Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures. The stock market rally closed slightly lower on Tuesday after major declines in the previous two sessions. Investors are wary of big bets ahead of Fed chief Jerome Powell’s big Jackson Hole speech on Friday.
apple (AAPL) carves out a handle, lowering the potential buy point. Apple stock technically already has a buy point on a weekly chart.
Tesla ( TSLA ) rose toward an aggressive buy point on Tuesday. Outside of the Tesla share, most electric car manufacturers are struggling. However, several EV-related games are close to purchase points or actionable now. They include lithium producers Albemarle (ALB) and Alive (LTHM). Also chips At Semiconductor (ON), Axcelis Technologies (ACLS) and Monolithic power systems (MPWR).
It comes ahead of Wednesday night’s earnings from the chip giant Nvidia (NVDA), with its comments on data centers also important to Monolithic Power.
Tuesday night, TurboTax maker Intuit (INTU) rose on strong earnings, while La-Z-boy (LZB) jumped on the results. Luxury home builder Toll Bros. (TOL) and retailer of youth clothing Urban Outfitters (URBN) fell on mixed results, while Advanced Auto Parts (AAP) turned around disappointing EPS and sales. Nordstrom (JWN) tumbled when it cut guidance amid a glut of inventory.
The ALB share is on the IBD Leaderboard. MPWR stock is on the IBD Long-Term Leaders. Tesla stock, Monolithic Power, Axcelis and Onsemi are on the IBD 50. Albemarle, Monolithic and ON stock are on the IBD Big Cap 20. Monolithic Power was Tuesday’s IBD Stock Of The Day. Livent was Monday’s stock of the day.
Dow Jones Futures today
Dow Jones futures were flat versus fair value. S&P 500 futures were reduced and Nasdaq 100 futures were little changed.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally ended Tuesday, continuing a pullback, but with the major indexes near their 21-day moving averages.
The Dow Jones Industrial Average fell 0.5 percent in Tuesday’s trading. The S&P 500 index lost 0.2%, and TWTR stock was easily the worst performer. The Nasdaq composite, up for most of Tuesday’s session, closed less than 1 point lower. The small-cap Russell 2000 rose 0.2%.
U.S. crude oil prices rose 3.4% to $93.74 a barrel, continuing to bounce off Monday’s lows after Saudi Arabia suggested OPEC could cut output.
Natural gas futures fell 5%, reversing from 14-year highs, even as Freeport LNG pushed back the restart of its Texas plant from early October to early-mid November.
The 10-year government yield rose 2 basis points to 3.05%. The 10-year yield reached 3.08% intraday, then briefly undercut 3% after several weak economic reports.
Powell’s policy speech is likely to swing Treasury yields and the odds of rate hikes. Markets have fully priced in at least 50 basis points for September 21, but are divided on whether policymakers will opt for a third straight Fed rate hike of 75 basis points.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.6%. The iShares Expanded Tech-Software Sector ETF ( IGV ) fell 0.2%, with the CRM stock a top IGV component. VanEck Vectors Semiconductor ETF ( SMH ) climbed 0.65%. Nvidia stock is a great SMH holding.
The SPDR S&P Metals & Mining ETF (XME) rose 2.45%. The Energy Select SPDR ETF (XLE) gained 3.6% and the Financial Select SPDR ETF (XLF) retreated 0.4%. The Health Care Select Sector SPDR Fund ( XLV ) fell 1.4%.
Reflecting more speculative history stocks, the ARK Innovation ETF ( ARKK ) fell 0.55% and the ARK Genomics ETF ( ARKG ) rose 1.8%. Tesla stock is a large holding across Ark Invest’s ETFs.
Top five Chinese stocks to watch now
Apple stock fell 0.2% to 167.23, trading just above its 21-day moving average. On August 17, AAPL stock managed a downtrend line, but then pulled back on Friday. Now the technology giant Dow Jones is working with a handle. Apple stock needs one more day on a daily chart to have a real handle with a buy point at 176.25. On a weekly chart, AAPL stock already has that handle.
The relative strength line for Apple stock just hit an all-time high, a bullish sign.
EV shares close to buy points
Lithium plays Albemarle and Livent reported strong earnings and guidance earlier this month.
Albermarle shares rose 1.9% to 281.03, after an upside reversal on Monday. ALB stock has extended from a buy point at 250.25 from a handle within a large handle. However, shares are within range of an alternative entry at 273.78, just above the high of the 31% deep handle. Investors can use this as a chance to buy ALB shares or add a few shares.
LTHM shares fell 5.1% to 30.33. The Livent share has a buy point of 31.63 cup-with-handle, but right in a downtrend in the handle. It would offer an early entry, although the low volume is a problem.
At Semiconductor, Axcelis Technologies and Monolithic Power, chip players with EV exposure, all delivered strong results in early August.
The ON share rose 3.6% to 71.25 on Tuesday. It is back above a buy point at 69.36, although the consolidation high + 10 cents at 71.35 is also a legitimate entry.
ACLS stock climbed 2.2% to 72.22, working toward a 79.93 buy point from a deep cup with handles. The Axcelis handle has been volatile, but the chip gear maker has found support at the 21-day line. Axcelis stock may have an early entry from breaking the downtrend of the handle.
MPWR stock rose 1.2% to 497.51, around its 21-day line. Monolithic Power stock has a buy point of 541.49 cup handle, according to MarketSmith analysis. Shares retreated on Friday and Monday, below the 21-day line, providing a bit more of a shakeout after a strong advance.
Monolithic Power is in a variety of markets, including data centers, industrial applications and electric vehicles.
Tesla shares rose 2.3% to 889.36, bouncing off the 21-day moving average, just below the 200-day mark. TSLA stock could have an aggressive entry if it clears near-term highs, with an emphasis on aggressive.
Tesla stock will split 3-for-1 after Wednesday’s trading.
Tesla vs. BYD: Which EV giant is the best buy?
Market Rally Analysis
Stock markets were mixed on Tuesday, with all the major indexes hitting resistance at the 21-day moving average. The Nasdaq lost a fraction after falling 2% on Friday and 2.55% on Monday. The Dow Jones, which closed Monday just below its 21-day low, lost a little more ground on Tuesday.
Nvidia and Salesforce.com (CRM) earnings will be in focus on Wednesday evening. But the market rally may be limited until Fed chief Powell’s big speech on Friday morning. Volume has been particularly low this week.
Electric car supplier stocks such as Albemarle and Axcelis look interesting.
Energy shares have been leading, but many have already passed buy points. Energy prices are subject to large daily or even intraday swings, with natgas futures’ reversal to the downside on Tuesday a clear example.
Some steel sheds are established together with fertilizer and agricultural storage.
Biotechnology and pharmaceutical manufacturers such as Vertex Pharmaceuticals (VRTX) and Eli Lilly (LLY) had a tough session but is not broken yet.
Time the market with IBD’s ETF market strategy
What to do now
The market rise is in a pullback within an uptrend in a bear market. In the very short term, investors should be cautious about increasing exposure, especially with Fed Chair Powell looming.
Several stocks are forming bullish setups, so investors should run monitors and update watch lists.
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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