Dow Jones futures rose early Wednesday, along with S&P 500 and Nasdaq futures. Salesforce.com (CR) headline earnings after the close, as Nio and other Chinese EV manufacturers released pre-opening sales data. The stock market closed higher on Tuesday mixed after an initial pullback, with the Nasdaq holding a key level after the big advance last week.
The market is in a confirmed uptrend, and investors have a green light to add some exposure. But don’t fall into the trap of buying hot stocks that are stretched, like Schlumberger (SLB) and the stock of Albemarle.
Salesforce and HP Inc. (HPQ) reported after closing.
Salesforce earnings Fell but overpowered views. Steering was light. But CRM stock jumped 9% overnight. Shares recently hit a two-year low, but the business software giant remains an industry leader.
HP earnings also topped the number of views while the printer and supercomputer company raised its minimum full-year EPS target, although overall expectations were roughly in line. HP stock soared in extended trade. The shares rose 0.2% in the regular Tuesday session to 38.84, which is the fourth consecutive gain as it bounced off the 200-day line and reclaimed the 50-day line. HP stock has a consolidation buy point of 41.57, but 39.81 could act as an early entry.
China sales EV
Nio stock jumped Tuesday, along with Xpeng and Li Auto to ease Covid restrictions, improve economic data and several new incentives for electric vehicles. But all three are in downtrends.
China EV and battery giant BYD (BYDDF) May sales are likely to be released on Friday, after challenging the effects of Covid with record sales in April. BYD stock is still in an early buying point range.
Tesla (TSLA) China sales will come out in another week or two as Shanghai plant production recovers. TSLA stock has rebounded from its 2022 lows in recent days.
Dow jones futures contracts today
Dow Jones futures are up 0.6% against fair value. CRM stock is a component of Dow Jones. S&P 500 futures rose 0.4% and Nasdaq 100 futures rose 0.3%.
The 10-year Treasury yield rose 2 basis points to 2.86%.
US crude oil futures rose slightly.
China’s Caixin manufacturing index rose 2.1 points in May to 48.1, slightly above estimates. It follows that the official factory gauge is much stronger than expected. Both were below 50, but indicated a slower decline with the easing of Covid restrictions. Shanghai has largely ended its lockdowns as of June 1.
stock market rise
The stock market rally gave up some ground on Tuesday, but closed at intraday lows.
The Dow Jones Industrial Average fell 0.7% on Tuesday stock market trading. The S&P 500 fell 0.6%. The Nasdaq Composite Index fell 0.4%. Small-scale Russell 2000 slipped 1.3%.
US crude oil prices fell 0.4% to $114.67 a barrel, after briefly topping $119. The European Union’s move to partially block Russian crude imports supported prices on Tuesday morning, along with China easing lockdowns. But OPEC is considering whether to exclude Russia, which has seen production decline amid import bans and sanctions, from its OPEC+ production limits, according to OPEC. The Wall Street Journal. That could clear the way for Saudi Arabia and the United Arab Emirates, which have some spare capacity, to pump significantly more.
Natural gas futures were down 6.7%.
The 10-year Treasury yield rose 10 basis points to 2.84%, rebounding from the 50-day line. China lowered Covid restrictions, and Federal Reserve Governor Christopher Waller supported “several” more interest rate increases by half a point, helping to stimulate Treasury yields, which have been trending lower for several weeks.
between the Best ETFsThe Innovator IBD 50 ETF (fifty) gave up 1.75%, while the Innovator IBD Breakout Opportunities ETF (fit) down 1.2%. iShares Expanded Technology and Software Fund (ETF)IGV) give up 2%. CRM is a major IGV contract. VanEck Vectors Semiconductor Corporation (SMH) decreased by 0.4%.
SPDR S&P Metals & Mining ETF (XME) fell 3.5% and the US Global Infrastructure Development Fund (ETF) (cradle) 1.4%. US Global Gates Foundation (ETF)Planes) down 0.6%. SPDR S&P Homebuilders ETF (XHB) decreased by 1.3%. SPDR Specific Energy Fund (SPDR ETF)XLE) gave up 1.5%, taking ownership of SLP shares significantly. SPDR Financial Choice Fund (SPDR)XLF) decreased by 0.3%. SPDR Healthcare Sector Selection Fund (XLV) decreased by 1.3%.
