Dow Jones Futures: Market Recovery Suffers Big Loss As Key Inflation Report Approaches

Dow Jones and S&P 500 futures fell early on Friday, while Nasdaq futures rose slightly as investors awaited a key inflation report before opening.

The stock market rebounded sharply on Thursday, with major indices undermining key short-term support. Below the surface, conditions are even worse, with the declining defeating the winners and the ruptures not working.

With that in mind, Ulta Beauty (ULTA), Dollar Tree (DLTR) and Canadian Natural Resources (CNQ) are all around the buds. They all have lines of relative strength close to 52 weeks or all-time highs.

According to MarketSmith’s analysis, ULTA shares have been flirting with a 426.93 cup purchase point with handle. Shares finally fell 0.7% to 422.35 on Thursday. The DLTR stock is close to a cup break with a handle, but is also just above its 50-day line, so this could offer a little more security. Dollar Tree stocks have a buy point of 166.45, but a move above Thursday’s high of 163.36 would offer a trend entry. Shares fell 0.9% to 159.85. CNQ’s shares are not far above its 50-day line and are part of the market’s leading oil and gas space. Shares fell 2.4% to 66.65, close to a 69.56 point of purchase. Canadian Natural Resources was the stock of IBD on Thursday.

Meanwhile, Fortinet (FTNT) rose 1% to 303.50, just claiming its 50-day line, boosted by a FTNT 5 by 1 stock split announcement. , but they retreated as market sales intensified. It’s worth seeing the cybersecurity leader, with his RS line bouncing to highs. FTNT’s shares are in a messy consolidation and are a far cry from traditional buying points. Fortinet’s shares are IBD’s long-term leaders. Investors could occupy a position in FTNT shares as a long-term leader if it recovers its 200-day line decisively. But recent gains have reached light volume, while the current market climate is not encouraging.

Tesla stock

Finally, Tesla (TSLA) fell 0.9% to 719.12. For a second straight session, Tesla shares fell solid intraday gains, reaching resistance on the 21-day moving average. TSLA shares are far from actionable.

Sales and production in China recovered in May, while Tesla Shanghai production has now returned to full capacity. Meanwhile, the National Highway Traffic Safety Administration is expanding its autopilot probe to 830,000 Tesla electric vehicles. The investigation began last year focusing on the crashes of the autopilot with emergency vehicles. NHTSA seeks to determine whether autopilot undermines “the effectiveness of driver oversight.”

The video embedded in this article analyzed the market share and talked about the actions of TSLA, Adobe (ADBE) and Quanta Services (PWR).

The Chinese giant is approaching the highs when it seizes the crown of electric vehicles and becomes a supplier of Tesla

Consumer inflation report

The Department of Labor will publish the May consumer price index at 8:30 a.m. ET. Economists expect a 0.7% increase over April, led by energy and food prices. The CPI inflation rate is expected to fall for the second consecutive month to 8.2% from 8.3% in April. But that’s not a noticeable drop, and the global inflation reading may pick up.

Base prices are expected to rise a solid 0.5% month on month. Underlying inflation is expected to cool to 5.9% from 6.2% in April.

The Federal Reserve wants inflation to go down significantly, with labor markets cooling enough so that wage pressures do not keep inflation too high.

Dow Jones futures today

Dow Jones futures fell 0.2% from fair value. S&P 500 futures lost 0.1% and Nasdaq 100 futures rose 0.2%.

Crude oil prices rose slightly.

The 10-year Treasury yield fell 1 basis point to 3.03%.

The CPI inflation report is likely to change Dow Jones futures and Treasury yields ahead of Friday’s opening bell.

Remember that overnight action on Dow futures and elsewhere does not necessarily translate into actual trading at the next normal stock market session.

Join IBD Experts as they discuss actionable stock recovery actions on IBD Live

Stock market meeting

The stock market rebound was mixed on Thursday morning, but sales picked up strength, especially in the late afternoon.

