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Dow Jones futures were little changed Wednesday night, as were S&P 500 futures and Nasdaq futures. The stock rally gathered momentum when the White House unveiled a $ 2.25 trillion Biden infrastructure plan, with the S&P 500 hitting a new high amid several new breakouts. The Nasdaq and small caps have led the way, but both need to do more.
X
Micron technology (MU) reported after the close. Micron’s earnings beat views with equally strong forecasts. MU action rose modestly in extended trading, flashing a buy signal. Micron stock climbed 1.9% to 88.21, bouncing off its 50-day and 10-week lines while recovering its 21-day line.
CarMax (KMX) Results are due early Thursday. KMX action is standing above the buy zone and just below a tight three-week entry.
Biden infrastructure plan
President Joe Biden unveiled his infrastructure and tax plan after Wednesday’s close, touting the plan as a “one-time-in-a-generation” opportunity. The White House has already outlined key points ahead of the opening. Biden’s infrastructure plan included massive funding for bridges, roads and water projects, as well as funds for expanding broadband access and producing national chips. A corporate tax hike to 28% from the current 21% would pay off in the long run.
Biden later predicts further spending increases funded by high income and capital gains taxes.
Tesla, EV shares
You’re here (TSLA) and Chinese rivals EV Nio (NIO), Xpeng (XPEV) and Li Auto (LI) are expected to announce delivery figures, possibly as early as Thursday.
Tesla’s stock has rallied around President Biden’s infrastructure plan, with proposals to restore and expand electric vehicle credits and accelerate electric vehicle charging infrastructure. Nio stock, Xpeng and Li Auto also climbed, although Biden’s infrastructure plan would have no impact on their sales.
Chip gear manufacturers Integris (ENTG), MKS Instruments (MKSI) and Apple (AAPL) iPhone chip maker Skyworks (SWKS), cleared buying points on Wednesday, with several other semiconductor names close to the entries. Cleveland-Cliffs (CLF) and Generac (GNRC) also broke or flashed buy signals.
GNRC stock is on IBD Leaderboard and SwingTrader. ENTG stock, Generac and Tesla are on the IBD 50. CLF stock was the IBD Stock Of The Day.
Dow Jones Futures today
Dow Jones futures contracts were little changed from fair value. Futures contracts on S&P 500 were stable. Nasdaq 100 futures rose 0.1%.
Keep in mind that overnight action on Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular trading session.
Join the IBD experts as they analyze the exploitable stocks during the stock market rally on IBD Live.
Coronavirus news
Coronavirus cases around the world have reached 129.42 million. Covid-19 deaths have exceeded 2.82 million.
Coronavirus cases in the United States have reached 31.15 million, with deaths exceeding 565,000.
Today’s stock comes out thanks to solid advice
Stock exchange rally
The stock market rally continued to strengthen. Investors have embraced the long-awaited infrastructure plan, focusing on spending to boost the economy and the sector while avoiding potential corporate tax hikes for now. But big technologies have led the way, with the Apple stock, Microsoft (MSFT), Facebook (FB) and Netflix (NFLX) up about 2%, along with many chip names.
The Dow Jones Industrial Average faded to close 0.4% lower in Wednesday’s stock trading, trading in a narrow range all day near record highs. The S&P 500 Index climbed 0.4%. The Nasdaq composite rose 1.5% after passing 2% intraday. The small-cap Russell 2000 climbed 1.1%.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) rose 1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 1.13%. The iShares Extended Tech-Software Sector (IGV) ETF jumped 2.3%. The VanEck Vectors Semiconductor ETF (SMH) rose 2.9 %%, with Micron shares and Skyworks components.
The SPDR S&P Metals & Mining ETF (XME) rose 1.55% and the Global X US Infrastructure Development ETF (PAVE) rose 0.2%. US Global Jets ETF (JETS) fell 0.7%
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) climbed 5.1% and ARK Genomics ETF (ARKG) rose 4.8%. Tesla shares are the main holdings of ARK Investments ETFs.
Out of stock
Cleveland-Cliffs has given bullish predictions for 2021 and 2022, propelling CLF action off a base to its best level in nearly six years. Shares of the steelmaker climbed 17% to 20.11. This is extended buy points of 18.87 or 18.06. But investors could size a CLF stock position using a close below Wednesday’s 18.27 intraday low as a sell signal. Several other steel stocks have exploded in recent weeks, including American steel (X) Tuesday.
