Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures. The stock market rise had a strong response on Tuesday to another Goal (TGT) earnings warning, rebounding from early lows to closed higher.
Investors can get more clarity in Tesla (TSLA) China sale before Wednesday’s opening.
VRTX stock, Ulta beauty (ULTA), ZIM integrated shipping (ZIM), Albemarle (ALB), Ashland Global Holdings (ASH), TimkenSteel (TMST) and Chevron (CVX) are shares in or near buying zones. Vertex Pharmaceuticals (VRTX), Ulta Beauty and Albemarle are in hand. The ZIM stock is flirting. The ASH share is below an official buy point, but is undoubtedly capable of action now. TMST shares erupted on Tuesday while Chevron is holding in a buying area.
The relative strengths of these stocks are at or near heights. The RS line, the blue line in the accompanying charts, tracks the performance of a stock versus the S&P 500 index.
The ALB stock is on the IBD Leaderboard, while the Ashland stock is on the Leaderboard watch list. The ZIM stock is on IBD 50. The CVX stock is on IBD Big Cap 20. Vertex Pharmaceuticals was Today’s IBD stock. The video embedded in this article discussed Tuesday’s market action and analyzed TimkenSteel, Chevron and the ULTA stock.
The Booming EV Giant grabs Tesla’s EV crown
Tesla China supplies
The China Association of Automobile Makers is likely to release data for car sales in May early Wednesday morning. In addition to industry-wide electric cars and total car sales, investors will get Tesla (TSLA) China supplies.
Tesla China’s production and deliveries in May were definitely improved compared to April, when the factory in Shanghai was closed for much of the month. Tesla production remained limited during May, although it has picked up in recent weeks and may reach full capacity sometime in June.
Most other automakers reported improvement, but still limited production and deliveries in China last month. The big exception is China EV and the battery giant BYD (BYDDF), which reported record sales in April and again in May thanks to internal battery and chip operation.
Nevertheless, Tesla is practically sure of losing the EV crown in the second quarter to BYD, even though the latter includes electric cars and plug-in hybrids.
Tesla shares rose 0.25% to 716.66 on Tuesday, recovering from the morning’s lowest level. Although they are not at the end of the May 11-month low, the TSLA stock is well below the 50-day and 200-day moving averages. The BYD share fell 0.5% to 38.12.
Dow Jones Futures today
Dow Jones futures fell 0.2% to fair value. S&P 500 futures fell 0.3% and Nasdaq 100 futures lost 0.3%.
Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze powerful stocks in the stock market rally on IBD Live
Stock market rally
Target said early Tuesday that large declines to meet surprising inventories will hit profit margins even harder than predicted just a few weeks ago. This increased concerns about consumer spending and the economy. But the Target stock, which fell to 147.15 just after opening, closed only 2.3% at 155.98.
The stock market rise, which opened sharply lower, quickly erased losses and moved solidly higher.
The Dow Jones Industrial Average rose 0.8% in Tuesday’s trading session. The S&P 500 index rose 0.95 percent. The Nasdaq composite rose 0.9%. Small-cap Russell 2000 jumped 1.6%.
The US crude oil price rose 0.8% to $ 119.41 a barrel.
The 10-year government interest rate fell 7 basis points to 2.97%.
Among the best ETFs, Innovator IBD 50 ETF (FFTY) rose 2.9%, while Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.65%. iShares Expanded Tech-Software Sector ETF (IGV) rose 1.6%. VanEck Vectors Semiconductor ETF (SMH) was up 0.8%.
SPDR S&P Metals & Mining ETF (XME) rose 3.5%, with the TimkenSteel stock as a small component. Global X US Infrastructure Development ETF (PAVE) rose 1.65%. The US Global Jets ETF (JETS) rose 1.3%. SPDR S&P Homebuilders ETF (XHB) rose 0.4 percent. Energy Select SPDR ETF (XLE) rose 3%, with the CVX stock a large holding. Financial Select SPDR ETF (XLF) rose 0.8%. Health Care Select Sector SPDR Fund (XLV) closed 1.3% higher.
