Dow Jones futures: Bulls resist pullback as Tesla and Nvidia race; 5 stocks near buy points

Dow Jones futures trended higher in after-hours trading, as did S&P 500 futures and Nasdaq futures. FedEx (FDX) reported after the close, with Fed Chair Jerome Powell set to testify before Congress on Wednesday.




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The stock market rally resulted in losses for the second straight month. The Nasdaq and even the S&P 500 expanded, so a drop was not a surprise and might even be welcome. The major indices, particularly the Nasdaq, declined reluctantly Tesla (TSLA) and Nvidia (NVDA) continues to rise.

Market breadth was weak on Tuesday but has improved.

Meritage houses (MTH) recaptured a buy point on Monday Allegro MicroSystems (ALGM) and Lantheus Holdings (LNTH) flashed early entries. ELEVEN beauty (ELF) presented a brief contribution. ATI (ATI) is aiming for a possible entry.

However, buying stocks while the market may be initiating a decline carries an additional level of risk.

Tesla and Nvidia stocks are on the IBD leaderboard, while ELF stocks are on the leaderboard watchlist. ELF Beauty and ALGM stocks are in the IBD 50. Tesla stocks are in the IBD Big Cap 20. Meritage Homes was the IBD stock of the day on Tuesday.

Fed Chair Powell

Fed Chair Jerome Powell will address the House Financial Services Committee on Wednesday at 10 a.m. ET and then appear before the Senate Banking Committee on Thursday. Last week, the Fed left interest rates unchanged but signaled two more rate hikes this year. The markets are mostly expecting a rate hike in either July or September, but see little chance of a second rate hike before the end of the year. Fed Chair Powell, along with several other policymakers, may try to bolster expectations of a second rate hike this week. But Powell was relatively reserved in his comments after last week’s meeting. In any case, the inflation reports and other economic data will provide clues in the coming weeks and months.

Dow Jones futures today

Dow Jones futures were slightly above fair value. S&P 500 futures and Nasdaq 100 futures edged higher.

Keep in mind that nightly action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular trading session.

FedEx Results

FDX stock fell 3% in extended trading after FedEx earnings narrowly beat forecasts for the fiscal fourth quarter while revenue lagged. The shipping giant also provided a 2024 EPS guidance that was broadly below expectations. FedEx shares fell 0.8% to 231.65 in Tuesday’s regular session, just below a buy point of 235.81 from a flat base that is part of a base-to-base pattern. Shares surpassed this entry last Thursday.

United Parcel Service (UPS) fell 1% overnight. UPS stock slipped slightly by 0.7% on Tuesday, trading near its 50-day and 200-day moving average, well below its February 2022 peak.


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stock market rally

The stock market rally started with decent losses but hit lows after the first hour of trading.

The Dow Jones Industrial Average lost 0.7% in trading on Tuesday. The S&P 500 index fell 0.5%. The Nasdaq Composite is down less than 0.2%. The Russell 2000 small-cap index fell 0.5%.

US crude prices fell 1.8% to $70.50 a barrel. The 10-year government bond yield fell 4 basis points to 3.73%.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) was up slightly, up 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) lost 1%. The VanEck Vectors Semiconductor ETF (SMH) lost 0.35%. NVDA stock, SMH’s #1 largest stock, rose 2.6% to hit a new all-time high.

ARK Innovation ETF (ARKK) fell 0.1% and ARK Genomics ETF (ARKG) edged up 0.35%, reflecting more speculative story stocks. TSLA stock, Ark Invest’s #1 ETF, rose 5.3% on strong EV sales in China and another U.S. charging tech deal, this time with Rivian (RIVN).

The SPDR S&P Metals & Mining ETF (XME) fell 0.5%. The US Global Jets ETF (JETS) fell 0.3%. SPDR S&P Homebuilders ETF (XHB) is up 0.6%. The Energy Select SPDR ETF (XLE) fell 2.2% and the Health Care Select Sector SPDR Fund (XLV) slipped 0.1%.

The Financial Select SPDR ETF (XLF) lost 0.75%. The SPDR S&P Regional Banking ETF (KRE) fell 1.3%.


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Stocks near buy points

MarketSmith analysis Meritage Homes is up 2% to 132.89, back above a buy point of 130.68 from a flat base. MTH stock has traded around this entry for the past two weeks. Surprisingly strong housing starts helped boost homebuilder stocks.

Allegro Micro stock rose 4% to 41.76. Stocks bounced off their 50-day moving average, breaking a trendline in their consolidation and surpassing near-term resistance. ALGM stock did all of this on a larger scale.

Lantheus shares rose 5.2% to 92.87 and traded well above the 50-day moving average. LNTH stock is showing signs of consolidation with a possible buy point at 100.85. But Tuesday offered an early start. Medical device companies have bounced back in recent sessions

ELF shares rose 3% to 107.19, overcoming a three-week tight entry of 108.43 on the day and hitting a fresh closing high. This provided existing investors with an opportunity to add a few more stocks.

ATI shares rose 2.7% to 40.36. The specialty alloys business has a consolidation buy point of 43.32 on the daily chart but is working on a possible fix. On a weekly chart the mark is there giving ATI stock a lower buy point of 41.

Analysis of the market rally

The stock market rally eased again slightly on Tuesday, but the major indices lagged well behind the daily highs. The extended Nasdaq barely gave way.

megacap growth. Alongside Tesla shares and Nvidia Apple (AAPL), metaplatforms (META), Amazon.com (AMZN) and Netflix (NFLX) all advanced.

The broader market suffered losses, but in a normal, healthy way. The losers significantly outperformed the winners, but the overall trend was positive.

The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) fell 0.9% but never hit its 10-day moving average.

The Invesco S&P 500 Equal Weight ETF (RSP) also fell 0.9% to find support at the 10-day moving average and near its April high.

The Nasdaq Composite is still 8.6% above its 50-day moving average, while the Nasdaq 100 is 9.9% above that line, both significantly elevated.

A few buying opportunities emerged on Tuesday including Meritage and ALGM stocks. As always, market and sector development will be key to the future performance of such stocks.

A market pause or decline would result in leading stocks finding support at key moving averages or potentially consolidating around traditional buy points, creating new entries. Other potential leaders, such as ATI stock, are trying to make their mark.

Look at indices or ETFs like Dow Jones, QQEW, RSP, XLI to get an idea of ​​how pauses or declines would affect individual names.

Of course, some stocks will lag or even collapse on a slight decline. Some of these stocks may have underperformed over the past few weeks, but that’s not always evident when the market is rising.


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What now

A moderate pullback still seems the most plausible scenario for a stock market rally in the near term. The alternatives are sideways movement, a sharper decline, or renewed market strength that pushes the Nasdaq back to more extreme levels almost immediately. Neither of these scenarios seems particularly optimistic for new buying, particularly for technology stocks.

If you’re making new or additional purchases in the current environment, be prepared to back down quickly. With some extended names, you can consider taking partial profits. However, this depends on the size of your position, your overall exposure and your investment style.

Keep making watch lists. Many stocks take some time to make new entries, but you want to be ready to strike.

Read The Big Picture daily to stay up to date on market direction and the leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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