Dow Jones futures: S&P 500 regains key level, but be cautious; Tesla doubles the discount in the US
Dow Jones futures rose slightly after hours, along with S&P 500 futures and Nasdaq futures. Micron technology (IN) and Tesla (TSLA) were in focus at night.
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The stock market rally made solid progress on Tuesday, with Nike (ON) increasing and FedEx (FDX) leading in terms of earnings while also supporting some competitors and related stocks.
The S&P 500 rose slightly above its 50-day line, a positive sign but not decisive.
An apple (AAPL) managed to rise modestly, extending a rebound from just above the market’s bearish lows on Tuesday. Tesla (TSLA) failed to take a profit, closing slightly lower. Tesla has reportedly doubled its year-end shipping discount in the US
Investors should remain cautious. The market rally remains under pressure and has a nasty habit of retreating after showing some strength.
Meanwhile, Sunny first (FSLR), Medpace (MERP), Aehr Test Systems (acr), imp (PI) and Schlumberger (SLB) are leading stocks that are still near their 50-day or 10-week moving averages.
MEDP stock was added to IBD ranking on Wednesday, with PI shares on the ranking’s watch list. Shares of SLB and KLA Corp IBD Big Cap 20.
Micron Profits
Micron posted a bigger-than-expected loss while Q1 revenue fell 47%. The memory chip giant is targeting slightly lower for the current Q2.
Micron said it will continue to reduce capital spending. This is not good news for manufacturers of exposed memory chips Applied materials (HUGE), Lam Research (LRCX) and AH, OK (CLUTCH)
MU shares fell 2% in extended trading. Shares rose 1% to 51.19 in the regular session on Wednesday.
Meanwhile, AMAT and Lam Research shares fell 2% overnight, while KLAC shares sank less than 1%.
Disk drive manufacturers Western Digital (WDC), Seagate technology (STX) sank by 2.2% and 1.5%, respectively.
Dow Jones futures today
Dow Jones futures were up 0.2% at fair value. S&P 500 futures advanced 0.3% and Nasdaq 100 futures rose 0.35%.
The 10-year Treasury yield fell 3 basis points to 3.65%.
Remember this night action in Dow futures and elsewhere does not necessarily become an actual trade in the next regular Stock Exchange session.
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Stock market rallies
The stock market rally rebounded on Wednesday, quickly climbing well above 1% and largely holding on to those gains until the end.
The Dow Jones Industrial Average rose 1.6% on Wednesday Exchange Trading. The S&P 500 rose 1.5%, with Dow Jones giant Nike the best S&P 500 performer for the day. The Nasdaq composite also advanced 1.5%. The small-cap Russell 2000 rebounded 1.7%.
Apple shares rose 2.4% to 135.45 on Wednesday, still well below its moving averages. On Tuesday, AAPL shares hit 129.89, just above June’s bear market bottom of 129.04.
U.S. crude oil prices rose 2.7% to $78.29 a barrel.
The yield on 10-year government bonds was unchanged at 3.68%.
ETFs
Avg the best ETFsInnovator IBD 50 ETF (FFTY) rose 2.2%, while the Innovator IBD Breakout Opportunities ETF (BOOTH) is 1.6% higher. iShares Expanded Tech-Software Sector ETF (IGV) grew by 1.2%. VanEck Vectors Semiconductor ETF (SMH) rose 2.2%. Micron stock is a notable SMH holding, along with chip equipment stocks AMAT, LRCX and KLAC.
Reflecting the more speculative stocks of history, the ARK Innovation ETF (ARKK) rose 1.7% and the ARK Genomics ETF (ARKG) 2.2%. Tesla stock is a major holding in Ark Invest’s ETF.
SPDR S&P Metals & Mining ETF (XME) jumped 2.6%, and the Global X US Infrastructure Development ETF (PAVING) 1.7%. US Global Jets ETF (STREAMS) rose 1.3%. SPDR S&P Homebuilders ETF (XHB) rose 1.9%. Energy Select SPDR ETF (XLE) and Financial Select SPDR ETF (45) advanced by 1.55%. Select Healthcare Sector SPDR Fund (XLV) added 1.3%.
The five best Chinese stocks to watch now
Tesla shipping discount
Tesla began offering $7,500 to receive a U.S. delivery of a Model 3 or Model Y before the end of the year, Electrek reported late Wednesday. That’s up from $3,750 at the start of December, with 10,000 free Supercharger miles too. Tesla is trying to boost its fourth-quarter delivery numbers.
Many potential buyers may delay shipping until January 1, when new US tax credits of up to $7,500 will take effect. Tesla’s US sales may also face a negative impact from Elon Musk’s Twitter actions and politically charged tweets .
Tesla shares tried to rally on Wednesday, but failed to end their losing streak on a strong market day. Shares of TSLA fell 0.2% on Wednesday to 137.57, hitting another bearish low. Shares are down 8.4% so far this week and 29% in December.
Stocks to watch
Shares of First Solar rose 3.5% to 162.06 after falling to 150.25 intraday, finding support just above the 50-day line. Shares of FSLR are now 5.7% above the 10-week line and right at near-term highs. The solar power leader can work on a new base, but it needs a few more weeks.
Shares of MEDP rose 3.4% to 210.59, bouncing off the 50-day line and retracing its 21-day line. Investors can buy shares of Medpace now or wait for a breakout of the trend line starting on November 15th. MEDP stock has a 235.82 buy point from a 16% deep consolidation to a 45% deep base.
PI shares rose 2.3% to 117.15, continuing to bounce off the 10-week line, but only 4% above that level. This RFID chip play could be taken from this pullback after a breakout in late October earnings.
AEHR rose 1.3% to 22.80, bouncing off its 50-day line. A move above the 21-day line would suggest entry into the volatile stock. EV-exposed chip testing firm delivers booming revenue growth.
Shares of SLB rose 3% to 53.31, extending Tuesday’s bounce from the 50-day and 21-day lines. Now clearly breaking the trend line in a short consolidation, Schlumberger stock is still actionable here.
Market Rally Analysis
OK, now the stock market rally is up. After posting gains on Tuesday, the major indexes had a strong session on Wednesday.
Nike-backed Dow Jones continued to rally from its 50-day line.
The S&P 500 and S&P MidCap 400 just recovered their 50-day moving averages, but only by a hair. The S&P 500 should decisively move above the 50-day line, and that would be just the first step for the market rally.
The Nasdaq and Russell 2000 remained below their 50-day moving averages.
More leading stocks found support or bounced off key levels, including First Solar and Aehr Test Systems. Some are flashing buy signals, but in a volatile market.
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What should we do now
After last week’s ugly week of reversals and Monday’s losses, the last few days have been positive, but don’t get too excited.
Market exposure should still be weak. The uptrend remains under pressure with the S&P 500 right at a key level, with several other obstacles ahead.
Even if the market rally recovers much of the previous week’s losses, there is still the risk that this could be another trap to lure investors into just before a pullback.
So while several stocks have flashed buy signals, investors should be wary of taking new positions. Yes, if the major indexes continue to recover, the new buying in the last few days will likely work. But if the S&P 500 falls to Tuesday’s lows or worse, those new purchases are likely to fizzle out.
If you do try to play the current market, keep positions small and take at least partial profits quickly. Broad market ETFs can be a way to get in on a mini rally without the individual stock risk.
But many stocks are created. So investors should be ready to act by updating watchlists and staying engaged.
Read it The big picture every day to stay in sync with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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