Dow Jones futures edged higher Friday morning, along with S&P 500 futures and Nasdaq futures. The June jobs report looms large for the stock market rally on Friday. Investors also remain on lookout for Tesla (TSLA) deliveries, following strong results from Nio (NIO) and Xpeng Motors (XPEV) and now Li Auto (LI).
Meanwhile, Virgin Galactic (SPCE) rocketed higher overnight after announcing that billionaire founder Richard Branson will join a July 11 flight into space.
Shopify (SHOP), PayPal (PYPL), CrowdStrike (CRWD), Zscaler (ZS) and Snapchat parent Snap (SNAP) are carving new buy points at or close to highs after already flashing buy signals lower in the base. This could offer a place to start or add to a position in these top names.
The stock market rally was higher across the board, at least on the major indexes. Fueled by energy stocks, the S&P 500 led the way, hitting a fresh high. The Nasdaq erased intraday losses to close slightly higher. Yet that masked some notable losses or reversals among many growth stocks, notably hot China stocks such as UP Fintech (TIGR) and IPOs from the past year, such as Palantir (PLTR).
Economists expect the June jobs report to show payrolls up by 675,000, following a gain of 599,000 in May. The jobless rate should dip to 5.7%.
Employers are raising wages sharply but are still struggling to fill open positions. One question is whether more Americans were motivated to find work as many states said they would stop extra jobless benefits as of July 1.
Initial jobless claims fell to a pandemic-era low of 364,00 in the week ended June 26, the Labor Department reported Thursday.
Billionaire Space Race
Meanwhile, SPCE stock soared overnight after Virgin Galactic said late Thursday that it would fly Richard Branson on the first fully crewed flight of its SpaceShipTwo space plane on July 11. That’s nine days ahead of fellow billionaire Jeff Bezos’ planned Blue Origin flight. SPCE stock leapt 29% before Friday’s open.
Dow Jones Futures Today
Dow Jones futures were 0.1% above fair value. S&P 500 futures climbed 0.1% and Nasdaq 100 futures rose 0.3%.
Expect the June jobs report to move Dow Jones futures after the 8:30 a.m. ET release. But the action in stock futures and Treasury yields could whipsaw before the open and beyond.
Crude oil prices edged lower as OPEC ministers struggle to agree on new production quotas.
Stock Market Rally Thursday
The stock market rally closed with broad-based gains on the major indexes, with energy names powering higher.
The Dow Jones Industrial Average rose 0.4% in Thursday’s stock market trading. The S&P 500 index climbed 0.5%. The Nasdaq composite edged up 0.1%. The small-cap Russell 2000 popped 0.8%.
U.S. crude oil futures climbed 2.4% to $75.23 a barrel, hitting fresh three-year highs intraday. OPEC is mulling a production hike that would phase in starting in August, but would not keep pace with demand growth.
Once again, growth stocks had some trouble, while other sectors did well.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) sank 1.55%, while the Innovator IBD Breakout Opportunities ETF (BOUT) dipped 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) eked out a 0.1% gain. ZS stock, CrowdStrike and Snap are all IGV components, but not SHOP stock.
The VanEck Vectors Semiconductor ETF (SMH) slumped 1.5%. Micron Technology (MU) beat views but sold off in part on higher capital spending. But the capex boost didn’t help several chip-equipment makers.
SPDR S&P Metals & Mining ETF (XME) climbed 0.5% and Global X U.S. Infrastructure Development ETF (PAVE) gained 0.7%. U.S. Global Jets ETF (JETS) advanced 1.8%. SPDR S&P Homebuilders ETF (XHB) popped 1.4%. The Energy Select Sector SPDR ETF (XLE) rose 1.7% as energy stocks ran up with soaring crude oil prices. The Financial Select Sector SPDR ETF (XLF) added 0.8%.
Stocks Near Buy Points
Shopify stock edged down 0.2% to 1,458 on Thursday. On June 14, SHOP stock cleared early entries around 1,281 and 1,302 on June 14, then quickly ran up to the 1,499.85 official cup-base buy point, according to MarketSmith analysis. A SHOP stock pullback seemed likely, and that’s what happened. Investors could still use the 1,499.85 entry or use 1,552.33 as a high-handle entry. Investors drawing a trend line in the high handle could find entry around 1,500.
