Dow Jones Futures: Indices Mask Broad Market Rally; Cathie Wood Stock hovers while another dives

Dow Jones futures were little changed Wednesday morning, along with S&P 500 futures and Nasdaq futures.

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The stock market recovery had a slightly positive session on large company indices on Tuesday. But small-cap and mid-cap stocks had a big day.

Two major Cathie Wood companies, Shopify (SHOP) and Coinbase Global (COIN), went in opposite directions on Tuesday.

SHOP stock rose solidly, extending Monday’s advance and flashing an early entry. TransMedics Group (TMDX), Taiwan Semiconductor Manufacturing (TSM), Lifetime group (LTH) and Marriott International (MAR) made bullish moves.

Meanwhile, the SEC accused Coinbase of being an unlicensed broker and violating other securities regulations. COIN stock fell 12%, although it was coming off intraday lows. Coinbase shares fell just over 9% on Monday, below the 50-day and 200-day lines, after the SEC sued Binance, the world’s largest cryptocurrency exchange.

SHOP stock was added to the IBD Leaderboard and SwingTrader on Tuesday. TMDX stock is on the IBD 50. Shopify was also Tuesday’s IBD Stock Of The Day.

Dow Jones Futures today

Dow Jones futures fell slightly relative to fair value. S&P 500 futures and Nasdaq 100 futures rose higher. Tesla shares helped prop up the S&P 500 and Nasdaq composite, extending the recent run.

Crude oil prices rose 1% and copper futures rose slightly.

China’s exports fell 7.5% in May compared to a year earlier, far worse than expected. However, it raises hopes for new economic stimulus. Hong Kong’s Hang Seng index rose 0.8 percent.

Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session.

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Stock market rally

The share rise showed strong market breadth, even though the major indices traded in a tight range.

The Dow Jones Industrial Average gained a fraction in Tuesday’s trading. The S&P 500 index rose 0.2 percent. The Nasdaq composite rose 0.4%. The small-cap Russell 2000 jumped 2.7%.

US crude oil prices fell 0.6% to $71.74 a barrel. The 10-year government yield rose 1 basis point to 3.7%.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF ( FFTY ) rose 1.5% to a 2023 high. The iShares Expanded Tech-Software Sector ETF ( IGV ) rose 0.2%. VanEck Vectors Semiconductor ETF ( SMH ) climbed 0.7%. The TSM share is an important SMH component.

ARK Innovation ETF ( ARKK ), reflecting more speculative story stocks, rose 1.5% and ARK Genomics ETF ( ARKG ) rose 2.3%. As mentioned above, COIN stocks and Shopify are major holdings for Ark Invest’s ETFs. Tesla (TSLA), Year (ROKU) and DraftKings (DKNG) were other major components that had solid gains on Tuesday.

The SPDR S&P Metals & Mining ETF (XME) rose 2.4% and the Global X US Infrastructure Development ETF (PAVE) rose 1.5%. The US Global Jets ETF (JETS) rose 1.7%. The SPDR S&P Homebuilders ETF (XHB) rose 2.9%. The Energy Select SPDR ETF (XLE) rose 0.8% and the Health Care Select Sector SPDR Fund (XLV) retreated 0.8%.

The Financial Select SPDR ETF ( XLF ) climbed 1.3%. The SPDR S&P Regional Banking ETF (KRE) rose nearly 5%, hitting its best levels since late April.

Top five Chinese stocks to watch now

Shares in buying zones

Shopify stock jumped 6.2% to 63.66, clearly breaking a trend line in a brief consolidation. The volume was the heaviest since the huge three-day post-earnings rally in the first quarter. SHOP stock was already active on Monday when it bounced off its 21-day line. It’s starting to look elongated. It’s possible the e-commerce giant will forge a new base, but not until the end of next week.

TransMedics shares jumped 6.2% to 79.40, rebounding from the 50-day line on strong volume. TMDX stock has a buy point of 90.15 but can be traded here.

Taiwan Semiconductor shares climbed 1.8% to 99.82, moving back above the 98.99 consolidation buy point in above-average trading, according to MarketSmith analysis. The chip foundry giant sees stronger performance in the second half of 2023, and also guided capital spending to the low end of previous guidance. TSM stock broke out of the base on May 25, following the blowout results and key customer guidance Nvidia (NVDA), but soon withdrew. On Monday, shares retreated to just above the 21-day line before rallying.

Life Time shares fell 4.2% to 20.94, reclaiming a buy point at 20.35 cups on strong volume. Investors can see the last few weeks as a flat base with an entry at 21.39. LTH stock hit an 18-month high of 21.75 intraday.

Marriott shares rose 2.1% to 180.90, making an early entry into a growing flat base next to a year-long cup with handles. MAR stock flat base will not be forged until Friday, but will have a buy point of 183.27. A move above the old buy point of 181.55 would be another entry and mark a 52-week closing high.

Market rally analysis

The stock market rally had a dull day according to the major indices, but there was underlying strength.

The Nasdaq rose, but is not significantly more extended. The S&P 500 continues to remain just below its August 2022 highs. The Dow Jones retreated to its 50-day line before reversing higher.

Meanwhile, both the Russell 2000 and S&P 500 MidCap 400 jumped to their best levels since March 9.

The Invesco S&P 500 Equal Weight ETF ( RSP ) rose 0.7%, hitting a one-month high after reclaiming the 50-day and 200-day lines last Friday.

The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) rose 0.2%, right at a 52-week high.

Overall, winners beat losers by more than 3-to-1 on the NYSE and by 5-to-2 on the Nasdaq. The number of stocks that hit new highs easily beats those that set new lows.

The market rise has been led by a smaller number of tech titans and AI plays. Many of these names stop or at least do not surpass the field. That’s probably healthy for these stocks and the broader market. That could help keep the Nasdaq from overheating as hopefully more groups join the lead.

Homebuilders, building products, medical products and travel names show some strength.

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What to do now

With the major indexes holding steady, the market breadth showing a positive, tentative trend, and a small number of buying opportunities, investors can continue to add purchases gradually. It is an opportunity for lightly invested traders to increase their exposure, while those who rode the AI ​​wave can diversify their portfolio.

Shakeouts remain common, while many stocks with deep bases look extended to traditional buy points. So look for early entries and try to buy stocks as close to buy points as possible. This is where it pays to build watch lists and set alerts. If you’ve done your homework, the real tests are much easier.

Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock exchange updates and more.

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