.
Shares lost a fraction after the Tesla shareholder meeting.
Tesla stock rose 1.4% to 793.68 on Thursday, the best close since late February. That's still in range from a 764.55 buy point.
Tesla Rivals
Tesla is riding high, with record deliveries yet again and huge pricing power during the global automotive crunch. Likely U.S. electric vehicle credits for Tesla in the near future promise to fatten margins further.
But the competitive landscape is changing dramatically, especially in the U.S.
Rivian has begun delivering the R1T, the first of several electric pickups that will beat the Tesla Cybertruck to market. General Motors, which will release its high-end Hummer EV this year, said Wednesday that it planned to unveil a highly advanced "Ultra Cruise" driver-assistance system to customers in 2023 as it also pushes into robotaxis with its Cruise unit.
Rivian will release its R1S large SUV before year-end while the GM Lyriq is due next spring, both taking on the Tesla Model X, which has seen dwindling sales and production issues.
Lucid Motors will begin Lucid Air deliveries this month. The luxury Lucid Air sedan boasts a 520-mile range that's far beyond even the Tesla Model S Plaid.
Not only will these specific models and offerings provide competition for Tesla — along with dozens of other EV models through 2022 — but they could erode Tesla's public status as having the cutting edge EVs and auto technology.
Musk may feel a need to address these emerging challengers and respond to GM's self-driving ambitions and various digs at Tesla.
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Market Rally Analysis
The stock market rally attempt took another positive step. But the indexes' price gains ultimately were not quite strong enough while NYSE and Nasdaq volume fell from Wednesday. So the Dow Jones did not have a follow-through day confirming its rally attempt on day five. The Nasdaq and S&P 500, on day 3 of their rally attempts, will be eligible for follow-through days starting Friday.
Meanwhile, the major indexes hit resistance at key levels. The Dow Jones hit resistance around its 50-day moving average. The S&P 500 gapped above its 21-day line but then also backed off slightly from near its 50-day. The Nasdaq composite and Nasdaq 100 hit resistance at the 21-day line.
Thursday's low-volume gains and hitting resistance suggests that big institutions are holding back on the stock market rally. That's not surprising with the jobs report on tap. A well-received jobs report could be the trigger for a high-volume advance, but it could be a high-volume retreat as well.
From the perspective of leading stocks, the market rally is looking healthy. A number are flashing buy signals, typically rebounding from key support or breaking trend lines, but those gains could quickly reverse if the market rally attempt fizzles.
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What To Do Now
With the stock market rally attempt continuing to show positive signs, investors could choose to nibble at a few tasty buying opportunities. But if you do so, it's probably a good idea to keep exposure relatively light and use tight stops.
There's also nothing wrong with not taking any action until the market rally is confirmed. If the market rally has a follow-through day and goes on to have a run for several weeks or months, you will have plenty of opportunities to make money. If the rally peters out after a few days, you'll probably be happy you stayed out.
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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