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Dow Jones Futures: Market Rally Falls While Potential Leaders Crack; Tesla, Nio News looms

Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures. Tesla (TSLA) and Nio News are in print before Thursday’s opening. The major indices withdrew on Wednesday due to financial concerns.


The OECD cut forecasts for economic growth in the US and globally on Wednesday, after Tuesday’s recent Goal (TGT) warning. Intel (INTC) and Altria (MO) fell as analysts became skeptical of the current environment.

Offshore shipping warehouses such as ZIM integrated shipping (ZIM) and Star Bulk Carriers (SBLK) plunged to its 50-day lines and beyond, wiping out a few weeks of gains. It is not clear if the sector is facing a long slide or just a short break, but Wednesday’s action was ugly. Railway, truck and other freight warehouses also fell.

Travel, mining and especially steel stocks were notable losers among broad-based sales.

Meanwhile, Eli Lilly (LLY), Synopsys (SNPS), Equinor (EQNR), Westlake (WLK) and Callon Petroleum (CPE) are all close to buy points. The LLY stock is among several large drug manufacturers that are holding up well. Synopsys is a rare growth action that shows a certain strength. The Norwegian state-owned oil and gas game Equinor and the slate operator Callon are in the energy room. WLK stock is among several solid chemicals names.

The Eli Lilly stock is on the IBD Leaderboard. The SNPS stock is on IBD Long-Term Leaders. ZIM, Westlake, Synopsys and CPE shares are at IBD 50. Westlake was Wednesday’s IBD Stock Of The Day.

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 0.35%.

The 10-year government interest rate rose 2 basis points to 3.05%.

The European Central Bank is likely to conclude asset purchases at Thursday’s political meeting, with an announcement before opening time. This would lay the groundwork for an interest rate hike in July.

The Ministry of Labor will publish weekly data on unemployment claims at 8:30 ET, followed by the consumer price index on Friday morning. It comes ahead of the Fed’s political meeting next week, with another half-point increase priced in.

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

Tesla News

Investors will receive Tesla China’s sales figures for May as part of industry-wide data from the China Passenger Car Association. Tesla Shanghai’s production improved in May after the plant closed for most of April, but remained well below normal. Tesla production can reach full capacity sometime in June.

It came as the China EV giant BYD (BYDDF) said they would supply Tesla with batteries. BYD, which passes Tesla in car sales for the first time this quarter, climbed 1.8% to 38.80. On the way to a fifth weekly rise in a row, the BYD share is not far from record highs.

Tesla CEO Elon Musk Twitter (TWTR) The takeover saga has weighed on the TSLA share, amid fears that Musk will have to sell many more shares. On Wednesday, Twitter’s board will reportedly give Musk access to all internal data. Musk, after signing a $ 44 billion Twitter deal and renouncing due diligence, has threatened to try to go away unless he gets more data on fake users. The TWTR share rose 0.8% to 40.44, reaching its highest intraday level since 13 May. But Twitter is still well below Musk’s takeover price of $ 54.20.

Tesla shares rose 1.25% to 725.60 on Wednesday, but outside morning highs after meeting resistance at its 21-day line. The TSLA stock is well below the 50-day and 200-day lines.

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Nine Earnings

Most Chinese electric car manufacturers have already reported production and delivery data for May, including BYD and Nio (NIO). Nine will announce results for the first quarter before Thursday’s opening, but attention will probably focus on guidance for Q2 and beyond. The nine-share rose 3.7% to 20.38 on Wednesday, and continued to rise from its long-sliding 50-day line.

AMD Analyst Day

Advanced micro devices (AMD) Thursday holds analyst day. On Wednesday, the AMD stock fell 3.2% to 101.90, and moved back towards its falling 50-day line. Several analysts cut their arch-rival Intel’s earnings estimates on Wednesday, after cautious comments from management. INTC shares fell 5.3% to their lowest close since the end of 2017.

Join IBD experts as they analyze powerful stocks in the stock market rally on IBD Live

Stock market rally

The stock market was mixed for large parts of the morning, but the key indices ended with solid losses.

The Dow Jones Industrial Average fell 0.8% in Wednesday’s trading session. The S&P 500 index fell 1.1 percent. The Nasdaq composite gave up 0.7 percent. Small-cap Russell 2000 fell 1.55%.

