S&P 500 Breaks at Resistance; Elon Musk scores his own LOLs with Manchester United Tweets| Investor’s Business Daily
Dow Jones futures were steady early Wednesday morning, along with S&P 500 futures and Nasdaq futures. Tesla CEO Elon Musk tweeted on Tuesday night that he was going to buy the football club Manchester United, and later explained that he was joking.
Stock markets had a mixed day on Tuesday, with the major indexes propping up afternoon highs as the S&P 500 came within one point of its 200-day moving average.
Walmart (WMT) and Home Depot (HD) earnings lifted the Dow and many retailers, with Costco Wholesale (COST), AutoNation (AN) and Penske Automotive (PAG) clearing purchase points.
Antero resources (AN) and EQT Corp. (EQT) topped buy points as natural gas prices rose.
Tesla ( TSLA ) briefly managed an aggressive run Tuesday morning, but TSLA stock turned slightly lower on the Nasdaq.
BBBY Stock Leads Meme Mania
Meanwhile, Bed Bath & Beyond (BBBY) continues to soar amid resurgent interest in this meme stock. BBBY stock shot up 29% to 20.65 on record volume, but that’s after rising to 28.60 intraday. Bed Bath & Beyond, which in the real world is a money-losing household retailer with rapidly declining sales, is up 355% from its July 27 low of 4.54.
BBBY stock rose 9% overnight.
Ryan Cohen, chairman of the original meme stock GameStop (GME), disclosed Tuesday that he still owns Bed Bath & Beyond shares and hefty call options for BBBY stock betting on prices from 60-80.
GME shares fell 6.3% on Tuesday.
Key earnings Wednesday
early Wednesday, Goal (TGT), Lowes (LOW) and TJX Cos. (TJX) continues its retail revenue run. Chipmaker Analog devices (ADI) and seagoing container shipper Zim integrated shipping (ZIM) also reports.
Target, Lowe’s and TJX stock advanced Tuesday with other retailers, but their charts need work. ADI stock is moving up on the right side of a base. The ZIM share finds support at important moving averages.
The Commerce Department releases retail sales data for July at 8:30 a.m. ET. At 1:00 PM ET, the Federal Reserve will release minutes from its late July Fed meeting.
Costco stock was added to the IBD Leaderboard and SwingTrader.
The video embedded in this article discussed the market action and analyzed AR stocks, Costco and Isolate (PODCASTS).
Dow Jones Futures today
Dow Jones futures rose 0.1% relative to fair value. S&P 500 futures climbed. Nasdaq 100 futures were flat.
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 on Tuesday
The stock market rise was mixed for much of the morning and mostly turned higher in the afternoon before slowing down again.
Dow Jones giants Walmart and Home Depot beat second-quarter showings early Tuesday. In a big relief to the markets, Walmart did not cut its guidance for the rest of the year.
The Dow Jones Industrial Average rose 0.7% in Tuesday’s trading, with WMT shares up 5.1% and Home Depot up 4.1%. The S&P 500 index rose 0.2 percent. The Nasdaq composite fell 0.2 percent. The small-cap Russell 2000 closed just below break-even.
U.S. crude oil prices turned lower, falling 3.2% to $86.53 a barrel, the lowest close since late January. US natural gas futures jumped 6.9% to the highest close in 14 years. Energy prices continued to rise in Europe, which led to increased demand for LNG exports.
The 10-year government yield rose 3 basis points to 2.82%.
Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) fell 1.3%, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) rose 0.4%. The iShares Expanded Tech-Software Sector ETF ( IGV ) fell 0.6%. The VanEck Vectors Semiconductor ETF ( SMH ) retreated 1.1%.
