Dow Jones Futures: Market Expects This from Fed Chief Powell;  5 Actions in Buy Zones

Dow Jones Futures: Market Expects This from Fed Chief Powell; 5 Actions in Buy Zones

Dow Jones futures were down slightly on Friday morning, along with S&P 500 and Nasdaq futures, with Fed chief Jerome Powell ready to deliver his long-awaited Jackson Hole policy speech shortly after the bell. of opening.




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The stock market rally saw a strong session on Thursday, with major indexes rising above a key near-term level despite concerns that Fed Chief Powell will signal the need for tight monetary policy in the future. long term.

Axelis Technologies (ACLS), GlobalFoundries (GFS), Steel Dynamics (STLD), Isolation (He can International RPM (RPM) were among several stocks exiting or flashing buy signals.

earnings

ultra beauty (ULTA) was actionable on Thursday but had gains after the close. ULTA shares rose modestly on strong earnings and guidance. The shares closed up 1.75% on Thursday to 419.25, offsetting buy points at 417.08 and 418.89.

Work day (DAY) and Affirm Participations (AFRM) also reported. WDAY stock jumped 10% overnight but was still below the 200-day line. AFRM shares are down more than 10% on heavy losses and weak guidance.

Axcelis and STLD shares joined the IBD Leaderboard on Thursday. GFS stocks and Steel Dynamics are the new swingers on SwingTrader. ACLS stock is at IBD 50. Steel Dynamics stock is Thursday’s IBD day stock.

The video embedded in the article discussed Thursday’s market rally and what to expect from Fed chief Powell. It also analyzed stocks in Axcelis, Steel Dynamics and PODD.


Speech by Fed Chair Powell: The two words that could upset the S&P 500


Speech by Fed Chief Powell Seen as Hawkish

Fed Chief Powell, scheduled to speak at 10 am ET Friday at the Jackson Hole symposium, is unlikely to provide much information on the size of the Fed’s rate hike in September. Instead, it is expected to emphasize longer-term inflationary pressures. This would include chronic labor shortages, but also perhaps higher energy and commodity prices, rising trade barriers and tight housing supplies.

All this suggests that the Federal Reserve will need to significantly raise interest rates – and keep them there for the foreseeable future. Fed chief Powell may even suggest that a recession or a long period of below-average growth will be needed to raise unemployment and contain wage inflation pressures.

That could mean sluggish demand, a strong dollar and higher Treasury yields. This can weigh on companies’ profitability and valuations, especially highly valued growth.

Just a few weeks ago, markets saw rate hikes cooling off rapidly after September and perhaps reversing downwards next year.

Dow Jones Futures Today

Dow Jones futures were 0.1% below fair value. S&P 500 futures were down 0.15% and Nasdaq 100 futures were down 0.2%.

The 10-year Treasury yield rose 2 basis points to 3.05%.

Crude oil futures rose slightly, while natgas prices rose 2%.

Ahead of Powell’s speech and opening bell, the Commerce Department will release its July income and expenditure report. That report includes the Personal Consumption Spending Index, the Fed’s favorite inflation indicator.

Keep in mind that overnight action in the Dow futures and elsewhere does not necessarily translate to actual trading in the next regular session of the stock market.


Join IBD experts as they review actionable stocks in the stock market rally on IBD Live


stock market rally

The stock market rally had a solid session, especially in tech and small caps, coming back above some key levels despite mixed earnings and guidance from some notable companies.

The Dow Jones Industrial Average rose 1% on Thursday’s stock market, even with salesforce.com (CRM) falling solidly on earnings. The S&P 500 index rose 1.4%. The Nasdaq compound jumped 1.7%. Small cap Russell 2000 advanced 1.55%.

US crude oil prices fell 2.5% to $92.52 a barrel.

The 10-year Treasury yield fell 8 basis points to 3.03% after rising 23 basis points in the previous four sessions.

ETFs

Among the best ETFs, the Innovator IBD 50 (FFTY) ETF is up 1.7%, while the Innovator IBD Breakout Opportunities (BOUT) ETF is up 1.1%. The iShares Expanded Software Technology Sector (IGV) ETF gained 0.8% despite CRM inventory being a large component. The VanEck Vectors Semiconductor ETF (SMH) surged 3.4%.

The SPDR S&P Metals & Mining (XME) ETF rose 2.6%, with STLD stocks being one of the top holdings. The SPDR S&P Homebuilders (XHB) ETF rose 1.8%. The Energy Select SPDR (XLE) ETF rose 0.8%. The Health Care Select Sector SPDR Fund (XLV) advanced 1.1%.

Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) gained 2.9% and the ARK Genomics ETF (ARKG) 2.5%.


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Stocks in buy zones

ACLS shares soared in massive volume, rising 13% to 81.73. Axcelis shares first broke above the one-handle downtrend, then moved past the official handle-cup buying point of 79.93, according to MarketSmith’s analysis. The relative strength line has reached a new high, a bullish sign of a breakout as ACLS stocks outperform the S&P 500 index.

GFS shares rose 6.8% to 64.50 in heavy trading, breaking the downtrend on a handle. The identifier’s official buy point is 66.06 as part of a very deep double bottom consolidation. GlobalFoundries shares went public in October 2021.

Steel Dynamics stock rose 6.6% to 86.76, breaking the one-handle downtrend and the official handle cup buy point of 86.04. The volume was way above normal. Nucor (NU) and commercial metals (CMC) also broke out of downtrends, but in lighter volume.

On Wednesday, Cleveland-Cliffs (CLF) announced a price increase of at least US$75 per ton for carbon steel products.

PODD shares rose 3.35% to 282.86, clearing a buy point of 276.48. Volume was slightly below normal, but Insulet shares rebounded from their 21-day line on Wednesday in above-average trading.

RPM stock gained 5.6% to 97.83, clearing a 95.80 entry from a “handle” that needed another day to be adequate. The RS line for RPM stocks hit a new high.

Market Rally Analysis

Fed chief who? The stock market rally came on strong Thursday despite the big news on Friday.

The Dow Jones, S&P 500 and Nasdaq composite pulled back above their 21-day moving averages after hitting resistance in the previous two sessions. The small-cap Russell 2000 and the S&P Midcap 400, which rebounded from the 21-day line on Wednesday, are pointing to the 200-day line.

Even better, an increasing number of stocks are flashing buy signals and from various sectors. The stock movements of ACLS, Steel Dynamics and more reflect the handles that developed or expanded during the market rally’s downturn.

Previous leaks continue to work.

So there’s a lot of positive action out there. But it’s coming right before Powell’s speech.

Powell may or may not be especially aggressive, but ultimately it’s the market’s reaction that matters. The good news is that the markets are gearing up for an aggressive speech.

Fed chief Powell could propel major indexes up, giving major stocks and potential leaders a turbo boost that is establishing themselves. But a backlash to Powell’s speech could push the market rally down significantly, erasing strong gains in winning stocks.


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What to do now

Well now let’s wait. Thursday’s breakouts and buy signals certainly gave investors reason to take some new positions. If you decided that discretion was the better part of the value in Powell’s speech, that’s fine. If the market continues to advance over the next few days, various setups will soon turn into buy signals.

Build your watch lists. Be sure to cast a wide net to find leading stocks from a variety of industries. Pay close attention to a select group in or near shopping zones.

Be ready to act on Friday. The market rally may affect Powell’s pitch, but at some point you may want to add or reduce exposure.

Read The Big Picture every day to stay in sync with market direction and major stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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