PayPal stock sank 0.85% to 289 on Thursday. PYPL stock now has a legitimate handle, with a 296.11 cup-with-handle buy point. On July 17, PayPal stock cleared an an early entry at 277.96.
CrowdStrike stock dipped 0.1% to 251.16 on Thursday. After clearing resistance on June 10, CRWD stock ran up to new highs, much like the Shopify stock chart. CrowdStrike stock has consolidated around the 251.38 buy point. Investors could use the official entry or 260.92 as a place to buy.
Zscaler stock pulled back 1.1% to 217.72. It does not yet have a handle, but could have one soon on a daily or weekly chart, with a potential 224.04 buy point. For now, the official cup-base buy point is 230.98. Like fellow cybersecurity play CrowdStrike, ZS stock blasted above resistance just below 200. Unlike CRWD, Zscaler stock has not yet hit a new high.
Snap stock edged down 0.7% to 67.66. Shares have now formed yet another handle with a 69.45 entry, but there was not much of a shakeout. Unlike SHOP stock and the names highlighted here, Snap didn’t really run up that much from a prior buy point. Shares cleared a 65.96 buy point, breaking past a clear resistance area just below 66. Above the midpoint of the base, investors could view that as the “official” buy point, with 69.45 or even 73.69 as alternate entries.
Tesla is expected to report quarterly delivery and production figures by Friday morning. Technically, Tesla could release Q2 figures over the weekend or even on Monday and meet its standard of reporting within three business days of the prior quarter.
Analysts expect Tesla deliveries of 196,700 vehicles. That would be a 6.4% quarterly gain. That would be more than double the year-ago figure of 90,900, when the Fremont, California, plant was closed for much of the quarter. FactSet estimates Tesla will deliver 193,500 Model 3/Y cars and 3,200 Model S/X vehicles.
China demand late in the quarter is a wild card, given complaints about alleged Tesla safety and customer service issues. But it’s unclear if that PR headache is having a major impact on Tesla sales, or whether any such impact would show up in June deliveries.
Tesla stock dipped 0.3% to 677.92 on Thursday. Shares cleared a downward-sloping trend line late last week, shortly after retaking the 50-day line. That offered an aggressive entry point for Tesla stock. A move above last week’s high might provide another aggressive entry. Investors also could use 780.89, just above the April 14 short-term high, as another early entry.
Early Friday local time, Li Auto reported June deliveries of 7,713 Li One SUVs, up 78.4% vs. May and 321% vs. a year earlier. Second-quarter deliveries hit 17,575, up 166% vs. a year earlier and far above the company’s target for 14,500-15,500. Li Auto’s lone production vehicle, the Li One, has a tiny gas engine as a range extender.
On Thursday, Nio reported June deliveries of 8,803, up 20.4% vs. May and 116% vs. a year earlier. Second-quarter deliveries totaled 21,896 electric SUVs, up 112% and at the higher end of Nio’s target range of 21,000-22,000. Chip shortages affected Nio production in recent months.
Xpeng deliveries hit 6,565 in June, up 15% vs. May and surging 617% vs. a year earlier. Q2 deliveries shot up 439% vs. a year earlier to 17,398.
Before Friday’s open, Li Auto stock, Xpeng and Nio all fell just over 1%.
On Thursday, Nio stock rose early, but reversed lower for a 4.3% decline. That’s after surging 18% over the prior three sessions, vaulting above an especially aggressive entry. Xpeng stock jumped near the open, clearing a similar entry, before reversing for a 1.7% loss. Li stock dipped 0.7%.
Market Rally Analysis
The stock market rally had an interesting session. The S&P 500 index hit a fresh high, while the Dow Jones and Russell 2000 moved closer to all-time high levels. The Nasdaq eked out a gain at its closing.
But beneath the surface there were a lot of growth stocks falling 3%, 4%, 5% or more. Generally the action didn’t cause too much chart damage. In fact, some stocks are working on handles or getting other shakeouts in emerging bases.
However, it’s a lesson not to buy stocks that are extended, especially highfliers.
While the Nasdaq and S&P 500 have moved to record highs, the Nasdaq and NYSE advance/decline lines haven’t improved much. That points to a lack of breadth in the stock market rally. It’s also more evidence that this is a stock picker’s market.
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