Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures. The rise in shares increased on Wednesday, and prolonged a rebound, but ended well with sediment in the session. The Tesla stock was a big winner while the Apple chip maker Taiwan semiconductor (TSM) is in the process of reporting earnings.
Consumer inflation came in a little warmer than expected, reaching a new 39-year high of 7%. But investors seemed relieved that the December inflation report was not even worse. Meanwhile, crude oil and copper prices continued to rise, with energy, mining and other commodity-related stocks rising.
Nevertheless, the large indices supported the morning highs, with Nasdaq hitting resistance after returning since Monday afternoon. Materials used (AMAT) reboundly bullishly from its 50-day line while Mosaic (MOS) broke out past a point of purchase. Tesla (TSLA) was among Wednesday’s major initiators, and withdrew key support, but is not yet able to act.
KB Home recently reported earnings Taiwan semiconductor (TSM) and Delta Air Lines (DAL) report early Thursday, starting earnings for their respective sectors.
KB Home revenue beat impressions. The sale came in a small light, but the house builder gave bullish guidance on income, sales prices and profit margins. The KBH share, which was a laggard when rivals broke out, rose solidly overnight, signaling movements across the 50-day and 200-day lines.
The DAL share fell 1.5 percent on Wednesday. Shares have risen in recent weeks, but are well away from the 2021 highs, along with other airline shares. But Delta revenues will not only be important for other airlines, but for better-performing hotels and travel sites.
Taiwan Semiconductor shares rose 2.6% to 132.51 on Wednesday. The TSM share now has an 11-month cup-with-handle base with a buy point of 135.60. As a chip contractor, Taiwan Semi makes chips for apple (AAPL), Nvidia (NVDA) and many other fabulous chip makers. The investment forecast will be important for chip equipment manufacturers such as Applied Materials.
Apple shares rose 0.3%, still active from its 10-week line. Nvidia shares climbed 0.65%, still below the 50-day line after last week’s sale.
The Tesla stock and Nvidia are on the IBD Leaderboard. Applied Materials and MOS stock are on SwingTrader. The AMAT stock is on the IBD 50 list. Mosaic was Wednesday’s IBD Stock Of The Day.
The video built into this article discusses Wednesday’s market action and analyzes AMAT, Mosaic and TSM shares.
Dow Jones Futures today
Dow Jones futures lost 0.1% at fair value. S&P 500 futures fell 0.2% and Nasdaq 100 futures fell 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
The rise in equities ended well in the morning, but the large indices ended positively.
The Dow Jones Industrial Average rose 0.1% in Wednesday’s trading session. The S&P 500 index rose 0.3 percent. The Nasdaq composite rose 0.2 percent. Small-cap Russell 2000 sank 0.7%.
The 10-year government interest rate fell by about 2 basis points to 1.725%, and continued to retreat from Monday’s 23-month intraday high of 1.81%. Crude oil prices rose 1.8% to 82.64 dollars per barrel, while natural gas increased by more than 10%. Copper prices rose around 3%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.8%. iShares Expanded Tech-Software Sector ETF (IGV) fell 0.3%. VanEck Vectors Semiconductor ETF (SMH) climbed 0.85%. TSM warehouse, Nvidia and AMAT are important 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 the DAL stock a remarkable JETS share. SPDR S&P Homebuilders ETF (XHB) closed just during break-even. Energy Select SPDR ETF (XLE) increased 0.2% and Financial Select SPDR ETF (XLF) increased 0.1%. Health Care Select Sector SPDR Fund (XLV) fell 0.3%.
As a result of more speculative history shares, the ARK Innovation ETF (ARKK) fell 2.8% and the ARK Genomics ETF (ARKG) 4.1%. The Tesla share is still number 1 across ARK Invest’s ETFs.
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Mosaic shares rose 3.8% to 41.91, and managed a buying point of 41.25 cups with handles above volume on average, according to MarketSmith analysis. The MOS share hit the intraday highs of 42.61.
The AMAT stock fell 4.7% to 159.55, rebounding sharply from its 50-day line and breaking a very short trend line entry. It’s capable of action now. The Applied Materials stock is also back above a previous buying point of 159.10, although it is no longer technically valid.
Tesla shares climbed 3.9% to 1,106.22, convincingly regaining their 50-day line. From Monday’s lowest level, the TSLA share has declined by more than 125 points. The 50-day line often offers an early entry, but the EV giant is trying to go straight up after plunging from 4 January intraday altitude. Currently, the Tesla stock is active just above the 1200 level. Ideally, stocks will stop just below or around 1200 before breaking out.
Market Rally Analysis
The stock market rally continued to pick up on Wednesday, but definitely hit back early peaks.
The Nasdaq composite, up more than 1% intraday, retreated after hitting the 10-day line and almost reaching its 21-day moving average. It is still below the 50-day limit. The Dow Jones and S&P 500, over their 21-day and 50-day lines, also met resistance at their 10-day lines.
Russell 2000 also reversed from short-term moving averages. But the small company index also closed lower.
The market upturn expected an upturn at Monday’s lowest levels. Well, we have it. But it is still unclear if that bounce has real legs. Can Nasdaq regain its 50-day line and year-end levels? Can the S&P 500 and Dow Jones reach new heights? Or will the market rise falter again?
We do not need an answer right away. A short break in the main indices can be constructive. It would be unusual for stocks to race straight up. A little sideways action would allow stocks to repair themselves, while managers could stand out.
Energy stocks are still strong, even though Wednesday’s rise was tame given the large movements in crude oil and natural gas. The economy looks good. Investors may want to wait for Friday’s earnings from JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) before making significant new bets on bank shares.
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What to do now
The market direction may be the most important part of CAN SLIM. You can find top stocks with good fundamental values, but if the market goes south, these leaders are likely to falter as well. If the market generally trends higher, most stocks will rise.
If you buy Nvidia shares, Tesla shares or Microsoft (MSFT) Right now you are not only investing in these stocks prematurely, you are betting that the market will show strength. But instead of trying to predict where the market will go, pay attention to what the market is doing now. Although there is still a stock market rise, the market direction is changing under pressure.
The complicating thing is that although most growth stocks are struggling, they are not commodity-related stocks and finances.
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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