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Dow Jones futures were little changed Thursday night, as were S&P 500 and Nasdaq futures, with AFRM shares signaling “buy now” on earnings. The stock rally lost more ground on the major indexes on Thursday as the Dow Jones undercut its 50-day line. But there was positive action below the surface.
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American Airlines (AAL) and other carriers surged Thursday as several warnings were issued, but also hinted the worst was over as Covid cases stabilized. AAL action gave a buy signal. Other travel-related actions, from hotels to casinos to Airbnb (ABNB), have been trending upward over the past few days.
Lululemon Athletica (LULU) came out of a long consolidation of earnings. HR (RH) has at least given early buy signals on its results. TopBuild (BLD) and HCA Health (HCA) has also erupted beyond points of purchase, at least intraday.
Cybersecurity cabinet Zscaler (ZS), fintech To affirm (AFRM) and IPO of the wood pellet grill Traeger (COOK) reported post-close profit. Zscaler and Traeger beat the sights and guided higher. But the AFRM action was the big winner overnight.
TopBuild’s stock is on the IBD ranking. BLD stock was also the IBD stock of the day Thursday. AAL action is on SwingTrader.
The video embedded in the article analyzed LULU stock, HR and Macy’s (M).
Dow Jones Futures Today
Dow Jones futures have fallen a fraction from fair value. S&P 500 futures fell slightly and Nasdaq 100 futures remained stable.
Keep in mind that overnight action on futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades in the next regular trading session.
Join the IBD experts as they analyze the exploitable stocks in the stock market rally on IBD Live
Coronavirus news
Coronavirus cases around the world have reached 223.96 million. Covid-19 deaths have exceeded 4.61 million.
In the United States, coronavirus cases have reached 41.54 million, with more than 673,000 deaths. The seven-day moving average of new Covid cases is now down.
Stock exchange rally
The stock rally ended Thursday at the low of the session, although the declines were modest.
The Dow Jones Industrial Average fell 0.4% in Thursday’s stock trading. The S&P 500 index lost 0.5%. The Nasdaq composite lost 0.25%. Small cap Russell 2000, rising sharply intraday, closed flat.
Airline stocks were the big winners. American Airlines, Delta Airlines (DAL) and United Airlines (UAL) all cut the third quarter forecast amid the recent surge in Covid cases. But they reported that the weakness would be short-lived or start to fade. AAL stock jumped 5.6% to 20.20, recovering its 200-day line but ending just below its declining 50-day average. DAL stock climbed 3.6% and UAL stock rose 2.3%.
LULU stock was up 10.5% against Lululemon’s beat-and-raise report, erasing a one-year consolidation. But stocks closed near the low for the session.
RH inventory jumped 7.8% to 725 on the furniture retailer’s beat and rise results, despite some supply chain issues. RH recovered the 50 day line and broke a trendline, providing early entry. Investors could also use 730.63 as another aggressive buy zone or use 744.66, just above the old high.
TopBuild stock rose 1.7% to 223.73, briefly erasing a 229.99 handle-cup buy point, according to MarketSmith analysis, before retreating. It is still exploitable from an early entry of 223.07. But BLD stock closed in the lower half of its range.
HCA stock climbed 1.5% to 258.26, hitting an all-time high and breaking through a tight seven-week zone. Investors could use 257.52 as a buy point.
Sports and outdoor academy (ASO) rose 1.5% to 44.07, moving higher into a buy zone, following strong earnings and forecasts. But ASO stock first fell to 39.05, just above its 50-day line, before soaring.
On the decline, Biogen (BIIB) fell 6.7% after its CEO said its controversial Alzheimer’s drug had lower than expected initial demand. Eli lilly (LLY), which is working on a similar treatment for Alzheimer’s disease, fell 5.8%. BIIB and LLY stocks were Thursday’s worst performance on the S&P 500 Index.
President Joe Biden’s support for drug price controls has also weighed on some pharmaceutical and biotech stocks.
