As with S&P 500 futures and Nasdaq futures, Dow Jones futures changed little overnight. The stock market rally closed at the low of the session on Wednesday. Crude oil prices jumped and Treasury yields bounced back from 34-month highs.
apple stock and Tesla (TSLA) extended their winning streak to seven seasons, though both came out of intraday highs. Apple (AAPL) is in range from a trendline entry and not far from an official buy point. Tesla stock is a long way from its buy point. Both may use a pause to make their chart patterns more attractive, especially Tesla.
During this, JB Hunt Transportation Services (JBHT) and Costco Wholesale (cost) while pulling back into their buying area CVS Health (CVS) and Builders firstsource (BLDR) working on possible handles.
Tesla and JBHT stocks are on the IBD leaderboard, while Cost stock is on the leaderboard watchlist. JB Hunt, Costco and CVS are on the stock swing trader. TSLA, JB Hunt and BLDR stocks are at IBD 50.
dow jones futures today
Dow Jones futures were flat versus fair. S&P 500 futures were stable. Nasdaq 100 futures edged higher.
Remember that overnight action in Dow futures and elsewhere does not necessarily entail actual trading in the next regular stock market session.
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stock market rally
The stock market rally has suffered the biggest loss since March 14. The Dow Jones Industrial Average fell 1.3% in Wednesday’s stock market trading. The S&P 500 index dropped 1.2%. The Nasdaq Composite dropped 1.3%. The small-cap Russell 2000 fell 1.8%.
US crude oil prices jumped 5.2% to $114.93 a barrel.
The 10-year Treasury yield fell 5 basis points to 2.32% after hitting its highest level since May 2019.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.3%, while the Innovator IBD Breakout Opportunities ETF (BOUT) closed just above break-even. The iShares Extended Tech-Software Sector ETF (IGV) and the VanEck Vector Semiconductor ETF (SMH) both lost 2.5%.
The SPDR S&P Metals & Mining ETF (XME) gained 1.8% while the Global X US Infrastructure Development ETF (PAVE) dropped 0.9%. The US Global Jets ETF (JETS) dropped 1.4%. The SPDR S&P Homebuilders ETF (XHB) dropped 3.9%. The Energy Select SPDR ETF (XLE) was up 1.7% and the Financial Select SPDR ETF (XLF) was down 1.85%. Health Care Select Sector SPDR Fund (XLV) declined 1.8%.
Reflecting the more-speculative story stocks, the ARK Innovation ETF (ARKK) fell 1.9% and the ARK Genomics ETF (ARKG) fell 2.4%, both of which traded intraday along their 50-day lines. Tesla stock remains the No. 1 holding in Arc Invest’s ETF.
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Apple stock rose 0.8% to 170.21 on Wednesday, though down from an intraday high of 172.64. After Tuesday’s close on the trendline, shares are now above that opening entry while still holding close to the 50-day line. According to MarketSmith analysis, it is not far from the 176.75 double-bottom base buy point.
The relative strength line, the blue line in the chart provided, is back near record highs, reflecting the strong performance of Apple stock versus the S&P 500 index.
Investors can buy AAPL shares here. But after seven consecutive seasons, the iPhone giant could use a break. Ideally, Apple stock would stay here for at least a few days, and then move higher. Of course, it doesn’t need to take a break anytime soon.
JPMorgan analyst Samik Chatterjee said iPhone sales are “strong” while Apple is poised for a “monster growth cycle” over the next 18 months.
Tesla’s stock rose to 1,040.70 on Wednesday morning. Shares pulled back, briefly turning negative, before gaining 0.5% at 999.11. After lasting six sessions, including Tuesday’s 7.9% spike, the EV giant is now well extended beyond its 50-day and 200-day lines. But TSLA stock is still below the cup-basis buy point at 1,208.10, as well as a trendline entry around 1,150.
Ideally, Tesla stock would stall around current levels, becoming a handle and a new, lower official buying point.
JB Hunt’s stock fell 1.7% to 210.18, its fifth consecutive decline but still above the 208.97 flat-basis buy point. JB Hunt gained a whopping 9.6% on March 16 as the trucking firm forged an alliance with the Warren Buffett-owned BNSF Railway. Berkshire Hathaway (BRKB). A glacial pullback toward a buy point provides an opportunity to initiate or add a position, either now or after JBHT stock has rebounded somewhat.
Costco stock fell 1% to 554.02, still above a 545.39 buy point from a cup-with-handle basis. The RS line is near a record high for the COST stock.
Builders Firstsource stock fell 3.7% to 73.49, which is still above its 50-day line. BLDR stock has an 86.58 cup-base buy point, but could be working on a handle that would create a lower entry.
One concern for Builders Firstsource is that many housing-related plays, including homebuilders and retailers, are selling out as interest rates rise and new-home sales return.
CVS stock retreated 1% to 106.20. It is still close to the 111.35 flat-base buying point. It is also near the 50-day line and an early entry from the short term high of March 7. Monday’s intraday high of 109.69 could also act as another early entry.
market rally analysis
The stock market’s rally on Wednesday took solid losses, even as Apple faced weakness in the big-cap index. The S&P 500 retreated below its 200-day line. The Dow Jones lowered its 50-day line.
The Nasdaq Composite and the Russell 2000 are above their 50-day lines.
While down days are not fun, a brief market rally break can be beneficial. That will give relief to stocks like Apple and Tesla, perhaps form handles. Meanwhile, stocks that continue to climb will see a significant increase in their RS lines.
Energy stocks were leading Wednesday, reflecting strong crude prices. Steel, mining and fertilizer plays also performed well.
Software and housing related stocks declined. Medical stocks ranging from biotechs to health insurance companies had a tough session.
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What should we do now
Wednesday’s return was not dangerous given the recent strong gains for the market rally. But this is the reason why investors should increase investments gradually, so as to avoid jumping to the top, in the short term or in any other way. This is why you never want to buy an expanding stock.
If the stock market’s rally struggles significantly, with the Nasdaq and S&P 500 falling decisively below their 50-day moving averages, investors should probably trim or exit some recent positions.
It is time to be flexible. Don’t get caught in a bullish or bearish mindset. Listen to the market and follow it.
Read The Big Picture every day to learn the direction of the market and keep up with the major stocks and sectors.
Please follow Ed Carson on Twitter @ibd_ecarson For stock market updates and much more.
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