Dow Jones futures are showing a slight uptick early on Friday, alongside gains in S&P 500 futures and Nasdaq futures, as investors await the September jobs report. Meanwhile, Tesla has once again lowered its prices for the Model and Model Y, and Exxon Mobil is reportedly nearing a significant takeover deal.
Despite the stock market experiencing a correction phase, a rally attempt persists, but the absence of a follow-through day makes it challenging to confirm an uptrend. This is a critical time for monitoring stocks with strong relative strength lines that are either at or near their highs, indicating robust performance compared to the S&P 500.
Key Stock Performances
Several stocks, including Nvidia, Tesla (TSLA), Meta Platforms (META), Arista Networks (ANET), Qualys (QLYS), Eli Lilly (LLY), and Vertex Pharmaceuticals (VRTX), are either holding or regaining key levels with strong RS lines.
Tesla stock saw a slight dip early on Friday as the electric vehicle giant continues its trend of price reductions in 2023.
Nvidia (NVDA), Arista Networks, and Meta Platforms are already part of IBD Leaderboard, with Tesla on the Leaderboard watchlist. TSLA stock is also on SwingTrader. Meta stock, Nvidia, Qualys, Arista Networks, Tesla, and Eli Lilly are part of the IBD 50. Nvidia, Tesla, and ANET stock are included in the IBD Big Cap 20.
Exxon Mobil (XOM) is reportedly on the verge of acquiring Pioneer Natural Resources (PXD) for approximately $60 billion, as reported by The Wall Street Journal on Thursday night. XOM stock experienced a modest decline on Friday morning, while PXD stock surged by 10%.
September Jobs Report
The Labor Department is scheduled to release the September jobs report at 8:30 a.m. ET. Economists anticipate an increase of 160,000 nonfarm payrolls, with the unemployment rate decreasing to 3.7% and average hourly earnings rising by 0.3% compared to August. Although this would be considered a modest report, it still reflects a solid job market. The Federal Reserve, however, would prefer to see some weakness, but recent job data has been mixed, with the expectation that job growth may slow towards the end of the year.
Dow Jones Futures Today
Dow Jones futures are slightly above fair value, while S&P 500 futures have inched higher. Nasdaq 100 futures have risen by 0.1%. Notably, TSLA stock is exerting a minor drag on both the S&P 500 and Nasdaq futures. The 10-year Treasury yield has inched up to 4.74%, and the outcome of the September jobs report will likely influence Dow futures and Treasury yields on Friday morning.
It’s important to remember that overnight action in Dow futures and other markets doesn’t necessarily translate into actual trading during the next regular stock market session.
Aehr Test Earnings
AEHR stock experienced a sharp decline in late trading. While Aehr Test Systems slightly exceeded expectations for fiscal Q1, it did not revise its full-year guidance upward. Aehr Test Systems (AEHR) produces testing equipment for silicon carbide chips used in electric vehicles (EVs). AEHR stock fell by 2.1% to $44.06, just below the 50-day line. It should be noted that there is a $53.05 buy point from an unusual cup-with-handle pattern.
Stock Market Rally
The stock market’s rally attempt witnessed major indexes rebounding from significant intraday losses to close slightly down. The Dow Jones Industrial Average remained virtually flat, registering a 0.03% decline in Thursday’s stock market trading. The S&P 500 and Nasdaq composite both fell by 0.1%, while the small-cap Russell 2000 inched up by 0.1%.
Thursday marked an inside day compared to Wednesday’s inside day for the Nasdaq and S&P 500. Notably, healthy-looking stocks with a strong tech focus are somewhat scarce at the moment. The Nasdaq’s market rally attempt has reached day seven, suggesting a follow-through day could occur soon. In contrast, the S&P 500 and Dow Jones are only on day two of their rally attempts after dipping below late September lows earlier this week.
U.S. crude oil prices declined by 2.3% to $82.31 per barrel, extending recent losses amid concerns over demand. Gasoline futures also dipped by 0.4% after hitting a 2023 low on Wednesday. Copper prices fell by 1% to an 11-month low. Additionally, the 10-year Treasury yield dropped by 2 basis points to 4.715%, marking a nearly 9 basis point decline over the past two days.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose by 0.7%, while the iShares Expanded Tech-Software Sector ETF (IGV) edged down by 0.1%. The VanEck Vectors Semiconductor ETF (SMH) remained flat. Notably, Nvidia stock is the top holding in SMH.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) edged just above break-even, while the ARK Genomics ETF (ARKG) climbed by 1.1%. Tesla stock maintains its position as the number one holding across Ark Invest’s ETFs, despite Cathie Wood’s ongoing sales of TSLA shares.