The Dow Jones Industrial Average was down 1.9% on Thursday. The S&P 500 fell 2.4%. The Nasdaq compound fell 2.75%. The small Russell 2000 capitalization fell 2.3%.

Flex LNG (FLNG), Amphastar Pharmaceuticals (AMPH) and TimkenSteel (TMST) continued to fall on Thursday in decisive failures to leave a new base. Vertex Pharmaceuticals (VRTX), which attempted to exit on Wednesday, fell below its 50-day line on Thursday, but has yet to be shattered. Nor is Atkore (ATKR), which exploded on Friday and raised gains on Monday, before lowering its buying point on Thursday.

U.S. crude oil prices fell 0.5 percent to $ 121.51 a barrel, still three-month highs. Natural gas prices rose 3% after falling intraday after a solid drop on Wednesday.

The 10-year Treasury yield rose 1 basis point to 3.04%. The European Central Bank said on Thursday it would begin raising interest rates in July.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) suffered 3.6%, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 2%. The ETF of the iShares Extended Technology Software (IGV) sector fell 3.1%, with the shares of FTNT owned by IGV. The VanEck Vectors Semiconductor ETF (SMH) yielded 2.7%.

The SPDR S&P Metals & Mining ETF (XME) was up 4.8% and the Global X US Infrastructure Development ETF (PAVE) was down 2.1%. US Global Jets ETFs (JETS) were down 3.4%. SPDR S&P Homebuilders ETF (XHB) fell 0.5%. The Energy Select SPDR ETF (XLE) lost 2.2% and the Financial Select SPDR ETF (XLF) fell 2.5%. The SPDR Fund for the Selected Health Sector (XLV) closed 2.3%.

Reflecting more speculative stocks, ARK Innovation ETF (ARKK) fell 6.1% and ARK Genomics ETF (ARKG) 5.65%. TSLA shares remain the No. 1 stake in Ark Invest ETFs.

Top five Chinese stocks to watch now

Market concentration analysis

The stock market rebound had its worst day in weeks. Major indices closed below their 21-day moving averages for the first time since late May and lowered June intraday lows.

The Nasdaq saw a larger volume, marking its second consecutive day of distribution. Thursday was also a day of distribution for the S&P 500 and the Dow Jones, as NYSE volume also rose.

But wait, there’s more! The upturn in the market is much weaker than the main indices indicate.

The Russell 2000 and S&P MidCap 400, which surpassed their 50-day lines on Tuesday, fell on Wednesday and fell sharply on Thursday, undermining their 21-day lines.

The weakness of small and medium-sized capitalizations is a good indicator of the breadth of the market, which was terrible on Thursday. The declining ones led the winners almost 3 to 1 on the Nasdaq and 4 to 1 on the NYSE.

Outside the oil and gas space, market share is deteriorating. Shipping stocks have plummeted, adding to the weakness of shipping in general. Metals and miners are melting again. Agriculture works do not show green shoots. Drug stocks and utilities such as VRTX, Pfizer (PFE) and Exelon (EXC), after staying reasonably well, had a tough session.

Leading actions are not doing well. Oil and gas stocks are doing well overall, but even this sector is seeing large volatile movements, with actions related to LNG, such as FLNG shares, which have fallen in recent days. In more general terms, outbreaks are failing, often dramatically.

On the downside, the next big level to see is the Nasdaq follow-up day on May 26th. A close below the FTD minimum would be a very bad signal for the market to rebound.

Time to market with IBD’s ETF market strategy

What to do now

The rise of the stock market shows many worrying signs. Of course, the current uptrend is likely to increase once the inflation report and the Fed meeting have passed. But these events could also be catalysts for stronger sales.

Investors should use risk management. Even if the market rally recovers soon, that doesn’t mean the recent failed ruptures will suddenly revive and lead the load.

Current market action is helping to form bases and handles, so investors should update their watchlists with new additions and deletions. It is possible that Ulta Beauty, Dollar Tree, and Canadian Natural Resources have already been on your list, while FTNT shares may slip again.

But keep the exposure light on until conditions improve. Getting quick partial profits and reducing losers quickly is vital.

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