Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures. fedex (FDX) Fed Chairman Jerome Powell is scheduled to testify before Congress on Wednesday, it was reported after the close.
The rally in the stock market has resulted in two consecutive losses. With the Nasdaq and even the S&P 500 continuing to extend, the pullback may not be surprising, but rather welcome. Major indices, especially the Nasdaq, fell reluctantly. Tesla (TSLA) and Nvidia (NVDA) continues to rise.
Market width was weak on Tuesday, but is improving.
Meritage Homes (MTH) I got my purchase points back on Monday, Allegro Microsystems (ALGM) and Ranteus Holdings (LNTH) flushed the early entries. elf beauty (fairy) showed a tight entry. ATI (ATI) are moving toward potential entry.
However, buying stocks when the market may start to pull back comes with additional risks.
Tesla and Nvidia Stocks Rise IBD Leaderboard, with ELF stocks on the leaderboard watchlist. ELF Beauty and ALGM strains are on top. IBD50.Tesla stock IBD Big Cap 20. Meritage Homes was IBD’s “Stock of the Day” on Tuesday.
Federal Reserve Secretary Powell
Fed Chairman Jerome Powell will address the House Financial Services Committee at 10 a.m. ET on Wednesday and will attend the Senate Banking Committee on Thursday. The Fed last week left rates on hold, but hinted at two more rate hikes this year. While the market is largely expecting a rate hike in July or September, we see a second rate hike unlikely before the end of the year. Fed Chairman Jerome Powell, along with several other policymakers, may try to bolster hopes for a second rate hike this week. But Mr. Powell was relatively dovish in his post-meeting comments last week. In any case, the next few weeks and months of inflation reports and other economic data will tell the story.
dow jones futures today
Dow Jones futures fell slightly against fair value. S&P 500 futures and Nasdaq 100 futures are little changed.
Note that overnight trading such as Dow Futures does not necessarily translate into actual trading in the next regular stock market.
FedEx shares fell slightly in the closing days of trading as FedEx’s profit marginally beat its fourth-quarter earnings guidance while sales fell short. The shipping giant also gave its 2024 EPS outlook well below the view. FedEx shares fell 0.8% to 231.65 in regular trading on Tuesday, just below the buy point of 235.81 from the flat base, which is part of the base-on-base formation. The stock just topped its entry last Thursday.
United Parcel Service (UPS) lost some overnight. UPS shares were down 0.7% on Tuesday, trading near the 50- and 200-day lines, well below their February 2022 highs.
stock market rise
The stock market’s rally started with sizable losses, but broke out of lows after the first hour of trading.
The Dow Jones Industrial Average fell 0.7% in stock market trading on Tuesday. The S&P 500 index fell 0.5%. The Nasdaq Composite fell less than 0.2%. Small-cap Russell 2000 fell 0.5%.
US oil prices fell 1.8% to $70.50 a barrel. The 10-year U.S. Treasury yield fell four basis points to 3.73%.
Among Growth ETFs, Innovator IBD 50 ETF (FFTY) increased by 0.2%. iShares Augmented Technology Software Sector ETF (IGV) fell 1%. VanEck Vectors Semiconductor ETF (SMH) fell 0.35%. NVDA, the No. 1 holding of major SMH, rose 2.6% to a new all-time high.
A stock that reflects a more speculative story, the ARK Innovation ETF (Arkuk) down 0.1%, the ARK Genomics ETF (Argu) rose 0.35%. TSLA shares, Ark Invest’s No. 1 holding across all ETFs, rose 5.3% on the back of strong EV sales in China and US charging technology deals. Rivian (Riven).
SPDR S&P Metals & Mining ETF (XME) fell 0.5%. US Global Jets ETF (Jets) fell 0.3%. SPDR S&P Homebuilders ETF (XHB) rose 0.6%. Energy Select SPDR ETF (XLE) fell 2.2%, while the Healthcare Select Sector SPDR Fund (XLV) fell 0.1%.
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Stocks close to the purchase point
Meritage Homes rose 2 percent to 132.89, above its buy point of 130.68 from a flat base, MarketSmith analysis showed. MTH shares have been trading around this entry for the past two weeks. Surprisingly strong housing starts boosted homebuilder stocks.
Allegro Micro shares surged 4% to 41.76. The stock has rebounded from the 50-day line, broken out of the consolidating trendline and above short-term resistance. The ALGM strain did all of this to a greater extent.
Ranteus shares rose 5.2% to 92.87, well above the 50-day line. LNTH stock sees new consolidation at 100.85 buy point. On Tuesday, however, he offered an early entry.Medical product companies have seen a resurgence in the last few sessions
ELF shares climbed 3% to 107.19, breaking the intraday three-week tight entry of 108.43 to a new closing high. This provided an opportunity for existing investors to add a few more shares.
ATI shares rose 2.7% to 40.36. Special Alloys has a consolidated buy point of 43.32 on the daily chart but is working on a possible handle. There is a handle on the weekly chart, and the buy point for ATI stock is 41 points.
market rise analysis
Equity market gains eased back slightly on Tuesday, but the major indexes were well off their intraday highs. The extended Nasdaq barely fell.
The market as a whole suffered losses but was in a normal and healthy situation. The losers outnumbered the winners significantly, but the overall trend was positive.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell 0.9% but did not touch the 10-day line.
Invesco S&P 500 Equal Weight ETF (RSP) also abandoned 0.9% and found support near the 10-day line and April peak.
The Nasdaq Composite is still 8.6% above the 50-day line and the Nasdaq 100 is 9.9% above the line, both gaining significantly.
There were several buying opportunities on Tuesday, including Meritage and ALGM shares. As always, market and sector performance will be key to what these stocks do going forward.
If the market pauses or pulls back, major stocks may find support at key moving averages or perhaps consolidate near traditional buy points to generate new entries. Other potential leaders, such as ATI stock, are also trying to get behind the wheel.
Look at indices and ETFs such as the Dow Jones, QQEW, RSP, and XLI to get an idea of how pauses and price declines are reflected in individual stocks.
Of course, some stocks lag behind or even go bankrupt with a small drop. Some of these stocks may have been lagging in recent weeks, but that’s not always apparent when markets are rising.
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what to do now
A modest drop remains the most plausible short-term stock market rally scenario. The alternatives are a sideways move, a deeper drop, or renewed market strength that almost immediately pushes the Nasdaq back to more extreme levels. None of these scenarios look particularly bullish, especially for new buys in tech stocks.
If you are making a new or additional purchase in the current situation, be prepared to withdraw immediately. Depending on the size of your position, your overall exposure and your investment style, you may consider taking a partial profit on the extension name.
Continue building your watchlist. It will take time for many newcomers to enter the market, but be prepared to swoop in.
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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