Shares reflect more speculative stories, the ARK Innovation ETF (see you) is down 2.9% and the ARK Genomics ETF (ARKG) 4.1%. Tesla stock is the largest stake in Ark Invest’s ETF. Ark also owns some shares of BYD.
Schlumberger stock on Tuesday briefly rose to 48.67, a three-year high and just extending from the official consolidation buying point of 46.37 that was cleared last Thursday. At that point, SLB stock was more than 15% above the 50-day line. But with crude oil prices erasing the big morning gains, SLB stock reversed lower, reducing the official buying point. Investors who bought the oil services giant from early buying points, including 44.61, are still somewhat positive, although they may have wanted to take partial profits on Friday or Tuesday morning. But SLB stock shows the risk of buying breakouts, especially when the stock extends from the 50-day line.
Albemarle shares fell 3.9 percent to 260.42 on Tuesday, after big gains last week and May. After flashing an early entry around 248 on Thursday, ALB stock was clearly extended from that level on Friday. Perhaps the lithium giant will form a handle.
China sales EV
EV startups Nio, Xpeng and Li Auto should show an improvement in production and sales from a grim April, when the Covid shutdown criticized production and supply chains. A full recovery may take place in June, as Shanghai greatly eases Covid restrictions from Wednesday.
Li Auto stock rose 3.25% to 25.07 on Tuesday, after reclaiming its 50-day streak on Friday. Stocks are still in a downtrend, with some distance to 200 days.
Nio stock rose about 5% to 17.39, just below its long sliding 50-day line. Xpeng stock rose 4.4% to 23.50, also below the 50-day line.
BYD marked record sales in April, thanks to battery and internal chip production. BYD stock rose 2.8% to 35.80, the highest level in 2022. Last week, the shares traded an early entry at 34.60 from a completely patchy handle. BYDDF stock has 41.34 buying points from a deep cup base.
Tesla Shanghai’s production is close to normal, but May’s production was still well below normal. Tesla China sales data won’t come out for another week or two as part of the industrial trade data. Tesla stock fell 0.2% on Tuesday to 758.26, after hitting a 10-month low on May 24 but rebounding to post a 14% weekly gain.
Market Rise Analysis
The stock market rally made no progress on Tuesday but did not lose much ground.
Major indexes fell on Tuesday morning, not a big surprise after last week’s strong gains, especially with Treasury yields rising sharply at the start of the week. But the Nasdaq found support at its 21-day moving average while the Dow and the S&P 500 never fell that far.
However, it was a distribution day, with volumes on the NYSE and Nasdaq soaring.
The stock market rally is in a confirmed uptrend thanks to the NASDAQ index Follow-up day Thursday. This was followed by the Nasdaq with another significant price gain in higher volume on Friday. The Dow Jones and the S&P 500 haven’t had a follow-up days yet, but they are getting close to the 50-day moving average.
The 50-day line could be a major test of the stock market’s rally. This may be where the major indicators are reversing into the dips. A decisive move above the 50-day line could indicate that this could be more of a bear market rally. But there is still plenty of general resistance, with the 200-day line and late March tops also key levels.
Growth stocks, especially speculative growth, had a tough Tuesday, although Chinese electronic stocks and internet stocks in general rebounded. Pharmaceutical companies and some of the big biotech companies have fallen behind. Mining and metal stocks, some of which were showing signs of life, had a rough day.
What are you doing now
Tuesday’s market movement was normal. With few shares to buy on Tuesday, there was little reason to increase exposure from thin to mediocre.
It is never a good idea to buy extended shares, but especially in a fragile and volatile market. Oil stocks were a big mover on Tuesday morning. But a lot of point-of-purchases have been extended or from their 50-day streaks, like Schlumberger.
While investors should look for opportunities, it is still time to exercise caution. Keep your head level and work on your watch lists.
Read The Big Picture Every day to stay in sync with the trend of the market, stocks and leading sectors.
Please follow Ed Carson on Twitter at Tweet embed For stock market updates and more.
You may also like:
“Infuriatingly humble analyst. Bacon maven. Proud food specialist. Certified reader. Avid writer. Zombie advocate. Incurable problem solver.”