Dow Jones futures were little changed after the close, as were S&P 500 futures and Nasdaq futures. The stock market rally on Tuesday was slightly positive for the big cap indices. But small-cap and mid-cap stocks were having a big day.
Two large Cathie Wood stocks, Shopify (SHOP) and Coinbase Global (COIN) moved in opposite directions on Tuesday.
SHOP stock was up solidly, extending Monday's surge and recording an early entry. TransMedics group (TMDX), Taiwan semiconductor manufacturing (TSM), lifetime group (LTH) and Marriott International (MAR) made upward moves.
Meanwhile, the SEC accused Coinbase of being an unlicensed broker and violating other securities rules. COIN stock fell 12% despite hitting intraday lows. Coinbase shares fell just over 9% below its 50-day and 200-day moving averages on Monday after the SEC sued Binance, the world's largest cryptocurrency exchange.
SHOP stock was added to the IBD Leaderboard and SwingTrader on Tuesday. TMDX stock is in the IBD 50. Shopify was also Tuesday's IBD stock of the day.
Dow Jones futures today
Dow Jones futures saw a slight decline from fair value. S&P 500 futures and Nasdaq 100 futures were flat.
Keep in mind that nightly action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks from the stock market rally on IBD Live
stock market rally
The stock market rally showed strong market breadth, although the major indices traded in a narrow range.
The Dow Jones Industrial Average was up slightly in trading on Tuesday. The S&P 500 index rose 0.2%. The Nasdaq Composite rose 0.4%. The Russell 2000 small-cap index rose 2.7%.
US crude prices fell 0.6% to $71.74 a barrel. The 10-year government bond yield edged up 1 basis point to 3.7%.
Among growth ETFs, the innovator IBD 50 ETF (FFTY) is up 1.5% to a 2023 high. The iShares Expanded Tech-Software Sector ETF (IGV) is up 0.2%. The VanEck Vectors Semiconductor ETF (SMH) is up 0.7%. TSM stock is a key SMH component.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) was up 1.5% and the ARK Genomics ETF (ARKG) was up 2.3%. As mentioned above, COIN stocks and Shopify are key holdings for Ark Invest's ETFs. Tesla (TSLA), roku (ROKU) and DraftKings (DKNG) were other big components that posted solid gains on Tuesday.
The SPDR S&P Metals & Mining ETF (XME) is up 2.4% and the Global X US Infrastructure Development ETF (PAVE) is up 1.5%. The US Global Jets ETF (JETS) rose 1.7%. SPDR S&P Homebuilders ETF (XHB) is up 2.9%. The Energy Select SPDR ETF (XLE) was up 0.8% and the Health Care Select Sector SPDR Fund (XLV) was down 0.8%.
The Financial Select SPDR ETF (XLF) is up 1.3%. The SPDR S&P Regional Banking ETF (KRE) is up nearly 5%, hitting its best level since late April.
The five best Chinese stocks to watch right now
Stocks in buy zones
Shopify stock rose 6.2% to 63.66, clearly breaking a trendline in a brief consolidation. The volume was the largest since the huge three-day surge following first-quarter results. SHOP stock was able to trade as early as Monday as it recovered from its 21-day moving average. It's starting to look stretched out. It's possible the e-commerce giant is building a new base, but not before the end of next week.
TransMedics shares rose 6.2% to 79.40 and bounced off the 50-day moving average on strong volume. TMDX stock has a buy point of 90.15 but is actionable here.
Shares of Taiwan Semiconductor climbed 1.8% to 99.82, according to MarketSmith analysis, bouncing back above the consolidation buy point of 98.99 in above-average trading. The chip foundry giant sees stronger performance in the second half of 2023 and has also kept capital expenditures at the lower end of previous guidance. TSM stock broke off its baseline on May 25 on the overwhelming results and outlook from key clients Nvidia (NVDA), but soon withdrew. Shares fell back to just above their 21-day moving average on Monday before recovering.
Life-Time stock rose 4.2% to 20.94 and recaptured a cup-based buy point of 20.35 on strong volume. Investors could consider the last few weeks as a flat base with an entry of 21.39. LTH shares hit an 18-month high of 21.75 during the day.
Marriott's stock rose 2.1% to 180.90, offering an early entry into an emerging flat base alongside a year-old mug with a handle. MAR stock's flat base is not forged until Friday but would have a buy point of 183.27. A move above 181.55 old buy point would provide further entry and marks a 52 week close high.
Analysis of the market rally
According to major indices, the rally in equity markets was a dull day, but there was underlying strength.
The Nasdaq rose but will not expand significantly further. The S&P 500 continues to hold just below the August 2022 highs. The Dow Jones fell back to its 50-day moving average before turning higher again.
Meanwhile, both the Russell 2000 and the S&P 500 MidCap 400 rose to their highest levels since March 9th.
The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.7% to hit a one-month high after retaking the 50-day and 200-day moving averages last Friday.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) gained 0.2%, right to its 52-week high.
Overall, the winners outperformed the losers by more than 3 to 1 on the NYSE and 5 to 2 on the Nasdaq. The number of stocks making new highs far outpaced the number of stocks making new lows.
The market rally was led by a smaller number of tech titans and AI companies. Many of these names aren't pausing or at least not overtaking the field. That's likely to be good for these stocks and the broader market. That could help prevent the Nasdaq from overheating as hopefully more groups take the lead.
Homebuilders, construction products, medical devices and travel names are showing some strength.
Plan the market with IBD's ETF market strategy
With major indices holding steady, market breadth showing a positive tentative trend and buying opportunities few, investors may continue to buy at a time. It's an opportunity for lightly invested traders to increase their exposure, while those who have been riding the AI wave can diversify their portfolio.
Market shakeouts remain the order of the day, while many stocks that have been priced low at traditional buy points appear seemingly outdated. So watch out for early entries and try to buy stocks as close to the buy points as possible. This is where it pays to create your watchlists and set up notifications. Once you've done your homework, the real tests are much easier.
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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