Dow Jones futures edged lower after hours, while S&P 500 and Nasdaq futures edged lower. NVDA shares fell overnight after reports that the United States may expand its chip export curbs.
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The stock market rose sharply on Tuesday after Monday’s mixed trading.Nasdaq and S&P 500 Rebound from Near 21-Day Exponential Moving Averages Along with Megacaps Tesla (TSLA) and Nvidia (NVDA). Overall market breadth was solid.
united airlines (UAL), american airlines (AAL), fedex (FDX), Amkor Technology (AMKRMore) and On hold (Onon) I cleared all purchase points.
Stocks of Tesla, On Holding and Nvidia are on the rise IBD Leaderboard, the UAL stock is on the leaderboard watchlist.United Airlines and ONON shares IBD50.Tesla stock IBD Big Cap 20. United Airlines was IBD’s “Stock of the Day” on Tuesday.
Is the market rally over or is this just a one-day plunge? That’s the big question. Investors can use buying opportunities cautiously, but be prepared to exit if the position or the market as a whole goes back down again.
A video embedded in this article discusses Tuesday’s strong market rally, highlighting FDX shares, United Airlines, and data dog (DDOG).
US Considers AI Chip Export Restrictions
Biden Administration Considers New Policy Export restrictions on artificial intelligence chipsThe Wall Street Journal reported Tuesday night, citing people familiar with the matter.
The Commerce Department could stop shipments of AI chips by companies such as Nvidia to China and other countries of concern without obtaining prior licenses.
Nvidia shares fell 3% in extended trading. Advanced Micro Devices (AMD) fell more than 2%. broadcom (AVGO) fell 1.5%.
In addition to potentially losing business from the likes of Nvidia and AMD, expanding chip exports could spur retaliation from China.Beijing has already restricted sales micron technology (Mu) tipped a major customer due to cybersecurity concerns. Micron fell overnight, reports Wednesday night.
In other news Spirit Aerosystems (SPR) reached a tentative agreement with the striking workers late Tuesday. Spirit Aero manufactures the fuselage for his 737. boeing (BA). SPR shares edged higher in late trading. BA shares advanced slightly.
dow jones futures today
Dow Jones futures were slightly below fair value even as Boeing stock rose slightly. S&P 500 futures were down 0.2% and Nasdaq 100 futures were down 0.4%. Nvidia and AMD stocks are notable components of the S&P 500 and Nasdaq 100.
Note that overnight trading such as Dow Futures does not necessarily translate into actual trading in the next regular stock market.
IBD experts analyze hot stocks during the stock market rally on IBD Live.
stock market rise
Stock market gains were broad-based and strong. Economic data were positive, with May new home sales dominating the outlook, while June consumer confidence and Richmond area manufacturing reports also outperformed.
The Dow Jones Industrial Average rose 0.6% in stock market trading on Tuesday. The S&P 500 index rose 1.1%. The Nasdaq Composite rose 1.65%. Small-cap Russell 2000 rose 1.5%.
US oil prices fell 2.4% to $67.70 a barrel.
The 10-year U.S. Treasury yield rose 5 basis points to 3.77%, in a range since late May.
ETFs
Among Growth ETFs, Innovator IBD 50 ETF (FFTY) jumped 2.6%, while the Innovator IBD Breakout Opportunity ETF (game) rose 2.5%. iShares Augmented Technology Software Sector ETF (IGV) rose nearly 2%.
VanEck Vectors Semiconductor ETF (SMH) rose 3.2%. SMH’s top holding, NVDA, rose 3.1%, rebounding from around the 21st line. However, it turned out to be an inside day after a 3.7% drop on Monday.
A stock that reflects a more speculative story, the ARK Innovation ETF (Arkuk) surged 3.4%, while the ARK Genomics ETF (Argu) rose 0.7%. Tesla stock is the number one constituent of the Ark Invest ETF overall. The EV giant rose 3.8% to 250.21 on Tuesday, rebounding from the 21st line, but fell 6.1% on Monday. TSLA stock probably has a buy point of 274.75 handles in the consolidation dating back to September.
