Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures, heading into Thanksgiving Day.
The stock market rally was positive for the second consecutive session. Fed officials see slower rate hikes coming “soon,” according to Fed minutes from the November meeting released Wednesday afternoon.
The Nasdaq led, supported by a rebound Tesla (TSLA). The major indices have all risen solidly in this short holiday week so far. But a longer holiday before the market rally could be constructive.
Investors should be cautious about adding exposure given significant technical resistance and remarkable economic reports ahead.
However, Dexcom (DXCM), UnitedHealth (UNH), Neurocrine Biosciences (NBIX), Medpace Holdings (MEDP) and Shock wave medical (SWAV) are five health care stocks showing interesting action.
DXCM stock and Neurocrine Biosciences are on IBD Leaderboard, with MEDP stock on the Leaderboard watchlist. NBIX stock and Medpace are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures rose 0.1% from fair value. S&P 500 futures rose 0.1% and Nasdaq 100 futures rose 0.15%.
The US stock markets are closed on Thursday for Thanksgiving Day. On Friday, US stock markets will close early at 1 p.m. ET. But other exchanges around the world are normally open on Thursdays and Fridays.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally had some wobbles Wednesday, but extensive gains, led by techies.
Initial jobless claims rose to their highest level in three months, while persistent claims hit an eight-month high. S&P Global’s purchasing managers’ indices for US manufacturing and services both pointed to contraction.
The minutes from the Fed bolstered expectations of a 50 basis point rate hike at the December 14 meeting. Markets are still favoring another half-point move in February, but there is a decent chance of a quarter-point upside.
The Dow Jones Industrial Average rose 0.3% during Wednesday trading. The S&P 500 index climbed 0.6%, led by TSLA stocks. The Nasdaq composite was up 1%. The small-cap Russell 2000 rose 0.1%.
US crude oil prices fell 3.7% to $77.94 a barrel. Natural gas futures rose 7.2%.
The 10-year Treasury yield fell 5 basis points to 3.71%. Two-year government bond yields, which are more closely linked to the prospects for the Fed rate hike, dipped below 4.5%.
The US dollar fell significantly for a second session in a row, back near recent lows.
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The iShares Expanded Tech-Software Sector ETF (IGV) climbed 1.5%. The VanEck Vectors Semiconductor ETF (SMH) gained 0.9%.
SPDR S&P Metals & Mining ETF (XME) rose 0.3%. The US Global Jets ETF (JETS) was up 0.1%. SPDR S&P Homebuilders ETF (XHB) climbed 0.5%. The Energy Select SPDR ETF (XLE) fell 1.1%. The Health Care Select Sector SPDR Fund (XLV) rose 0.4%. Dow Jones’ massive UNH share is the largest holding in XLV.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) was up 2.9% and ARK Genomics ETF (ARKG) was up 0.9%. TSLA stock is a major stock in Ark Invest’s ETFs
Shares of Tesla rose 7.8% to 183.20 on Wednesday, recovering from Tuesday’s bear market lows as Citigroup upgraded the EV giant from selling to holding. TSLA stock is still down 19.5% so far this month and is about to halve by 2022.
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Stocks to watch
Dexcom shares rose 1.7% to 112.92, finding support at the 21-day moving average. DXCM shares have paused this month after trailing earnings on Oct. 28. Dexcom shares arguably have a long hold with a buy point of 123.46 after a seven-month consolidation. Investors could buy DXCM shares from an early entry into the 21-day line, perhaps using Tuesday’s high of 113.88 as a specific buy point.
Medpace shares fell 1.3% to 218.81 on Wednesday. Shares have been consolidating near record highs since they soared 38% after gains on Oct. 25. Since then, MEDP stock has forged a messy handle on a deep, long-standing cup base. While stocks have had some major swings throughout the day, MEDP stock is currently on track to form a tight three-week pattern by Friday’s close. Investors could use the Nov. 15 close of 226.57 as an early entry, above most of the recent trading.
NBIX shares fell 1.5% to 118.97. Stocks are consolidating near multi-year highs, extended from an October breakout. Despite a plunge to the 50-day line last week, the supply of Neurocrine is on a tight three-week pattern on track for a fourth week. Technically, that has a buy point of 126.09, though investors may want to wait for some quieter action.
Shockwave shares rose 4.7% on Wednesday to 264.06, again above the 21-day line, but met resistance at the 50-day line. After a failed breakout at the end of October and a sharp sell-off that spilled over into earnings, SWAV shares have rebounded over the past week. A new base will take more time, but aggressive investors could use a strong move above 50 days as early entry.
UNH shares climbed 1.3% to 529.71 and recovered above the 50-day and 21-day lines after briefly undermining the 200-day line last week. UnitedHealth stock used to be a long-term IBD leader and still shares many characteristics. Investors can use a bounce off the 50-day line as an early entry or long-term leader entry. UNH stock must forge a new base after a breakout from a cup-with-handle base quickly failed last month.
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Analysis of the market rally
The stock market rally contributed to Tuesday’s gains. The S&P 500 just hit its November 15 intraday high, closing within 1% of its 200-day line.
The Russell 2000 got to its 200-day line.
The Nasdaq contributed to Tuesday’s rebound from its 21-day moving average, though it is still below the near-term high of Nov. 15 and well below the 200-day moving average.
The Dow Jones came within 20 points of its August 16 intraday high.
The S&P 500 resolutely above its 200-day line — which roughly coincides with a year-long trendline of bearish tops — is a huge test of the market rally.
A slew of economic data could tip the Fed’s interest rate expectations and, with it, the stock market. On Wednesday, Nov. 30, the October JOLTS report will show job openings, with Fed Chief Jerome Powell speaking later in the day. On Thursday, the PCE price index, the Fed’s favorite inflation gauge, will be released, along with unemployment claims and the ISM manufacturing index. The November jobs report is expected on Friday, November 2.
Ideally, the market would move sideways for a few days, with at least the 21-day line catching up, heading into those economic reports.
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What to do now
The market rally has produced some nice gains this week, with more stocks sending buy signals over the past few days. Investors could have added a little more exposure as a result.
But they may want to be cautious about making major new purchases as the S&P 500 hovers below the 200-day line and so many Fed-critical economic developments take place next week.
Also consider taking some partial profits in stocks that are rising quickly. Equities make short-lived progress amid choppy uptrend and sector rotation.
Still, investors should work hard on their investment shopping lists, looking for setup and usable names across industries.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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