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Dow Jones futures rose slightly on Thursday night, as did S&P 500 futures and Nasdaq futures. The stock rally had a wild session Thursday with the major indices further undercutting support levels before rebounding to close higher.
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The Federal Reserve said that large financial firms such as JPMorgan Chase (JPM) and Bank of America (BAC) can begin dividend buybacks and hikes on June 30, assuming they pass the latest round of stress tests. Previously, the Fed said those higher returns to shareholders could begin in the first quarter. But JPM and BofA shares were slightly higher.
Investors should look for stocks that hold up well to the current market, with strong fundamentals or at least a solid earnings outlook. This stock rally is about as much fun as a lumbar puncture, so here are 11 stocks for your watchlists: ASML (ASML), General Motors (GM), Facebook (FB), Scotts Miracle-Gro (SMG), Ubiquiti (UI), Disney (DIS), Target (TGT), Lowe’s (LOW), Mosaic (MOS), Deere (DE) and ArcelorMittal (MT).
GM stock and ArcelorMittal are listed in the IBD rankings. Deere Stock, ASML and Scotts-Miracle-Gro are on IBD 50. ASML Stock is on the IBD Long-Term Leaders Watchlist. Deere stock is listed on the IBD Big Cap 20. Lowe’s stock was the IBD Stock Of The Day.
Dow Jones Futures today
Dow Jones futures contracts increased 0.2% from fair value. S&P 500 futures were up 0.3% and Nasdaq 100 futures were up 0.4%.
Keep in mind that overnight action on Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular trading session.
Join the IBD experts as they analyze the exploitable stocks during the stock market rally on IBD Live.
Coronavirus news
Coronavirus cases around the world have reached 126.05 million. Covid-19 deaths have exceeded 2.76 million.
Coronavirus cases in the United States have reached 30.77 million, with deaths exceeding 559,000.
Stock market rally
The stock rally had a wild session, dropping sharply intraday before rebounding higher.
The Dow Jones Industrial Average rose 0.6% in Thursday’s stock trading. The S&P 500 Index climbed 0.5%. The Nasdaq composite edged up 0.1%. Intraday, the Nasdaq fell 1.35% after slipping 2% on Wednesday. The Russell 2000, sharply lower intraday, jumped 2.2%
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.3% and the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 0.65% after two big losses for growth ETFs. The iShares Extended Tech-Software Sector ETF (IGV) was down 0.4%. The VanEck Vectors Semiconductor ETF (SMH) rose 0.3%. SMH includes shares of ASML and many other chip gear manufacturers that have held up relatively well.
SPDR S&P Metals & Mining ETF (XME) jumped 2.2% and Global X US Infrastructure Development ETF (PAVE) 2.1%. US Global Jets ETF (JETS) rose 2.5% after several losses.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) fell 0.3% and ARK Genomics ETF (ARKG) edged up 0.3%.
Stock of the day in the buy zone as renovations explode
Facebook Stock, ASML and GM are stocks to watch
So why consider ASML Stock, GM, Facebook, SMG, Ubiquiti, Disney, Target, Lowe’s, Mosaic, Deere, and ArcelorMittal for your watchlist? They hold up reasonably well, with strong or at least improving relative lines of force. Many are posting a rebound in earnings with solid growth prospects.
Ubiquiti stock and SMG form a pretty solid foundation, which is particularly impressive given the volatile market conditions. A few of these stocks are technically in buy zones, including ArcelorMittal, Lowe’s and Disney stocks. A few others might be considered “exploitable” in a cheaper market, such as Facebook, GM or ASML stock. But it is not a good market. Recent surges continue to struggle or collapse as former growth leaders return to their March lows or beyond.
But all of it is worth watching and offers a window into a variety of positive areas. It’s not clear which stocks or sectors will lead the next strong stock rally, so you want to cast a wide net. Certainly consider many of the competitors and peers of the above 11 stocks, as well as other industries. Home builders, oil producers, and financial companies – including JPMorgan and BAC stock – are also worth a look.
Catch the Next Big Winning Stock with MarketSmith
Analysis of market rallies
The stock rally shifted to an “uptrend under pressure” on Wednesday and Thursday’s volatile stock did not change that. Intraday, the Dow Jones undermined its 21-day exponential moving average while the S&P 500 fell below its 50-day average and the Russell 2000 nearly broke its March lows. It is positive that they have rebounded to move higher after strong intraday losses, with the S&P 500 coming back above its 21-day line.
At least market conditions haven’t deteriorated. But they are not materially better.
The Nasdaq composite has work to do to break its 21-day limit. The high-tech index won’t look really healthy until it returns above its 50-day line and short-term high on March 16. The Dow Jones and the S&P 500 must maintain key levels.
More importantly, the recent eruptions have not worked. Many stock charts appear damaged and take weeks or even months to repair. Of course, it’s good that the MT stock was held in a buy zone on Thursday, but there were plenty of stocks that resisted selling until they didn’t resist.
If you have a few pilot positions or long-term winners, that’s okay. But investors should largely be in cash and shouldn’t be thinking about further purchases.
Perhaps Thursday’s intraday lows mark the start of a bold new era of bullishness. But it could be a brief respite before major indices dip below recent lows. If a renewed stock rally has legs, there will be plenty of opportunities to jump.
As IBD founder Bill O’Neil said, all stocks are bad unless they go up. There haven’t been a lot of good stocks lately.
Read The Big Picture daily to stay in sync with market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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