Dow Jones futures edged lower early Friday, along with S&P 500 futures and Nasdaq futures, with the November jobs report on tap. DocuSign (DOCU), GitLab (GTLB) and Samsara (IOT) were notable earnings movers overnight.
The stock market rally saw modest losses Thursday after the S&P 500 and Nasdaq hit fresh all-time highs intraday. Small caps extended a pullback.
Bitcoin topped $100,000 for the first time, but couldn’t hold that level. It kept falling in late trading. Many crypto plays erased intraday gains, including MicroStrategy (MSTR) and Coinbase Global (COIN)
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Microsoft (MSFT) cleared short-term highs, offering fresh early entries. Tradeweb Markets (TW), BlackRock (BLK), Confluent (CFLT) and Icici Bank (IBN) were among stocks flashing buy signals.
Tesla (TSLA) moved above a trading range to a new two-year high.
A number of highly extended stocks became more so. Investors need a game plan for handling these “heat” stocks.
Tesla stock is on the IBD Leaderboard watchlist. Samsara stock is on the IBD 50. Microsoft stock is on IBD Long-Term Leaders. BlackRock was Thursday’s IBD Stock Of The Day. Confluent stock was Wednesday’s pick.
Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures lost 0.1% and Nasdaq 100 futures declined 0.1%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Bitcoin rose 0.2% to $99,137.34 as of 4 p.m. ET vs. 24 hours earlier. But the cryptocurrency came off early Thursday highs of $103,900 after topping the $100,000 level for the first time Wednesday night.
Bitcoin briefly spiked down to $92,1111 Thursday evening before recovering to about $98,000 early Friday.
Late Thursday, President-elect Donald Trump named venture investor David Sacks, an Elon Musk ally, to be the “White House A.I. & Crypto Czar.”
MicroStrategy stock, which jumped to 444.94 soon after the open, reversed to close down 4.8% to 386.40. MSTR stock is off 0.3% for the week but up nearly 513% so far in 2024.
Coinbase stock backed off a record high of 349.49 to finish down 3.1% to 320.57. But COIN stock is up 8.2% for the week and 84% in 2024.
The Labor Department will report the November jobs report at 8:30 a.m. ET. Economists expect nonfarm payrolls to rise by 200,000 after job growth cooled to just 12,000 in October due to hurricanes and strikes. That included a loss of 28,000 private jobs. The jobless rate should tick up to 4.2%, while the annual gain in average hourly earnings should edge down to 3.9%.
Software makers DocuSign, GitLab, Samsara, Veeva Systems (VEEV), UiPath (PATH), Microsoft-backed cybersecurity IPO Rubrik (RBRK) and Asana (ASAN) reported Thursday night, along with Hewlett Packard Enterprise (HPE) and retailers Lululemon Athletica (LULU), Victoria’s Secret (VSCO) and Ulta Beauty (ULTA).
Rubrik, Asana, DocuSign, Ulta Beauty, Lululemon and GitLab stock were big winners overnight, with Veeva up as well. HPE and Victoria’s Secret rose slightly.
Samsara stock plunged and UiPath sank.
HP Enterprise had moved into a buy zone Thursday on an analyst upgrade just before earnings. Veeva stock also closed in a buy zone.
GitLab closed modestly below a buy point. PATH stock was slightly extended from a bottoming base, but hitting resistance at the 200-day line.
The other stocks were either extended from buy zones or lagging for months.
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The stock market rally faded into the close Thursday, but near record highs.
The Dow Jones Industrial Average declined 0.55% in Thursday’s stock market trading. The S&P 500 index and Nasdaq composite retreated 0.2%. The small-cap Russell 2000 fell 1.25%.
Leading stocks are generally faring well, with speculative stocks really coming on. Airline stocks jumped on bullish guidance from American Airlines (AAL) and Southwest Airlines (LUV)
However, after several big earnings winners on Wednesday, several software plays tumbled on results Thursday. Homebuilders continue to struggle, even with Treasury yields holding at their lowest levels in weeks.
U.S. crude oil prices fell 0.35% to $68.30 a barrel.
The 10-year Treasury yield was flat at 4.18%, again backing off morning highs.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) gave up 1.2%. Microsoft stock is a big component, with Samsara, GitLab, UiPath, Asana and DocuSign stock also in IGV. The VanEck Vectors Semiconductor ETF (SMH) sank 1.7%, with Nvidia the dominant holding.
ARK Innovation ETF (ARKK) declined 0.7% and ARK Genomics ETF (ARKG) slumped 3.6%. Tesla stock remains a major component across Ark Invest’s ETFs. Cathie Wood also has built up a sizable stake in NVDA stock.
SPDR S&P Metals & Mining ETF (XME) shed 0.7%. U.S. Global Jets ETF (JETS) ascended 3.1%, with American Airlines and Southwest both big components. SPDR S&P Homebuilders ETF (XHB) stepped down 1.5%. The Energy Select SPDR ETF (XLE) rose 0.4%.
The Health Care Select Sector SPDR Fund (XLV) fell 1.1% and the Industrial Select Sector SPDR Fund (XLI) lost 1.2%. The Financial Select SPDR ETF (XLF) climbed 0.3%.
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Tesla stock popped 3.2% to 369.49 on Thursday, clearing a recent range to hit a fresh two-year high. That could have offered an add-on entry for existing TSLA holders, but shares are significantly extended from key moving averages.
On Thursday, Bank of America raised its TSLA price target to 400 from 350 in a highly bullish note. BofA is fully expecting Tesla robotaxis and the Optimus robot in the near future.
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The market rally had a relatively quiet day at or around record highs.
“Heat” has definitely been working, with more speculative names running especially hot.
If you own greatly extended stocks, a key question is when to sell.
When stocks are more than 20%-30% above their 10-day moving averages, 100% over their 50-day lines or 200% above the 200-day, it may be prudent to bank some profits.
A lot will depend on your conviction in the stock and your investing style. Some people are looking to hold for the big run, while others want to cash in. If you’re going for home runs, you have to accept major drawdowns, with the risk that you’ll eventually cut bait after giving up much of your gains.
It doesn’t have to be an all-or-nothing. Investors can take partial profits on the way up. That can give you the confidence to hold the remaining core position — and to be more willing to sell the remainder if the stock breaks hard.
On the way down, investors can take profits on a major point loss or drop through the 10-day line, with other lines in the sand to draw you out.
The key is to find a strategy that works for you. So have an exit strategy for those winners.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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