Generac stock rose 3% to 327.45, erasing a downtrend after finding support on the 10 week line. GNRC is also not that far beyond its 10 weeks. It is a chance to buy or add stock in the generator maker. The GNRC stock could start building the right side of a base.
Entegris stock climbed 2.8% to 111.80, posting a double buy point of 110.47, according to MarketSmith analysis. MKSI stock rose 2.1% to 185.42, above a buy point of 184.79 from a handful in a double bottom base.
Microchip giants Materials applied (AMAT) and ASML (ASML) have already erupted, while Lam Research (LRCX) and KLA Corp. (KLAC) are being installed. Biden’s infrastructure plan provides incentives for domestic chip production. This follows the recent Intel (INTC) plans to spend $ 20 billion on two new chip factories in Arizona. Finally, Micron’s earnings report and tips could be good news for memory-focused chip gear manufacturers.
Finally, Skyworks stock rose 2.8% to 183.48. It still works on 195.92 points of purchase. SWKS erased a downtrend by rebounding higher from its 10 week line. Intraday, SWKS stock also reached 185.12, briefly breaking above a resistance point of 184.44. Fellow chipmaker Apple Qorvo (QRVO) rallied just below a point of purchase.
Apple stock rose 1.9% to 122.15, but hit resistance at its 21-day line.
Tesla and Biden EV Incentives
Biden’s infrastructure plan will include a range of incentives for electric vehicles. Notably, it should lift the cap on federal tax credits so that Tesla and General Motors Vehicles (GM) will be eligible again. This will be a boon for Tesla, which currently faces competition from the Model Y of Ford (F) and Volkswagen (VWAGY) which can offer EV credits of $ 7,500. But Biden’s plan will also encourage Tesla’s rivals, especially in the long run. Biden offered to subsidize charging stations, making Tesla alternatives more plausible. He also wants to electrify the fleet of the federal government. This will likely benefit Amazon-backed GM, Ford or Rivian more than Tesla.
Keep in mind that the outline of the infrastructure plan’s EV incentives has generally been known for weeks. The question is, what will go through Congress?
Tesla deliveries
Tesla reports quarterly production and deliveries within the first three working days of the following quarter. That would mean a Tesla report by Monday at the latest, but Thursday-Saturday is very likely.
Tesla’s deliveries for the first quarter were around 173,000, although analysts rushed to lower the bar to around 162,000. Sales of the Model Y in the United States and China will be among the driving forces, while Sales of the Model S will likely be slim due to an extended production shutdown and Tesla retooled for the new Model S Plaid.
Tesla stock rebounded 5.1% to 667.93, closing just above its 21-day line. Stocks are still well below the short term March 10 high as well as the 50 day line. Until TSLA stock recovers these key levels, investors should largely avoid this huge 2020 winner.
Nio deliveries
Nio deliveries for March are likely Thursday or Friday. Last week, Nio said it would halt production for five days starting March 29, citing chip shortages. It also lowered its delivery target for the first quarter, suggesting weakness in March.
The Nio stock rose 3.8%, trying to bounce just above its 200 day line, but still in a strong downtrend.
Chinese colleague EV plays Li Auto and Xpeng are also expected to post March deliveries in the coming days. Li Auto climbed 8.3% and XPEV stock was 8%, both far from the highs.
Analysis of market rallies
The Nasdaq composite rose above its 21-day moving average and breaking a downtrend from the February 16 high. The 1.5% price gain was coupled with higher volume than Tuesday. Since the Nasdaq has effectively been in a correction while the rest of the market has been trending, Wednesday’s action could be seen as a Nasdaq tracking day.
But just looking at the Nasdaq chart, Wednesday’s action doesn’t particularly stand out. And the higher volume may have come as the Nasdaq retreated to the intraday high. Additionally, the composite remains below its 50-day line and short-term highs from mid-March.
The Russell 2000 moved up its 50-day line, closing just above that key level. Intraday, it crossed its 21-day line before pulling back.
The S&P 500 index hit a record high while the Dow Jones finished just below the all-time best.
Better yet, the main values shone. Several other breakouts from a variety of groups joined the stock rally, while others set up or extended races.
A good first step
The Nasdaq and small caps have taken a good step towards moving from a split stock rally to a general uptrend. But it was only a step. The Russell 2000 must convincingly resume its 50-day range. The Nasdaq must recover its 50 days and its March highs.
The recent crop of breakouts and buy signals, such as Cleveland-Cliffs and Micron stocks, must hold and extend gains.
Read The Big Picture daily to stay in sync with market direction and major stocks and sectors.
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