The US crude oil price rose 2.5% to $ 122.11 a barrel, the highest in three months. Gasoline futures are just below record levels. Natural gas fell 6.4%, still close to a 14-year high. Wednesday’s fall was prompted by a fire at a liquefied natural gas export terminal in Texas. LNG-related stocks withdrew on Wednesday.

The 10-year government interest rate rose 6 basis points to 3.03%.

Among the best ETFs, Innovator IBD 50 ETF (FFTY) lost 2.3%, while Innovator IBD Breakout Opportunities ETF (BOUT) fell 1.7%. iShares Expanded Tech-Software Sector ETF (IGV) fell 0.7%. VanEck Vectors Semiconductor ETF (SMH) fell 2.1%. AMD shares and Intel are notable SMH components.

SPDR S&P Metals & Mining ETF (XME) stumbled 3.8% and Global X US Infrastructure Development ETF (PAVE) gave up 2.5%. US Global Jets ETF (JETS) fell 2.6%. SPDR S&P Homebuilders ETF (XHB) withdrew 2%. Energy Select SPDR ETF (XLE) rose 0.2% and Financial Select SPDR ETF (XLF) fell 1.8%. Health Care Select Sector SPDR Fund (XLV) falls 0.8%

ARK Innovation ETF (ARKK) reflects more speculative history stocks, up 2.7% and ARK Genomics ETF (ARKG) 2.4%. The Tesla share is still the No. 1 holding for Ark Invest. Ark, which sold quite a few TSLA shares over several months, has bought up many shares since the end of May, including Tuesday. Cathie Wood’s fund also owns some BYD and Nio shares.

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Shares close to buy points

Eli Lilly shares rose 0.4% to 313.47 on Wednesday, hitting resistance around the old buy point of 314.10. LLY shares have risen this week from their 21-day and 10-week lines, after retreating last week in the middle of price control. The relative strength of the Lilly stock is just below record highs. The RS line, the blue line in the accompanying charts, tracks the performance of a stock versus the S&P 500 index.

The SNPS share retreated 2% to 322.89. Investors can treat the current consolidation as a double bottom base with a buy point of 342.69. It is possible that the Synopsys share can start work with a handle, which will lower the official listing. While the SNPS stock has good peaks, the RS line is at record high levels.

The EQNR stock fell 0.3% to 37.75, working on a 38.80 cup-with-handle entry, according to MarketSmith analysis. The RS line for the Equinor stock is right on top.

The WLK stock fell 1.5% to 131.92, consolidating close to its 10-week line. The Westlake Chemical stock is on track to have a flat base with a buying point of 141.29 at the end of the week. Investors can take an early entry over short-term peaks of 136-137. The RS line is straight at heights.

The CPE share increased 0.1% to 62.50. Intraday, the Callon share reached 63.96, and just reached a buying point of 63.44 cups with handles. The large indices that withdrew on Wednesday weighed on the slate producer. But the CPE stock has a recent history with large intraday gains that wither or turn into losses at the close. The RS line for CPE stocks is at its peak.

Market Rally Analysis

The stock market retreated solidly on Wednesday. The Nasdaq volume rose compared to the previous session, marking a new distribution day.

Overall, the major indices continue to show sideways action, finding support at their 21-day moving average. However, the S&P 500 and Dow Jones met on their 10-week lines, while Russell 2000 fell back below its 50-day and 10-week lines.

Further lateral action can be constructive for the market rally, and allow more bases and handles to be formed. But with the 21-day lone line trending higher, and the 50-day and 10-week lines falling steadily, the large indices may come under pressure to break higher or lower.

Energy stocks remain standouts, although individual names can certainly have some major daily or weekly fluctuations. Meanwhile, other sectors are struggling to show leadership over time. The relative lack of stocks to buy – and the high frequency of errors among new buying opportunities – has been a worrying aspect of the current market upturn.

ZIM and Star Bulk gave up a few weeks of upswing on Wednesday, while TimkenSteel (TMST) and Amphastar Pharmaceuticals (AMPH) fell back below buying points after an impressive outburst on Tuesday.

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What to do now

If you’ve built up a modest exposure over the last couple of weeks, there’s no good reason to add posts right now. The market upturn is limited, with the CPI report for May on Friday and a Fed meeting in print next week. Investors should be quick to cut losses and consider taking at least partial profits relatively early.

The market upturn may worsen, pushing investors back to the sidelines. Or it can quickly improve, triggering a wave of buying opportunities. Investors must be aware of changes in the market and ready to act.

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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