Dow Jones futures rose Wednesday night, as did S&P 500 and Nasdaq futures. The stock rally showed weak gains on Wednesday, with the S&P 500 and the Nasdaq composite hitting record highs. Crude oil prices and Treasury yields continued to decline, with the Fed minutes offering few surprises.
Technological megacaps Apple (AAPL), Microsoft (MSFT) and Amazon.com (AMZN) continued to dominate, while software performed well overall as mining and steel games rebounded.
Pay Pal (PYPL) rose 1.5% to 297.13, exiting a cup base with handle with a buy point of 296.11. PYPL stock had passed an early buy point of 277.96 on June 17. Upwork (UPWK) now has a handle on its cup base, with supplier Apple Qorvo (QRVO).
On the downside, chips retreated as many highly valued growth stocks that rebounded from the spring lows lost ground, including electric vehicle makers You’re here (TSLA) and Nio (NIO). Both have new keys still awaited this week.
Finally, the latest hot stock of memes is Trade in new eggs (NEGG), which jumped 148% to 67.57. NEGG stock is up 522% just since June 29. But Newegg is 234% above its 10-day moving average, which is hugely extended even by the stock measurements itself.
NEGG stock fell 11% on extended action.
Meanwhile, the “old” stocks of memes such as AMC Entertainment (AMC), GameStop (GME) and Health Clover (CLOV) have lost a lot of ground in recent weeks. AMC stock fell 9.8% on Wednesday. GME shares slipped 4.5% and CLOV shares 2.8%.
Fed meeting minutes
Federal Reserve policymakers were moving closer to discussions on curtailing asset purchases last month, according to the Fed’s recently released minutes of the June meeting. Some members “expected the conditions to start slowing down the pace of asset purchases to be met a little earlier than expected at previous meetings.”
Fed chief Jerome Powell had previously said the June meeting was the Fed’s “talk talk” meeting, suggesting that discussions on the reduction could begin at meetings in late July or September, with a real reduction a few months after that.
Tesla, PayPal and Microsoft stocks are listed on the IBD rankings. Long-term IBD leaders are PayPal and Microsoft stocks.
Dow Jones Futures Today
Futures contracts on Dow Jones increased approximately 0.1% from fair value. S&P 500 and Nasdaq 100 futures rose slightly.
Keep in mind that overnight action on futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades during the next regular trading session.
Join the IBD experts as they analyze the exploitable stocks in the stock market rally on IBD Live
Wednesday stock market rally
The market rally closed slightly higher on the major indices, although small caps and several sectors lost ground.
The Dow Jones Industrial Average rose 0.3% in stock trading on Wednesday. The S&P 500 Index also rose about 0.3%. The Nasdaq composite closed one point above the breakeven point. The Russell 2000 small cap fell 0.9%, undercutting its 50-day moving average. The small cap index has a number of banks and energy companies, while AMC stock is currently a relatively large weight.
Apple stock rose 1.8% to 144.57, now just above the 5% buy zone. Microsoft stock edged up 0.8% and Amazon stock edged up 0.6%, both expanding slightly from their 5% pursuit zones.
Crude oil futures fell 1.6% to $ 72.20 a barrel. On Monday night, U.S. crude oil prices hit a six-year high at $ 76.98. The 10-year Treasury yield slipped 5 basis points to 1.32%, its lowest level since February. Intraday, the benchmark yield undercut 1.3%.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was down 0.1%. The iShares Expanded Tech-Software Sector (IGV) ETF was just above the break-even point, with MSFT stock being a major holding. The VanEck Vectors Semiconductor (SMH) ETF fell 1.4%.
The SPDR S&P Metals & Mining ETF (XME) climbed 1.8% and the Global X US Infrastructure Development ETF (PAVE) rose 1.3%. The US Global Jets ETF (JETS) fell 1.8%. The SPDR S&P Homebuilders ETF (XHB) gained 1.7%. The Energy Select SPDR ETF (XLE) fell 1.6% and the Financial Select SPDR ETF (XLF) edged up 0.1%.
Reflecting more speculative historical stocks, ARK Innovation ETF (ARKK) fell 2.3% and ARK Genomics ETF (ARKG) fell 2.2%. Tesla shares are number 1 among ARK Invest ETFs.
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Tesla stock, electric vehicle sales in China
Early Thursday, the China Passenger Car Association will report electric vehicle sales in China for June. BYD Co. (BYDDF), Nio and its peers Xpeng (XPEV) and Li Auto (LI) have already released June delivery figures. But the CPCA report will give investors insight into Tesla’s sales in China. Tesla has already announced record global second quarter deliveries.
Tesla stock fell 2.3% to 644.65 on Wednesday, closing in on its 50 and 200 day lines. A move above Friday’s 700 high could offer an aggressive entry, but 780.89, above the short-term April high, could be the first near-legitimate open.
Nio stock fell 8.45% to 46.04, its fourth consecutive loss after rising sharply. Stocks could have a 55.23 buy point after Thursday. Nio holds its annual Nio Day on Friday, with EV product announcements or expected updates.
BYD stock fell 0.7% to 28.46, finding support just above its 21-day line. The manufacturer of electric cars, buses and batteries already has a point of purchase of cup with handle of 31.40.
Li Auto’s stock fell 4.6% to 32.03. Like the Nio action, the China EV game is expected to have a handful after Thursday. But the base is 66% deep. An elongated grip, or even a short base in the larger consolidation, would be more attractive than a tiny grip.
XPEV stock slipped 5.9% to 41.47, after Xpeng began a secondary listing on the Hong Kong Stock Exchange. The stocks form a pattern in the shape of a handle, but they are located below the middle of a very deep base.
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Market rally analysis
Taking a step back, the stock rally had a good day, which might be fair. The Nasdaq is still 5.5% above its 50-day moving average while the large-cap Nasdaq 100 is now 6.8% above that level.
The Nasdaq opened with a modest gain, with many tech stocks issuing buy signals or extending breakouts. Anyone who took advantage of this likely saw their positions turn slightly negative within minutes. That’s because almost immediately the Nasdaq pulled back, falling slightly before returning to roughly breakeven for most of the session.
However, the S&P 500 and Dow Jones closed near session highs as crude oil prices and Treasury yields reduced losses.
With Apple, Amazon and Microsoft in the lead, gains in major indices may mask underlying weakness. Many growth stocks, especially highly valued names like Palantir (PLTR), Tesla, Nio and ARK-style stocks retreated after strong rebounds.
A plummeting 10-year Treasury yield has clearly contributed to the advance of tech stocks in recent weeks. With a booming economy and rising inflation, it’s hard to see how this continues, even though it could have been done for weeks. But if Treasury yields rise sharply, technology could struggle.
Crude oil prices reversed from morning gains for two consecutive days, despite a seemingly bullish backdrop of no increase in OPEC + production. This may be a sign that crude oil has peaked in the near term. Energy stocks may need to take a break if this is the case. But so far, most of the major energy stocks, such as Denbury Resources (DEN), received key support.
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