Dow Jones futures fell modestly overnight, along with S&P 500 futures and Nasdaq futures. Stock market rally attempts continued on Tuesday as Treasury yields and the dollar retreated amid hopes that the Federal Reserve could slow rate hikes. TWTR stock rose after Tesla CEO Elon Musk agreed to step forward with $44 billion Twitter (TWTR) Acquisition.
X
Major indices are moving higher but have not yet regained key levels or confirmed a new rally attempt.
megacaps Apple (AAPL), Microsoft (MSFT), Google Parents letters (Google) and Amazon.com (AMZN) were all strong hits. But only Microsoft stock finished above its 21-day moving average.
However, leading stocks provide reasons to enter the market, or at least be prepared.
Arista Networks (On the sides), Enphase energy (ENPH), Salary (PCTY), In semiconductor (Ann) and Devon Energy (TVN) are all premature or approaching Buy points. If the market rally continues to gain momentum, these stocks should be able to perform. Everyone has Relative strength lines At or near the maximum.
Velocity shares IBD Leaderboard Watchlist and Tuesday’s IBD Stock of the Day. Microsoft and Google have shares IBD long-term leaders list. Enphase, ON Semiconductor and TVN have shares The IBD 50 List. ENPH shares, Onesemi and Arista Networks IBD Big Cap 20.
A video embedded in this article highlights Tuesday’s market action and analyzes PCTY stocks, semiconductor and Neurocrine Biosciences (NBIX)
Elon Musk says he’ll move forward with Twitter deal
Musk agreed to proceed A $44 billion, $54.20-a-share Twitter deal. Lawyers for Musk and Twitter met Tuesday night in an emergency Delaware Court of Chancery hearing to discuss how to ensure a deal closes.
The Musk-Twitter saga isn’t over yet. Twitter disagreed with Musk’s latest terms, which offered no real assurances that he would want to go through with the deadline. Still, Musk could officially own the social media site in a matter of days.
With the Musk-Twitter test set to begin on October 17, the Tesla CEO is most likely to fail.
Twitter stock, which was off for most of the session, rose 22% to 52 as Musk blinked. Although TWTR stock is trading below the $54.20 acquisition price, it has outperformed parent Facebook. Meta platforms (Meta) and Snap (SNAP) in recent months.
Tesla (D.S.L.A) rose 2.9% to 249.44, retreating from an intraday high of 256.89 following the recent Musk-Twitter message. Investors may wonder if Musk will sell TSLA stock to pay for the Twitter deal, though he has already sold stock with the Twitter deal. Longer term, Tesla stock investors may fear that Musk’s focus will further diverge from the EV company as he adds Twitter to his portfolio of companies. However, TSLA investors may be happy to have a Musk-Twitter acquisition counterpart in the past.
Twitter shares were little changed in active after-hours trading. TSLA stock fell.
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Dow Jones Futures Today
Dow Jones futures fell 0.5%. fair value. S&P 500 futures were down 0.55%. Nasdaq 100 futures retreated 0.55%.
New Zealand’s central bank raised its key rate by 50 basis points overnight, while Australia raised rates by just 25 basis points a day earlier.
Remember that it is an overnight operation Dow futures The next routine elsewhere doesn’t necessarily translate into actual trading stock market session.
Join IBD experts as they examine stocks that could be in for a stock market rally on IBD Live
Stock market rally
Stock market gains followed Monday’s gains with strong gains on Tuesday, though major indices retreated to intraday highs.
Australia’s central bank raised rates for the sixth month in a row, but unexpectedly only by 25 basis points. The Bank of England continued to buy bonds last week as the new British government’s budget boosted the pound and UK debt.
The rally effort gained momentum at 10 a.m. ET after the JOLTS report showed that jobs fell sharply in August. Fed Chairman Jerome Powell specifically noted that job prospects are very high. Although the number of openings and exits is still high, the trend is positive for the central bank. On Friday, the Labor Department will release September Job Report.
The Dow Jones industrial average rose 2.8% on Tuesday Stock market trading. The S&P 500 index rose 3.1%. The Nasdaq composite rose 3.3%. The small-cap Russell 2000 rose nearly 4%.