Homebuilders fell again on Thursday, even as Treasury yields retreated. Lennar (LEN) and other manufacturers slipped on Wednesday after Pulte Group (PHM) warned of supply chain issues.
Best ETFs
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.9%. The FFTY ETF is still slightly down for the week, but that’s after rising more than 5% in each of the previous two weeks.
while the Innovator IBD Breakout Opportunities (BOUT) ETF climbed 0.4%. The iShares Expanded Tech-Software Sector (IGV) ETF fell 0.2%. The VanEck Vectors Semiconductor ETF (SMH) rose 0.4%.
The SPDR S&P Metals & Mining ETF (XME) gained 0.6% while the Global X US Infrastructure Development ETF (PAVE) fell 0.6%. The US ETF Global Jets (JETS) rose 1.9%, with AAL stock and other carriers lifting the group. The SPDR S&P Homebuilders ETF (XHB) closed 0.6% higher, with shares of RH, TopBuild and other housing-related building retailers and suppliers offsetting weakness in real home builders. The Energy Select SPDR ETF (XLE) gained 0.2% while the Financial Select SPDR ETF (XLF) gained 0.3%.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) rose 0.45% and ARK Genomics ETF (ARKG) rose 0.5%.
Five best Chinese stocks to watch right now
Key gains
Zscaler earnings and guidance beat fourth quarter views as the cybersecurity company is on the rise. ZS stock rose 2% overnight. The shares fell 0.2% to 280.22 on Thursday. But Zscaler’s stock is basically at highs and stretched from any entry.
Affirm reported a bigger loss than expected, but revenue growth easily exceeded. The “buy now, pay later” specialist forecasts strong growth.
AFRM stock climbed around 20% in extended trade, signaling a move above a possible early entry of 101.10. Shares rose 5.2% to 92.06 on Thursday.
Shares soared on August 30, after Affirm entered into a partnership deal with Amazon.com. Already assert buy offers now, pay later options for Walmart and Shopify. AFRM stock surged in August after Square (SQ) has agreed to pay $ 29 billion for AfterPay, an Australian fintech from BNPL. Pay Pal (PYPL), which has its own BNPL offers, agreed this week to buy Japan’s Paidy for $ 2.7 billion.
Traeger’s profits beat, and the pellet grill maker rose. But COOK stock fell almost 10% overnight. Shares rose 2.3% to 25.61 on Thursday. Traeger stock worked on an IPO basis with a buy point of 32.69.
Market rally analysis
The stock rally saw another session down slightly for the major indices. The Dow Jones Industrial Average closed below its 50-day moving average. However, the Nasdaq is testing its 10-day line, while the S&P 500 holds above its 21-day line.
The Russell 2000 gave up its intraday gains, but did not lose ground. Overall, growth stocks performed well, as did several other sectors. Airlines are trying to take off, as travel stocks get back to work.
Several new buying opportunities have emerged, generally outside the technological growth space. Lululemon’s earnings and forecast not only boosted LULU stock, but also Nike (OF), Under protection (UAA) and a few other names related to clothing. American Airlines, TopBuild, RH and Academy Sports have also issued buy signals.
There are some interesting differences with the big sectors. Homebuilders are collapsing while several related groups are doing well. Shipping companies continue to be strong, but trucking, rail and many other shipping stocks are struggling.
Time the market with IBD’s ETF market strategy
What to do now?
The stock rally is still doing well, with growth and the big names outperforming the major indices. There are many reasons to be bullish overall. But is now the perfect time to dramatically increase exposure? After three weeks of growth in leading stocks, a pause or pullback wouldn’t come as a surprise. One option is to take advantage of new buying opportunities to diversify your portfolio beyond growth. New buys could also be balanced by reducing losers or locking in partial profits.
Building your watchlist based on charts and fundamentals will allow you to spot intriguing setups from stocks and groups that you might otherwise miss. This can give an early start when these setups take off.
Read The Big Picture every day to stay in tune with the 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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