Dow Jones futures were little changed Wednesday morning, along with S&P 500 futures and Nasdaq futures. The stock market rally closed slightly lower on Tuesday after big pullbacks in the previous two sessions. Investors are wary of making big bets ahead of Fed chief Jerome Powell’s big speech in Jackson Hole on Friday.
An apple (AAPL) carves a handle, reducing its potential point of purchase. Apple stock technically already has a buy point on the weekly chart.
Tesla (TSLA) rose to an aggressive buy point on Tuesday. Late Tuesday, CEO Elon Musk told an FSD Beta user not to “complain” about the driver assistance software.
Outside of Tesla stock, most EV makers are struggling. However, several EV-related games are close to purchase points or already actionable. These include lithium producers Albemarle (ALB) and Livent (LTHM). Also chip plays On the semiconductor (ON), Axcelis Technologies (ACLS) and Monolithic energy systems (MPWR).
This comes ahead of the chip giant’s Wednesday night earnings Nvidia (NVDA), with his comments on data centers also important to Monolithic Power.
Tuesday night, TurboTax maker Intuit (INTU) rose with strong gains, while La-Z-Boy (LZB) jumped on his scores. Luxury builder Toll Bros. (TOL) and youth clothing retailer Urban Outfitters (URBN) fell with mixed results, while Advance auto parts (AAP) reversed due to disappointing EPS and sales. Nordstrom (JWN) fell as it cut guidance amid an inventory glut.
ALB shares included IBD ranking. MPWR shares included IBD long-term leaders. Shares of Tesla, Monolithic Power, Axcelis and Onsemi are at IBD 50. Albemarle, Monolithic and ON stock are in stock IBD Big Cap 20. Monolithic Power was on Tuesday IBD Stock of the Day. Livent was the stock of the day on Monday.
Dow Jones futures today
Dow Jones futures fell to fair value. S&P 500 futures and Nasdaq 100 futures edged higher.
The 10-year Treasury yield rose 1 basis point to 3.06%.
Crude oil futures rose 1%. Natural gas futures rose 2%. Copper futures fell more than 1%.
Remember this night action in Dow futures and elsewhere does not necessarily become an actual trade in the next regular Stock Exchange session.
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Stock market rallies
The stock market rally eased on Tuesday, continuing the pullback, but with all major indexes near their 21-day moving averages.
The Dow Jones Industrial Average fell 0.5% on Tuesday Exchange Trading. The S&P 500 lost 0.2%, with TWTR shares easily the worst performers. The Nasdaq Composite, which rose for most of Tuesday’s session, closed down less than 1 point. The small-cap Russell 2000 rose 0.2%.
U.S. crude oil prices rose 3.4 percent to $93.74 a barrel, continuing to rebound from Monday’s lows after Saudi Arabia suggested OPEC cut production.
Natural gas futures fell 5%, reversing from 14-year highs, despite Freeport LNG delaying the restart of its Texas facility from early October to early-mid November.
The 10-year Treasury yield rose 2 basis points to 3.05%. The 10-year yield hit 3.08% intraday, then briefly dipped below 3% after several weak economic reports.
Powell’s policy speech is likely to change Treasury yields and the chances of a rate hike. Markets have fully priced in at least 50 basis points for Sept. 21, but are divided on whether policymakers will opt for a third straight 75 basis point Fed rate hike.
Avg the best ETFsInnovator IBD 50 ETF (FFTY) grew by 1.6%. iShares Expanded Tech-Software Sector ETF (IGV) fell 0.2%, with CRM shares leading the IGV component. VanEck Vectors Semiconductor ETF (SMH) rose 0.65%. Nvidia stock is a major holding of SMH.
SPDR S&P Metals & Mining ETF (XME) gained 2.45%. Energy Select SPDR ETF (XLE) rose 3.6%, and the Financial Select SPDR ETF (XLF) declined by 0.4%. Select Healthcare Sector SPDR Fund (XLV) fell by 1.4%.
Reflecting the more speculative stocks of history, the ARK Innovation ETF (ARKK) fell 0.55% and the ARK Genomics ETF (ARKG) grew by 1.8%. Tesla stock is a major holding in Ark Invest’s ETF.
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Apple shares fell 0.2% to 167.23, trading just above their 21-day moving average. On August 17, AAPL shares cleared a downtrend line, but then pulled back on Friday. Now tech giant Dow Jones is working on the handle. Apple stock needs one more day on the daily chart to have a proper position with a buy point at 176.25. On a weekly chart, AAPL stock now has that handle.
The line of relative strength for Apple shares are right at a record high, a bullish sign.
EV stocks near points of purchase
Lithium plays Albemarle and Livent reported strong earnings and guidance earlier this month.
Albermarle shares rose 1.9% to 281.03, after reversing higher on Monday. ALB stock expands from 250.25 handle buy point within huge handle. However, shares are in an alternative entry range of 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 jumped 5.1% to 30.33. Shares of Livent have 31.63 cup-with-handle a buy point, but right on a downtrend in the handle. This would suggest early entry, although low volume is a concern.
At Semiconductor, Axcelis Technologies and Monolithic Power, chip plays with EV exposure, all posted strong results in early August.
ON shares rose 3.6% to 71.25 on Tuesday. This is again above a buy point at 69.36, although the +10 cent consolidation high at 71.35 is also a legitimate entry.
Shares of ACLS rose 2.2% to 72.22, working toward a buy point of 79.93 deep cup base with handle. Axcelis’ handle was volatile, but the chipmaker found support in the 21-day line. Axcelis shares may have an early entry from a downtrend break on the handle.
Shares of MPWR advanced 1.2% to 497.51, around its 21-day line. Monolithic Power shares have a 541.49 point to buy cup handle, according to MarketSmith analysis. Shares edged lower on Friday and Monday, breaking below the 21-day line, giving a little more shakeout after a strong advance.
Monolithic Power is in a number 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 line. TSLA stock could have an aggressive entry if it clears near-term highs, with an emphasis on the bullish.
On Tuesday evening, a Tesla owner with FSD Beta tweeted that he still had to “interfere” too often, even with the latest version 10.69. He suggested that Tesla should focus on “core control issues” versus very specific issues.
Musk responded that Tesla owners who were “invited” to test the FSD Beta shouldn’t “complain.” The cost of a full self-drive — which isn’t a full self-drive — goes up to $15,000 in early September.
Tesla shares will split 3-for-1 after trading on Wednesday.
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Market Rally Analysis
The stock market rally was mixed on Tuesday, with all major indexes hitting resistance at the 21-day moving average. The Nasdaq lost little ground after falling 2% on Friday and 2.55% on Monday. The Dow Jones, which closed Monday just below its 21-day low, lost some more ground on Tuesday.
Nvidia and Salesforce.com (CRM) earnings will be in focus on Wednesday night. But the market’s rally could be limited to Fed chief Powell’s big speech on Friday morning. Volume was particularly thin this week.
Shares of EV providers like Albemarle and Axcelis look interesting.
Energy stocks are leading, but many have already passed buy points. Energy prices are subject to large intraday or even intraday swings, with Tuesday’s downward reversal in natural gas futures a clear example.
Some steel plants are created along with stocks of fertilizers and agricultural products.
Biotech and drug manufacturers such as Vertex Pharmaceuticals (VRTX) and Eli Lilly (LLY) had a rough session but are not broken so far.
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What should we do now
The market rally is pulling back within an uptrend within a bear market. In the very short term, investors should be cautious about adding exposure, especially with Fed boss Powell looming.
More stocks are forming bullish setups, so investors should run screens and update watch lists.
Read it The big picture every day to stay in sync with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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