ARK Innovation ETF (ARKK) reflected more speculative history stocks, rising 3% and ARK Genomics ETF (ARKG) 3.6%. The Tesla share is still number 1 across Ark Invest’s ETFs.
Five best Chinese stocks to see now
Stocks to see
ULTA shares rose 1.8% to 421.02, advancing despite the latest Target warning. The Ulta Beauty share has a buying point for a cup with a handle of 426.93. Last month, shares in the beauty supplies retailer plunged in the wake of Target’s first warning, but they returned sharply on Ulta revenues.
The ZIM stock climbed 1.9% to 68.52, flirting with removing some short-term levels that can be treated as a quasi-handle. On a weekly chart, the ZIM stock has a small handle, offering a buy point of 68.63. But on a daily chart, the container-based shipping company has a cup base with an official purchase point of 75.81.
The ALB share rose 10 cents to 257.89 on Wednesday. Shares in the lithium giant have a buying point of 273.78 in a large cup base. At the end of May, the ALB share rose past 248 early entries in the wake of a second major earnings upgrade in one month, but then fell briefly below those levels a few days later.
The ASH stock closed up 0.3% to 110.51, and closed well by low intraday levels. On Monday, the chemical additive company came across a 111.15 flat-base buying point during the day, but closed below that level. An investor can use 108.95 as an early entry for the Ashland stock.
The TimkenSteel share rose 8.8% to 26.18, and managed a buy point of 24.90 cups with handles, MarketSmith said. The TMST warehouse has been slightly expanded. Special steel companies stand out, with Howmet Aerospace (HWM) shows strong action. Other steelmakers are starting to come back.
Chevron shares rose 1.9% to 180.21, a new closing high and moving up in a buying range from 174.86 flat-base entry. The CVX stock is less volatile than many energy names, and even now is only 5.9% above the 10-week line.
The VRTX stock rose 1.4% to 271.86. The Vertex share has a buying point of 276.10 cups with handles, and finds support on the 50-day line.
Market Rally Analysis
Important economic, business and political news is important for the stock market, but what really matters is the market reaction to that news.
Target’s previous warning on May 18 triggered a massive market sale, which signaled that the newly confirmed trend was in serious trouble. Two days later, the major indices hit their lowest levels in mid-May.
But on Tuesday, the current confirmed market upturn responded well to the latest Target warning, picking up again after first selling out. Even Target came out of the lowest mornings – above its lowest levels at the end of May after the first profit forecast. Other dealers reduced losses or even became positive.
The major indices, which underpinned their 21-day moving average on Tuesday morning, rose for solid gains.
The 10-year government interest rate, which fell below 3% after large rises on Monday, was quietly a key contributor to Tuesday’s upside.
Nevertheless, the stock market rise has not fully figured out whether it wants to move higher or test May’s lowest level.
Extended lateral action can be positive. A number of handles have formed in recent days. A longer break would allow more handles and bases to develop, as well as allow the moving average to catch up.
If the major indices move over recent areas, they will soon run up to a 50-day moving average. The S&P 500 is just below its 10-week line, with the Dow Jones closing just above that key level. Small-cap Russell 2000 is above 50-day and 10-week average.
Energy stocks continue to lead the market. A number of other sectors are trying to come back, including metals and mining games such as TimkenSteel. Lithium plays like Albemarle can be seen as a metal mining play, but also an energy store. Drug manufacturers and large biotechnology companies generally hold their own, such as Vertex shares. Even some retailers like Ulta Beauty look interesting.
But all of these non-energy sectors clearly need the market upturn to stay afloat, and may struggle to get far without broad progress.
Time market with IBD’s ETF market strategy
What to do now
After Monday’s fading, Tuesday’s action was more positive. However, with the market upturn still changing, investors should still keep their overall exposure slim to the modest. They should also keep individual positions small, at least for starters. Consider taking partial profits relatively quickly, given current market conditions.
If the market rally breaks above the last levels and the major indices go beyond their 50-day lines, investors can take advantage of buying opportunities. But continue to gradually increase your exposure.
Investors should keep their watch lists fresh. Some fertilizer names can be pushed to the side, with more attention to retail and steel names. Make sure you are ready and ready when the market builds momentum.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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