As with S&P 500 futures and Nasdaq futures, Dow Jones futures changed little overnight. The stock market rallied higher on Wednesday, extending a rebound, but closed off the session’s lows well. Tesla Stock Was a Big Winner While Apple Chipmaker Taiwan Semiconductor (TSM) is the one reporting the income.
Consumer inflation warmed slightly more than expected, reaching a 39-year high of 7%. But investors were relieved that the December inflation report was no worse. Meanwhile, crude oil and copper prices continued to rise, with energy, mining and other commodity-related stocks rising.
Still, the major indices held back early morning highs, with the Nasdaq hitting resistance after rebounding from Monday afternoon. Applicable Materials (AMAT) bounced back sharply from its 50-day line, while mosaic (MOS) exceeded a buy point. Tesla (TSLA) was one of Wednesday’s big movers, garnering major support but not yet actionable.
KB Home reports earnings after close time Taiwan Semiconductor (TSM) and Delta Airlines (DAL) reported early Thursday, starting with earnings for their respective sectors.
KB Home’s earnings beat View’s. Sales came out slightly lighter, but the homebuilder provided bullish guidance on revenue, sale price and profit margin. KBH stock, which was a laggard when rivals broke out, turned stronger overnight, moving signals above the 50-day and 200-day lines.
Shares of DAL fell 1.5% on Wednesday. Shares have been rallying for the past several weeks, but are well above their 2021 highs, along with other airline stocks. But Delta’s earnings will be significant not only for other airlines, but also for hotels and online travel sites that are outperforming.
Taiwan Semiconductor stock rose 2.6% to 132.51 on Wednesday. TSM stock now has an 11-month cup-with-handle base with a buy point of 135.60. As a chip contractor, Taiwan manufactures Semi chips Apple (AAPL), NVIDIA (NVDA) and many other fabless chipmakers. Its capital expenditure forecast will be important for chip-device makers such as Applied Materials.
Apple’s stock gained 0.3%, which is still actionable from its 10-week line. Nvidia stock climbed 0.65%, which is still below its 50-day line after last week’s selloff.
Tesla stock and Nvidia are on the IBD leaderboard. Applied Materials and MoS Stock are on Swing Trader. AMAT stock is on the IBD 50 list. Mosaic was the IBD stock of the day on Wednesday.
A video embedded in this article discusses Wednesday’s market action and analyzes of AMAT, Mosaic and TSM stocks.
dow jones futures today
Dow Jones futures were just above fair value. There was little change in the S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere does not necessarily entail actual trading in the next regular stock market session.
Join IBD experts as they analyze stock market rally actionable stocks on IBD Live
stock market rally
The stock market rally closed at morning highs, but major indices closed positive.
The Dow Jones Industrial Average rose 0.1% in Wednesday’s stock market trading. The S&P 500 index climbed 0.3%. The Nasdaq Composite gained 0.2%. The small-cap Russell 2000 fell 0.7%.
The 10-year Treasury yield fell nearly 2 basis points to 1.725%, continuing a retreat from Monday’s 23-month intraday peak of 1.81%. Crude oil prices rose 1.8% to $82.64 a barrel, while natural gas climbed more than 10%. Copper prices rose nearly 3 per cent.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) gained 1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 0.8%. The iShares Extended Tech-Software Sector ETF (IGV) dropped 0.3%. The VanEck Vector Semiconductor ETF (SMH) climbed 0.85%. TSM stock, Nvidia and AMAT are the major SMH components.
The SPDR S&P Metals & Mining ETF (XME) rose 2.3% and the Global X US Infrastructure Development ETF (PAVE) rose 0.5%. The US Global Jets ETF (JETS) retreated 0.9%, with DAL stock being a notable JETS holding. The SPDR S&P Homebuilders ETF (XHB) closed below break-even. The Energy Select SPDR ETF (XLE) was up 0.2% and the Financial Select SPDR ETF (XLF) was up 0.1%. Health Care Select Sector SPDR Fund (XLV) dropped 0.3%.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) fell 2.8% and the ARK Genomics ETF (ARKG) fell 4.1%. Tesla stock remains the No. 1 holding in ARK Invest’s ETF.
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According to MarketSmith analysis, Mosaic stock rose 3.8% to 41.91, clearing a 41.25 cup-with-handle buy point in above-average volume. MOS stock reclaimed intraday high of 42.61.
AMAT stock rose 4.7% to 159.55, a bullish rally from its 50-day line and breaking a very short trend line entry. It is actionable now. Applied Materials stock is also above the prior buy point of 159.10, although it is technically no longer valid.
Tesla stock climbed 3.9% to 1,106.22, having reclaimed its 50-day line. TSLA shares have rebounded over 125 points from Monday’s lows. The 50-day line often provides an early entry, but the EV giant is attempting a straight up move after breaking below its January 4 intraday high. For now, Tesla stock is actionable just above the 1,200 level. Ideally, the stock would stop below or around 1,200 just before a breakout.
market rally analysis
The stock market’s rally continued again on Wednesday but definitely bounced back from the initial highs.
The Nasdaq Composite, up more than 1% intraday, pulled back after hitting its 10-day line and nearly reaching the 21-day moving average. It is still below its 50-day range. The Dow Jones and the S&P 500 moved into resistance on their 10-day lines, above their 21-day and 50-day lines.
The Russell 2000 also reversed from the short term moving average. But the smallcap index also closed with a fall.
The market rally was due to a bounce back on Monday’s lows. Well, we got it. But it’s still unclear whether that hoop has real legs. Can Nasdaq reclaim its 50-day line and its year-end levels? Can the S&P 500 and the Dow Jones Reach New Highs? Or will the market rally falter?
We don’t have to respond immediately. A short break in the major indices could be constructive. It would be unusual for stocks to run straight. A small sideways action will help the stock repair itself while the leader can stand out.
Energy stocks remain strong, although Wednesday’s gains were held up on the back of big moves in crude oil and natural gas. Financial condition is looking good. Investors can wait for Friday’s earnings JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (c) before placing substantial fresh bets on bank shares.
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What do we do now
Market direction may be the most important part of CAN SLIM. You can find top stocks with great fundamentals, but if the market turns south, those leaders can also falter. If the market is generally trending higher, most stocks will rise.
If you buy Nvidia stock, Tesla stock or Microsoft (MSFT) Right now, you are not only betting on those stocks very quickly, you are betting that the market will show strength. But instead of trying to predict where the market will go, focus on what the market is doing right now. Although this is still a stock market rally, it is under pressure with the direction of the market in flux.
Complicating things is that while most growth stocks are struggling, commodity-related stocks and financials are not.
Read The Big Picture every day to learn the direction of the market and keep up with key stocks and sectors.
Please follow Ed Carson on Twitter @ibd_ecarson For stock market updates and much more.
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