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 large pullbacks 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) cuts a handle, lowering the potential buy point. Apple stocks technically already have a buying point on a weekly chart.
Tesla (TSLA) rose to an aggressive buying point on Tuesday. Outside of Tesla stocks, most EV makers are struggling. However, several EV-related games are now almost point-of-purchase or action-oriented. They include lithium producers Albemarle (ALB) and Levent (LTHM). Chip also plays On semiconductor (AT), Axcelis Technologies (ACLS) and Monolithic Energy Systems (MPWR).
That occurs on Wednesday evening’s profit from chip giant Nvidia (NVDA), with his comments about data centers also important to Monolithic Power. Salesforce.com (CRM) and Snowflake (SNOW) are the top software earnings on Wednesday night.
Tuesday evening, TurboTax maker intuitive (INTU) rose on strong gains, while La-Z-Boy (LZB) jumped on his results. Luxury home builder Toll Brothers. (TOL) and retail of youth clothing Urban Outfitters (URBN) delivered mixed results, while Advanced Auto Parts (AAP) returned after disappointing earnings per share and sales. Nordstrom (JWN) tumbled as it lowered guidance amid a stock surplus.
ALB shares are listed on IBD Leaderboard. MPWR stocks are listed on IBD Long-Term Leaders. Tesla shares, Monolithic Power, Axcelis and Onsemi are on the IBD 50. Albemarle, Monolithic and ON shares are on the IBD Big Cap 20. Monolithic Power was the IBD share of the day on Tuesday. Livet was the stock of the day on Monday.
Dow Jones Futures Today
Dow Jones futures were flat against fair value. S&P 500 futures and Nasdaq 100 futures tilt higher.
Keep in mind that an overnight action in Dow futures and elsewhere does not necessarily lead to actual trading in the next regular trading session.
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stock market rally
The stock market rally ended somewhat lower on Tuesday and continued a decline, but with the major indices all close to their 21-day moving averages.
The Dow Jones Industrial Average fell 0.5% in trading on Tuesday. The S&P 500 index lost 0.2%, with TWTR stocks easily the worst performer. The Nasdaq composite, which rose for most of Tuesday’s session, closed less than 1 point. The small-cap Russell 2000 rose 0.2%.
The price of crude oil in the US rose 3.4% to $93.74 a barrel, continuing to bounce from Monday’s lows after Saudi Arabia suggested OPEC could cut production.
Natural gas futures fell 5%, a reversal from a 14-year high, although Freeport LNG postponed the restart of its Texas plant from early October to early mid-November.
The 10-year government bond yield rose by 2 basis points to 3.05%. The 10-year yield reached 3.08% intraday and then briefly broke 3% after several weak economic reports.
Powell’s policy speech is likely to affect government bond yields and the likelihood of rate hikes. Markets have fully priced in at least 50 basis points for Sept. 21, but are divided on whether policymakers will opt for a third consecutive 75 basis point Fed rate hike.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) was up 1.6%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.2%, with CRM stocks being a major IGV component. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.65%. Nvidia stocks are a major SMH holding company.
SPDR S&P Metals & Mining ETF (XME) gained 2.45%. The Energy Select SPDR ETF (XLE) rose 3.6% and the Financial Select SPDR ETF (XLF) fell 0.4%. The Health Care Select Sector SPDR Fund (XLV) fell 1.4%.
As a result of more speculative story stocks, ARK Innovation ETF (ARKK) fell 0.55% and ARK Genomics ETF (ARKG) rose 1.8%. Tesla stocks are a major holding in Ark Invest’s ETFs.
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Apple stock fell 0.2% to 167.23, trading just above its 21-day moving average. On August 17, AAPL stock cleared a downward trendline, but then pulled back on Friday. Now the tech giant of Dow Jones is working on a handle. Apple stocks need another day on a daily chart to have a good handle with a buy point of 176.25. On a weekly chart, AAPL stock already has that handle.
The relative strength line for Apple stocks is right at an all-time high, a bullish sign.
EV stocks near buying points
Lithium plays Albemarle and Livent reported strong gains and guidance earlier this month.
Shares of Albermarle rose 1.9% to 281.03, after reversing upward on Monday. ALB stock is extended from a buy point of 250.25 from a handle in a huge handle. However, the stock is in the range of an alternate entry of 273.78, just above the high of the 31% deep handle. Investors can use this as an opportunity to buy ALB shares or add a few shares.
LTHM stock shot up 5.1% to 30.33. Livent stock has a buy point of 31.63 cup-with-handle, but right on a downward trend in the handle. That would provide early access, although low volume is an issue.
At Semiconductor, Axcelis Technologies and Monolithic Power, chip games with exposure to EVs delivered strong results in early August.
ON shares rose 3.6% to 71.25 Tuesday. That’s back above a buy point of 69.36, although the +10-cent consolidation high of 71.35 is also a legitimate entry.
ACLS stock climbed 2.2% to 72.22, building to a buy point of 79.93 from a deep cup-with-handle base. The Axcelis handle has been fleeting, but the chip kit maker has found support with the 21-day line. Axcelis stocks may have an early entry by breaking the handle’s downtrend.
MPWR shares were up 1.2% to 497.51, around the 21-day line. Monolithic Power stock has a buy point of 541.49 heads-to-hand, according to MarketSmith’s analysis. Shares pulled back Friday and Monday, undercutting the 21-day line, giving a bit more of a shakeout after a strong rally.
Monolithic Power operates in a number of markets, including data centers, industrial applications and EVs.
Tesla shares rose 2.3% to 889.36, bouncing off the 21-day moving average, slightly below the 200-day line. TSLA stock could have an aggressive entry if it clears short-term highs, with an emphasis on aggressive.
Tesla shares will split 3-for-1 after Wednesday’s trading.
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Market rally analysis
The stock rally was mixed on Tuesday with all major indices meeting 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 just below 21-day on Monday, lost a little more ground on Tuesday.
Nvidia and Salesforce revenues will take center stage on Wednesday evening. But the market rally may be limited to Fed chief Powell’s big speech Friday morning. Volume was particularly light this week.
Stocks of EV vendors like Albemarle and Axcelis look interesting.
Energy stocks led the way, but many are already past buying points. Energy prices are subject to large daily or even intraday swings, with the downside reversal of wet gas futures Tuesday being a clear example.
Some steel games are set up along with fertilizer and agricultural supplies.
Biotech and drug manufacturers such as Vertex Pharmaceuticals (VRTX) and Eli Lilly (LLY) had a tough session, but hasn’t broken so far.
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What to do now
The market rally is in a pullback within a bear market uptrend. In the very short term, investors should be careful about adding exposure, especially with Fed chief Powell looming.
More stocks are forming bullish setups, so investors should use screens and update watchlists.
Read The Big Picture every day to stay up to date on market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.
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