Market Rally Ends Losing Streak, Nvidia Jumps; 5 stocks near buy points

Dow Jones futures rose slightly in extended trade, along with S&P 500 futures and Nasdaq futures. Lululemon, Costco and Broadcom reported earnings after the close.


The stock rallied modestly higher on Thursday, but recovered only a small fraction of the losses suffered over the past few days. Investors still need to be cautious amid fluctuating market movements. The S&P 500 remains below its 200-day line, while most indexes are also holding resistance at their 21-day moving averages.

Semiconductor stocks did well with the chip maker Nvidia ( NVDA ) among the S&P 500’s top performers on Thursday. But chipmakers are generally in better shape KLA Corp. (KLAC), Axcelis Technologies (ACLS) and Ultra Pure Holdings (UCTT) flashing buy signals on Thursday. ASML (ASML) and Applied materials (AMAT) is among the close buy points.

Basic Earnings

Costco Wholesale (COST), Lululemon Athletica (LULU) and Broadcom This was reported on Thursday (AVGO).

COST shares were little changed overnight after Costco earnings and sales missed views. Costco shares lost some ground in Thursday’s regular session, but are down about 11% so far this month.

LULU shares fell in broad trade after the yoga apparel retailer steered slightly lower in the critical holiday quarter. Lululemon earnings slightly beat Q3 views. Lululemon shares rose 0.6% to 374.11 on Thursday, closing within a cup-handle buy point range of 370.56. But he is ready to go beyond the buying zone.

AVGO shares edged higher as Broadcom’s earnings and guidance beat views, while the chip and software giant also raised its dividend. Broadcom shares closed up 2.4% at 531.08, just below its 200-day line. Last week’s high of 552.42 may offer some sort of entry.

LULU stock is on the IBD Leaderboard as an earnings picks play. KLAC stock is in the IBD Long-Term Leaders.

Dow Jones Futures today

Dow Jones futures were up 0.1% at fair value. S&P 500 futures rose 0.15%, while Nasdaq 100 futures rose 0.2%.

The 10-year Treasury yield fell 2 basis points to 3.47%.

Crude oil futures rose 1%.

Remember that an overnight move in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.

Join IBD’s experts as they analyze the stocks that made the most of the stock rally on IBD Live

Stock market rally

The stock market rally had a solid session, with indices largely sideways after the first hour of trading.

The Dow Jones Industrial Average rose 0.55% in Thursday’s trading. The S&P 500 index rose 0.75%. The Nasdaq composite rose 1.1%. The small-cap Russell 2000 advanced 0.7%.

US crude oil prices fell 0.8% to $71.46 a barrel with some big changes during the day. Crude futures are now at levels that the Biden administration has said will lead to a refill of the Strategic Oil Reserve, which was cut to a long-term minimum this year to reduce energy costs.

The 10-year Treasury yield rose 8 basis points to 3.49%, but that was a day after dropping to 3.41% on Wednesday.


Among rising ETFs, the iShares Expanded Tech-Software Sector ETF ( IGV ) rose 1.8%. VanEck Vectors Semiconductor ETF (SMH) gained 2.55%. Nvidia shares, ASML, KLA and AMAT are all SMH holdings. Reflecting more speculative story stocks, the ARK Innovation ETF ( ARKK ) gained 2.4% and the ARK Genomics ETF ( ARKG ) gained 2.2%.

The SPDR S&P Metals & Mining ETF ( XME ) advanced 0.3%, while the Global X US Infrastructure Development ETF ( PAVE ) advanced 0.8%. US Global Jets ETF (JETS) fell 0.3%. The SPDR S&P Homebuilders ETF ( XHB ) rose 0.6%. The Energy Select SPDR ETF ( XLE ) and the Financial Select SPDR ETF ( XLF ) rose 0.1%. The Healthcare Select Sector SPDR Fund ( XLV ) rose 0.9%.

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Chip Stocks Close to Buy Points

Several chip-gear manufacturers are in or near acquisition zones. In general, semiconductor equipment makers have some uncertain forecasts for the coming year, but chip gear stocks often fall before business turns.

KLAC shares rose 2% to 395.92, clearing some buy points between 392.60 and 396.02. Trading was very light, but there were some big gains in bullish volume as KLA rebounded from bear market lows in October and November. The relative strength line is at a record high, even if stocks are well below their January peak. KLA stock is a Long-Term Leader, but the time to buy the stock as LTL is when it approaches the 200 or 50-day lines.

Shares of ACLS rose 4.9% to 81.93, breaching the 80.34 cup-handle buy point, according to MarketSmith analysis. Axcelis is well extended above the 50-day line, but the 21-day line is in a race higher. The RS line for ACLS stock is at a 15-year high.

UCTT shares rose 5.6% to 36.59, surpassing a 36.10 cup-handle buy point, hitting their best level since April. A base was formed in the lower right with no uptrend. But the handle is mainly formed on the 200-day line. The RS line for UCTT stock is at an 8-month high.

ASML shares rose 0.9% to 606.89. Stocks rebounded from the October 13 bear market to November 15 lows. Since then, the high-end Dutch semiconductor equipment giant has been consolidating comfortably above the 200-day line at its best levels since April. The 21-day line is close to maturity. A break above recent highs could suggest an early entry. Ideally, ASML will pull back from the 21-day line or make a corresponding base.

AMAT shares rose 2.4% to 108.61 on Thursday. Shares are just above the 200-day line since Oct. 13-Nov. 15 runs. Applied Materials has a tight three-week pattern suggesting a buy point of 112.22. Investors can use a short trend line, perhaps as an entry just before Thursday’s high of 109.43.

Meanwhile, chip giant Nvidia bounced back from its 21-day line, rising 6.5% to 171.69. NVDA stock is currently just below its 200-day line. An aggressive trader can use the decisive clearing of the 200-day line as a buy signal. But it might be better to wait for Nvidia stock to clear the 200 day and stage some sort of consolidation, a la ASML or AMAT, to spy a safer entry.

Market rally analysis

The stock rally snapped a recent losing streak with modest to solid gains. However, this did not fundamentally change the technical picture. Major indices are moving sideways, finding support at key levels while also hitting resistance.

The S&P 500 just managed to close above its 21-day moving average. The benchmark index should rise above the 200-day moving average and the December 1 high.

The Nasdaq composite held support at its 50-day moving average, recovering the 11,000 level but closing just shy of the 21-day. The Russell 2000, which fell below its 200-day and 21-day lines earlier this week, pulled back from its 21-day intraday.

The Dow Jones, which closed slightly above its 21-day moving average on Wednesday, rose modestly on Thursday.

With the arrival of major news, the markets may not take any decisive action.

The November producer price index is due to be released on Friday morning. Wholesale inflation should show a sustained slowdown. But the real concern is the service prices. The November CPI report is scheduled for December 13, and the year-end Fed meeting ends the following day.

These events can be the catalyst for major market moves up or down. Sure, over the past month the indices have made big moves around the October CPI, Fed Chair Powell’s speech and more, but sideways, choppy moves have continued.

Market Timing with IBD’s ETF Market Strategy

What to do now

Some stocks issued buy signals on Wednesday, including KLAC, ACLS, United Leases (URI) and Dexcom (DXCM). Investors could bite into some of that — or not.

Overall exposure should remain low. The current market trend is sideways and choppy. It’s just a tough environment to make progress trading stocks. If you make new purchases and make a decent profit, consider taking a partial profit quickly. Many promising stocks have gained 5%, 10% in the last few weeks.

A number of stocks are built from different sectors. So keep your watchlists up to date and get busy.

Read The Big Picture daily to stay in sync with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.


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