SPDR S&P Metals & Mining ETF (XME) rose 1.3%, while the Global X US Infrastructure Development ETF (pave) 1.7%. US Global Jets ETF (Jets) rose 4.4%, with UAL stocks and American Airlines dominating the ETF. SPDR S&P Homebuilders ETF (XHB) rose 2.9%. Energy Select SPDR ETF (XLE) rose 0.2%, while the Healthcare Select Sector SPDR Fund (XLV) fell 0.2%.
Industrial Select Sector SPDR Fund (XLI) rose 1.2%.
Financial Select SPDR ETF (XLF) rose 0.8%. SPDR S&P Regional Banking ETF (KRE) rebounded 3.2%.
Top 5 Chinese stocks to watch right now
Stocks in the buy zone
UAL shares climbed 5.1% to 56.03, clearing the buy point of 54.05 for cups with handles. AAL shares climbed 5.5% to 17.35, outperforming the 16.72 entry from the cup with handles, according to MarketSmith analysis.United and American jumped as planned delta airlines (Dar) raised the full-year outlook.Already extended DAL shares surge 6.8%
FDX shares surged 5% to 246.76, well above the buy point of 235.81 on a flat basis. FedEx surpassed this level in mid-June but then fell back on mixed earnings. The stock quickly rebounded from the 50-day line.
AMKR shares surged 11.4% to 29.37, easily breaking the buy point of 27.20. The company is now well above the 5% buy zone at 28.56.
Onon shares rose 2.2% to 31.30, but remain within the 50-day and trendlines. The high-end athletic shoe maker beat those key levels on Monday. The stock rose above its temporary high of 31.45 during the day on Tuesday.
Stock market predictions for the next 6 months
market rise analysis
The rally in the stock market turned out to be a decidedly bullish trade. The index rallied around key short-term levels with strong ranges and many stocks sending buy signals, with high volumes.
The Nasdaq and S&P 500 have rebounded from near the 21st line. Meanwhile, the Dow Jones and Russell 2000 have regained their vital levels.
Invesco S&P 500 Equal Weight ETF (RSP) recovered its 21-day gain on Monday, but rose 1.2% on Tuesday, breaking its recent downtrend and breaking above the 10-day line.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell only 0.2% on Monday, but rose 1.7% on Tuesday, also rebounding from 21 days.
On Tuesday, the rising stocks easily beat the losing stocks.
Aviation and travel were big winners, but semiconductors, software, industrial products, transportation and the broader housing sector were equally bullish.
Energy remains a weak sector, while biotech and some sectors struggle.
Tuesday may have marked the beginning of a new phase of market rally. The Nasdaq held a subsequent follow-through day. However, it has yet to fully break out of its recent decline and remains just below the 10-day line.
The overnight blow to Nvidia from reports of AI chip export curbs was an unexpected headwind.
Also, after Tuesday’s rally, the Nasdaq Index is 6.5% above its 50-day moving average and the Nasdaq 100 is up 7.5%. It doesn’t take long for them to reach extreme levels again.
Timing the Market with IBD’s ETF Market Strategy
what to do now
Investors may indeed have been looking for places to add exposure, as the stock market rally has provided a positive signal. The pullback is not over yet and there is still a risk that Tuesday’s buying opportunity will be quickly lost. But waiting for definitive evidence that the pullback is over, such as the Nasdaq hitting new highs, will be too late to chase stocks.
One option is to take a small position on new purchases. Be prepared to act quickly and consider taking some profits quickly to lock in profits.
Buy as close to the entry as possible. This gives you some protection from stock and market reversals.
Be sure to prepare your watchlist. Broad advancements with diverse leadership means it’s difficult to keep track of all promising stocks. But that’s a good question.
Read “The Big Picture” daily to stay on top of market direction and key stocks and sectors.
Follow Ed Carson on Twitter. @IBD_ECarson Stock market updates and more.
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