Dow Jones futures edged lower Wednesday morning, along with S&P 500 futures and Nasdaq futures. The stock market rally closed slightly lower on Tuesday after big retreats in the previous two sessions. Investors are cautious about making big bets ahead of Fed chief Jerome Powell’s big Jackson Hole speech on Friday.
Apple (AAPL) is carving a handle, lowering its potential buy point. Apple stock technically already has a buy point on a weekly chart.
Tesla (TSLA) rose toward an aggressive buy point Tuesday. Outside of Tesla stock, most EV makers are struggling. However, several EV-related plays are near buy points or actionable now. They include lithium producers Albemarle (ALB) and Livent (LTHM). Also chip plays On Semiconductor (ON), Axcelis Technologies (ACLS) and Monolithic Power Systems (MPWR).
That comes ahead of earnings Wednesday night from chip giant Nvidia (NVDA), with its comments about data centers also important for Monolithic Power.
Tuesday night, TurboTax maker Intuit (INTU) rose on strong earnings, while La-Z-Boy (LZB) jumped on its results. Luxury homebuilder Toll Bros. (TOL) and youth apparel retailer Urban Outfitters (URBN) fell on mixed results, while Advance Auto Parts (AAP) reversed on disappointing EPS and sales. Nordstrom (JWN) tumbled as it slashed guidance amid an inventory glut.
ALB stock is on IBD Leaderboard. MPWR stock is on IBD Long-Term Leaders. Tesla stock, Monolithic Power, Axcelis and Onsemi are on the IBD 50. Albemarle, Monolithic and ON stocks 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 fell less than 0.1% vs. fair value. S&P 500 futures and Nasdaq 100 futures lost a fraction.
The 10-year Treasury yield fell 1 basis point to 3.04%.
Crude oil futures rose about 1%. Natural gas futures climbed more than 1%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally edged lower Tuesday, continuing a pullback but with the major indexes all near their 21-day moving averages.
The Dow Jones Industrial Average fell 0.5% in Tuesday’s stock market trading. The S&P 500 index lost 0.2%, with TWTR stock easily the worst performer. The Nasdaq composite, up for most of Tuesday’s session, closed down less than 1 point. The small-cap Russell 2000 edged up 0.2%.
US 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 production.
Natural gas futures fell 5%, reversing from 14-year highs, even though Freeport LNG pushed back 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 undercut 3% following several weak economic reports.
Powell’s policy speech will likely swing Treasury yields and rate hike odds. Markets have fully priced in at least 50 basis points for Sept. 21, but are split on whether policymakers will opt for a third straight Fed rate hike of 75 basis points.
Among the best ETFsthe Innovator IBD 50 ETF (FFTY) rose 1.6%. The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.2%, with CRM stock a top IGV component. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.65%. Nvidia stock is a major SMH holding.
SPDR S&P Metals & Mining ETF (XME) gained 2.45%. The Energy Select SPDR ETF (XLE) ran up 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 story stocks, the ARK Innovation ETF (ARKK) dipped 0.55% and ARK Genomics ETF (ARKG) rose 1.8%. Tesla stock is a major holding across Ark Invest’s ETFs.
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Apple stock dipped 0.2% to 167.23, trading just above its 21-day moving average. On Aug. 17, AAPL stock cleared a downward-sloping trendline, but then pulled back on Friday. Now the Dow Jones tech giant is working on a handle. Apple stock needs one more day on a daily chart to have a proper handle with a 176.25 buy point. On a weekly chart, AAPL stock already has that handle.
The relative strength line for Apple stock is right at a record high, a bullish sign.
EV Stocks Near Buy Points
Lithium plays Albemarle and Livent reported strong earnings and guidance earlier this month.
Albermarle stock rose 1.9% to 281.03, following an upside reversal on Monday. ALB stock is extended from a 250.25 buy point from a handle within a huge handle. However, shares are in the range of an alternate entry of 273.78, just above the high of the 31%-deep handle. Investors could use this as a chance to buy ALB stock or add a few shares.
LTHM stock popped 5.1% to 30.33. Livent stock has a 31.63 cup-with-handle buy point, but right at a downtrend in the handle. That would offer an early entry, although the low volume is an issue.
On Semiconductor, Axcelis Technologies and Monolithic Power, chip plays with EV exposure, all delivered strong results in early August.
ON stock rose 3.6% to 71.25 Tuesday. That’s back above a 69.36 handle buy point, although the consolidation high + 10 cents of 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-handle base. The Axcelis handle has been volatile, but the chip-gear maker has been finding support at the 21-day line. Axcelis stock could have an early entry from breaking the downtrend of the handle.
MPWR stock advanced 1.2% to 497.51, around its 21-day line. Monolithic Power stock has a 541.49 cup-with-handle buy point, according to MarketSmith analysis. Shares retreated Friday and Monday, undercutting the 21-day line, giving a bit more of a shakeout after a strong advance.
Monolithic Power is in a number of markets including data centers, industrial applications and EVs.
Tesla stock rose 2.3% to 889.36, bouncing from the 21-day moving average, slightly below the 200-day line. TSLA stock could have an aggressive entry if it clears short-term highs, emphasis on aggressive.
Tesla stock will split 3-for-1 after Wednesday’s trading.
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Market Rally Analysis
The stock market rally was mixed Tuesday, with all the major indexes hitting resistance at the 21-day moving average. The Nasdaq lost a fraction after tumbling 2% on Friday and 2.55% on Monday. The Dow Jones, which closed Monday just below its 21-day, lost a little more ground Tuesday.
Nvidia and Salesforce.com (CRM) earnings will be in focus Wednesday night. But the market rally may be rangebound until Fed chief Powell’s big speech Friday morning. Volume has been especially light this week.
EV supplier stocks such as Albemarle and Axcelis are looking interesting.
Energy stocks have been leading, but many have already moved past buy points. Energy prices are subject to big daily or even intraday swings, with natgas futures’ downside reversal Tuesday a clear example.
Some steel plays are setting up along with fertilizer and agriculture stocks.
Biotechs and drugmakers such as Vertex Pharmaceuticals (VRTX) and Eli Lilly (LLY) had a tough session, but aren’t broken for now.
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What To Do Now
The market rally is in a pullback within an uptrend within a bear market. In the very short run, investors should be cautious about adding exposure, especially with Fed chief Powell looming.
More stocks are forming bullish setups, so investors should be running screens and updating watchlists.
Read The Big Picture every day to stay in sync with the 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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