Apple shares rose 2.6%, while Microsoft rose 3.4%. Both are members of the Dow Jones, S&P 500 and Nasdaq. Google shares rose 3% and Amazon rose 4.5%. All added up to Monday’s solid gains, but plenty of repair work needed.
US crude oil prices rose 3.5% to $86.52 a barrel. OPEC+ meets on Wednesday, with reports that the cartel could cut output by 1 to 2 million barrels per day.
Gasoline futures rose 6.8%, signaling a further increase at the pump. Natural gas futures rose 5.7%.
The 10-year Treasury yield fell 3 basis points to 3.62% after falling 15 basis points on Monday. For the second day in a row, the 10-year yield found support at its rising 21-day line.
ETFs
in the middle Best ETFsInnovator IBD 50 ETF (FFTY) gained 3.4%. iShares Expanded Technology-Software Sector ETF (VAT) rallied 3.8%, MSFT stock has a large IGV. VanEck Vectors Semiconductor ETF (SMH) rose 4.3%.
SPDR S&P Metals & Mining ETF (XME) rose 3.8%. US Global Jets ETF (JETS) rose 7.1%. Energy Select SPDR ETF (XLE) added 4.3%. Health Care Select Sector SPDR Fund (XLV) took 2.3%.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) and the ARK Genomics ETF (ARKG) both rose 7.6%. Tesla stock is a key player across Arc Invest’s portfolio of ETFs.
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Stocks near buy points
ANET stock rose 4.3% to 120.81, retrieving its 200-day and 50-day lines, albeit on lower volume. A decisive move above the 50-day line would break a short decline. Arista shares are consolidating in a very long base at the 132.97 buy point.
ENPH stock rose 0.6% to 288.55, but retreated from 297.67 intraday. At its peak, Enphase stock retook its 50-day and 21-day lines and broke a small downtrend.
PCTY stock rose 3.55% to 252.33, a strong rebound from its 50-day line. Paylocity stock is right on a trendline entry, moving above the September 28 high of 253.26 as a possible specific trigger point. The HR software maker is consolidating with a 276.98 buy point MarketSmith analysis.
The stock rose 6.4% to 68.92, retrieving its 50-day line, although trading was below average. A little more strongly, the Onsemi could see a trendline clear into a new consolidation next to the previous, deep base.
DVN shares rose 5.7% to 69.07 Cup-with-handle base and 75.37 buy point. Devon stock is coming up to a trendline within the handle.
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Market rally analysis
The stock market’s rally effort continued to gain momentum, with the major averages making second-strong gains. The Dow Jones, S&P 500 and Nasdaq composite rose above their 10-day moving averages and neared their 21-day lines. Small-cap Russell 2000 continued to lead and took a 21-day retracement.
All indices still have some way to go to reach their bearish 50-day and 200-day moving averages, with the mid-August highs another key resistance area.
Megacaps like Apple stock are doing their part this week, but still have a long way to go.
However, leading stocks are outperforming the major indices, with many stocks exiting, lighting up initial entries or moving into position for potential entries.
It was the cause of the stock market boom. A decline in Treasury yields and the dollar clearly helped drive this week’s gains in stocks. But if yields and the greenback resume their upswing, the market rally could quickly falter.
Markets continue to price in a fourth 75-basis-point hike in November and a half-point move in December, while stocks rose on hopes the Fed will slow the pace of rate hikes.
The Dow, S&P 500 and Nasdaq stock markets had their second day of rally on Tuesday. A Day after day May come this weekend to confirm a new uptrend.
Some might argue that the Russell 2000 and S&P MidCap 400 staged “follow-up days” on Tuesday. This is a positive sign, but does not prompt a change in market direction. Why? FTDs that do not include the Dow Jones, S&P 500 and Nasdaq have a lower success rate.
A confirmed market rally can only mark the beginning of a long-term rally against a tradable, bear market rally. The 50-day and 200-day lines will be key levels to watch following the FTD.
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What to do now
The stock market rally effort is gaining steam, with several leaders flashing buy signals. Investors can take some forward positions in certain stocks or broad market ETFs. But anyone who jumps in early should be prepared to exit quickly if the market rebounds.
There is nothing wrong with being almost or entirely cash.
But this is definitely a time to work on your watch lists and pay more attention to the market. Look for stocks that are performing or nearly so.
According to Big picture Each day should be in sync with the direction of the market and the leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.
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