HomeBusinessDow Jones Futures: Palantir Rises to Buy Zone, Nvidia Runs, But Beware

Dow Jones Futures: Palantir Rises to Buy Zone, Nvidia Runs, But Beware

Dow Jones futures were little changed after hours, as were S&P 500 futures and Nasdaq futures.

The stock market rally recovered on Wednesday after Tuesday’s tech-led sell-off, but major indexes closed well off intraday highs.




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Fed chief Jerome Powell continued to say there is no rush to cut rates, while labor market data is not raising any alarms. CrowdStrike (CRWD) showed some gains, but fell well short of the highs. And CRWD didn’t provide much support to the software sector, which was under pressure Tuesday. On the plus side, Nvidia (NVDA), Advanced micro devices (AMD) and Super microcomputer (SMCI) all hit new highs.

Play AI software Palantir Technologies (PLTR) hit a buy point on news Wednesday. This also applied to products for diabetics Dexcom (DXCM). Chipmaker Qorvo (QRVO) regained a buy point.

Square parent Block (SQ) is setting up.

In the meantime, Tesla (TSLA) briefly undermined 2024 lows as it significantly underperforms the S&P 500.

Overall, investors should be cautious as bullish sentiment reaches near-euphoric levels.

Nvidia stock is on the Leaderboard, while SQ stock is on the Leaderboard Watchlist. CrowdStrike, Nvidia and Palantir shares are on the IBD 50. Nvidia, Super Micro and CRWD shares are on the IBD Big Cap 20. Block was the IBD Stock of the Day on Wednesday.

Dow Jones futures today

Dow Jones futures were about flat versus fair value. S&P 500 futures and Nasdaq 100 futures were flat.

Remember, overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading during the next regular stock market session.


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Stock market rally

The stock market rally recovered on Wednesday, but ultimately only recovered some of Tuesday’s sharp losses.

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The Dow Jones Industrial Average rose 0.2% in stock trading on Wednesday. The S&P 500 index climbed 0.5%, with Dexcom the biggest gainer. The Nasdaq composite gained 0.6%, pushing it back above the 16,000 level.

The small-cap Russell 2000 rose 0.7% after falling 1% Tuesday.

CrowdStrike shares rose 10.8% to 329.57 on Wednesday, recovering from the 50-day mark on strong earnings and guidance. But shares hit an all-time high of 365 intraday. Many other software products staged modest recoveries after big losses on Tuesday, or even continued to decline.

Meanwhile, Nvidia shares rose 3.2% on Wednesday and 7.8% this week. AMD shares rose 2.7% on Wednesday and are up 3.9% so far this week. SMCI stock rose 3.1% and is up as much as 24% this week. They all reached new all-time highs.

So while the Nasdaq is actually trading around the same 16,000 level as it has in recent weeks, there is still a difference. The use of AI chips and servers has continued to rise, while many other techs have tested or undermined key levels in recent days and weeks.

US crude oil prices rose 1.25% to $79.13 per barrel.

The yield on ten-year government bonds fell by 3 basis points to 4.1%. The yield on two-year government bonds, which is more closely aligned with the Fed’s policy, rose by 1 basis point to 4.56%. Markets see a 70% chance of a rate cut in June, down slightly from Tuesday.

Bulls look at the bear

Investors Intelligence’s bulls-bears measure shows that 59.4% of investment newsletters are bullish, the highest percentage since summer 2021. Bears are down to 16%, the lowest since summer 2021. Bull Measures of 60% or more are considered excessive.

Separately, the Nasdaq won’t be extended from its 50-day line, but it wouldn’t take much to get there.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) rose 1.4% after falling 3.8% on Tuesday. CrowdStrike stock and Palantir are in IGV. The VanEck Vectors Semiconductor ETF (SMH) rose 2.6%. Nvidia stock and AMD are major SMH components, while Qorvo stock is a small holding.

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Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) rose 1.6% and the ARK Genomics ETF (ARKG) rose 0.2%. Tesla stock is a major holding in Ark Invest’s ETFs, along with Square-parent Block. Cathie Wood also owns some Palantir shares.

SPDR S&P Metals & Mining ETF (XME) climbed 1.4%. The US Global Jets ETF (JETS) rose 1.3%. The SPDR S&P Homebuilders ETF (XHB) rose 0.9%. The Energy Select SPDR ETF (XLE) and the Health Care Select Sector SPDR Fund (XLV) rose less than 1%. Dexcom shares are in XLV.

The Industrial Select Sector SPDR Fund (XLI) and the Financial Select SPDR ETF (XLF) advanced 0.5%. The SPDR S&P Regional Banking ETF (KRE) fell 0.1% after big recent gains.


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Stocks to watch

Shares of Palantir rose 9.9% to 26.26, clearing an aggressive or add-on entry of 26.52 after a brief consolidation that is modestly above a previous buy point. The data analysis and AI game won a contract from the US Army for Project TITAN. Palantir will also hold an AI event on Thursday.

Dexcom shares rose 9.8% to 133.72, just surpassing a 132.03 buy point from a flat base with greater consolidation. Investors could have bought DXCM stock Wednesday morning as it recovered from the 50-day line and broke a downtrend line. Late Tuesday, the FDA approved Dexcom’s newest glucose monitor for people who don’t need insulin treatment, including non-diabetics. The Stelo product can be purchased without a prescription.

Qorvo shares rose 2.2% to 115.89, regaining a buy point of 114.79 on a cup with handle basis. Wednesday’s gain was an inside day through Tuesday, when shares tumbled 5.8%. The QRVO share did find support on the 21-day line that day.

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SQ shares rose 1.5% to 75.53, ending a three-day slide. Square-parent Block has a high-handle buy point of 83.29, formed after the stock briefly broke out on earnings. Investors could use a downtrend line as an early entry, which would roughly coincide with the original cup base buy point of 80.29.

Tesla shares break low

Tesla shares fell 2.3% to 176.54, extending its weekly loss to 12.9%. Shares fell intraday to 173.70, undercutting the February low and hitting their worst level in 10 months. Morgan Stanley analyst Adam Jonas said Tesla could “potentially” lose money this year due to weak sales, price cuts and heavy spending.

Tesla Berlin will remain closed until the end of next week after an environmental group targeted its electricity infrastructure on Tuesday to knock the EV factory’s power offline. With Model Y inventories high in Europe, another extended production freeze isn’t all bad.

The relative strength line reached a new 52-week low. The RS line, the blue line in the charts shown, tracks a stock’s performance against the S&P 500.

Analysis of the market rally

The market rally refuses to fall and continues to recover after short, short pullbacks and a rise. For those who got significant exposure at the start of the rally in early November, it was easy to hold on. But it has often been difficult to get the word out in recent months as opportunities have been limited.

A few stocks showed buy signals or retreated on Wednesday, but not many.

Don’t be complacent, especially since investors are generally excessively bullish.

Read The Big Picture every day to stay informed about market direction and the most important stocks and sectors.

Follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.

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