SPDR S&P Metals & Mining ETF (XME) declined by 0.1%, while U.S. Global Jets ETF (JETS) descended by 0.2%. SPDR S&P Homebuilders ETF (XHB) dipped by 0.6%, and the Energy Select SPDR ETF (XLE) and Industrial Select Sector SPDR Fund (XLI) also experienced a 0.6% decrease. On the other hand, the Health Care Select Sector SPDR Fund (XLV) climbed by 0.55%, with LLY stock and Vertex being part of XLV.
The Financial Select SPDR ETF (XLF) rose by 0.5%.
Tesla Reduces U.S. Prices
On the late evening of Thursday, Tesla announced price cuts for its Model 3 and Model Y. The base Model 3 RWD price was reduced by $1,250 to $38,990, the Model 3 LR by $1,250 to $45,990, and the Model 3 Performance by $2,250 to $53,240. Additionally, the Model Y LR saw a price reduction of $2,000 to $48,490, and the Model Y Performance was reduced by $2,000 to $52,490.
These price cuts are indicative of ongoing concerns about Tesla’s demand and the pressure on profit margins. Earlier in the week, Tesla launched a more affordable Model Y with the Model Y RWD starting at $43,990, which is $3,750 cheaper than the previous base Model Y that is no longer available. On Monday morning, Tesla reported a larger-than-expected decline in third-quarter deliveries.
TSLA stock experienced a decline of over 1% in premarket trading on Friday. Despite a series of negative news this week, bullish investors remain hopeful, focusing on Tesla’s new Model 3 offerings outside the U.S., the upcoming Cybertruck, and speculative investments in self-driving technology and robotics.
Notably, Tesla stock recently displayed an aggressive buy signal by jumping 5.9% and decisively moving above the 50-day line on higher volume. Shares are currently positioned around another early entry point, stemming from a downtrend in the handle formation. The official buy point for TSLA stock stands at $278.98 from a cup-with-handle base. Shares held steady on Thursday, with a minor 0.45% decline, closing at $259.98.
Nvidia stock rose by 1.5% to $446.88, just below the 50-day line but above the 10-week line. Although volume has been light during the rebound, it was similarly light during the retreat in September. A strong move above the 50-day line could offer an early entry point for NVDA stock. By the end of the week, shares will form a new base with a $502.66 buy point.
The RS line, represented by the blue line in the charts provided, remains close to its highs following a substantial run throughout the year.
Meta stock declined by 0.3% to $304.79 after once again testing the 50-day line, where it has traded closely for several weeks. Meta now possesses a small handle within its cup base, establishing a new official buy point of $310.94, as indicated by a daily MarketSmith chart. Investors may prefer to wait for Meta to clear $312.87.
The RS line for Meta has been consistently reaching highs, a bullish sign, especially prior to a breakout.
ANET stock tested its 50-day line, reversed higher, and closed with a 1.1% gain at $188.03. Although volume was light, Arista stock is poised to form a flat base after Friday, with a $198.70 buy point. Investors might consider Monday’s high of $189.90 as an early entry point for this networking giant. The RS line for ANET stock is currently at record highs.
QLYS stock rose by 2 cents to $154.78. Qualys is among several cybersecurity firms boasting strong RS lines. It has a $157.88 buy point from a de facto flat base situated near the top of a significant consolidation. Shares have rallied this week, moving away from their 10-week line. Qualys stock is attempting to clear resistance just above $155.
Eli Lilly Stock
Eli Lilly stock climbed by 1.9% to $541.48, reclaiming the 50-day line, albeit with light volume. The stock had fallen below the 50-day line in heavy volume earlier in the week. Investors could view a decisive move above the 50-day line, possibly the 21-day line, as a potential buying opportunity. While the RS line has dipped slightly in recent weeks during LLY stock’s pullback, it remains close to its highs.
VRTX stock inched up by 0.6% to $355.14 on Thursday after bouncing back above the 50-day line on Wednesday. This biotech giant presents a $367 flat-base buy point. Investors may consider $358.59 or a downward-sloping trendline as early entry points. The RS line for Vertex stock is at consolidation highs, not far from its long-term bests.
What To Do Now
The market rally attempt exhibited resilience on Thursday, rebounding from significant intraday losses. However, until the market demonstrates genuine strength, investors are advised to maintain a nearly or entirely cash position.
A follow-through day could be on the horizon, but it wouldn’t take much for the indexes to dip lower once again. Investors should exercise “patient attention” during this period and focus on refining their watchlists. Some stocks may be nearing readiness, while others might require additional consolidation, even if they display decent relative strength.
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