The SPDR S&P Metals & Mining ETF ( XME ) rose 0.9% and the Global X US Infrastructure Development ETF ( PAVE ) rose 0.6%. The US Global Jets ETF (JETS) rose 0.9. The SPDR S&P Homebuilders ETF (XHB) rose 1%. The Energy Select SPDR ETF (XLE) fell 0.2% and the Financial Select SPDR ETF (XLF) rose 0.7%. The Health Care Select Sector SPDR Fund ( XLV ) fell 0.3%.
Reflecting more speculative storied stocks, the ARK Innovation ETF ( ARKK ) fell 2.8% and the ARK Genomics ETF ( ARKG ) 3.9%. Tesla stock remains a large holding across Ark Invest’s ETFs.
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TSLA shares fell 0.9% to 919.69 on Tuesday. Intraday shares hit 944, only topping an aggressive entry at 940.92 from an overly low handle. Tesla stock soon turned lower with the Nasdaq and highly valued growth, but held support at the 200-day line.
Musk scores a LOL of his own
On Tuesday evening, Tesla CEO Elon Musk tweeted that “I welcome Manchester United”. The world famous Manchester United (MANU) football team is listed on the NYSE. The general consensus was that Musk was probably joking, but you never know with the world’s richest troll.
As it turns out, Musk explained that it was a “long running joke” and said he’s not buying a sports team.
Joking about buying a publicly traded company might upset the SEC, but it all happened outside of even extended trading.
The Manchester U tweets came as Musk tries to get out of a deal to buy Twitter (TWTR) for $44 billion, or $54.20 per share.
Tesla’s biggest rival is now its partner
Shares in buying zones
Costco shares rose 1.3% to 553.02, just clearing a 552.81 cup-with-handle buy point. COST shares rose on strong Walmart earnings and reaffirmed second-half guidance. But, earnings from Target on Wednesday and less rival BJ’s Wholesale (BJ) on Thursday can swing the COST share.
AutoNation shares rose 7.3% to 132.49, blowing past resistance from the past few months on above-average volume. Intraday, shares topped the official buy point of 133.58 from a nine-month consolidation. The relative strength line reached a new high, reflecting AutoNation’s outperformance compared to the S&P 500 index. A stock appears to be on the verge of being extended from the more actionable area of 125-126 and especially moving averages.
Penske Automotive shares jumped 5.6% to 124.16, breaking out past a cup-with-handle buy point at 121.55. Volume was above average for PAG shares.
EQT stock fell 4.3% to close at 47.19, clearing a buy point at the 46.81 cup handle, according to MarketSmith analysis. Shares rose after hours.
Antero Resources shares rose 4.2% to 40.55, but closed in the lower half of Tuesday’s range. AR stock hit 42.16 intraday, briefly topping a 41.05 buy point from a handle that is just too low to be valid.
Market rally analysis
The stock market rally shrugged off some mixed early weakness to close higher. The Dow Jones, which just crossed the 200-day mark on Monday, led the way with a fifth straight gain. The Russell 2000, which surpassed its long-term average on Friday, tested and held it on Tuesday.
The S&P 500 nearly reached the 200-day line before falling back. But it was not an emphatic rejection.
Nasdaq has some distance to reach the 200 day.
Growth rates are without a doubt reason for a breath in the ground.
There may also be some rotation to “real economy” sectors such as energy and commodities, retail and even some transport names.
But growth gave up ground reluctantly. The Nasdaq, down more than 1% in the morning, returned to modest positives before falling to finish slightly in the red. ARKK and speculative growth names retreated somewhat.
Meanwhile, BBBY stock is showing speculative meme mania bubbling up again.
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What to do now
The share rally hovers around an important resistance area, with some rotation, at least in the short term, towards natgas, retail and other real economy names.
Investors should continue to be cautious about increasing exposure. If you add, say, EQT stocks or Costco, that’s fine, but don’t pack your portfolio with natgas and retailers.
Perhaps this week’s winners will continue to run and lead for a while longer. Or Nasdaq could quickly take control again. Or the market rally could see a noticeable pullback to the 21-day line.
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