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Dow Jones futures edged higher Wednesday night, along with S&P 500 and Nasdaq futures, after a strong stock rally on Wednesday. The Dow Jones jumped to a new high and the Nasdaq continued to rebound. Meanwhile, the GameStop The (GME) saga is back, with the GME title and other short-squeeze games soaring on Wednesday, with big payouts continuing overnight.
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Nvidia (NVDA) earnings reports after closing, as well as Teladoc Health (TDOC), NetApp (NTAP), Progins (PGNY) and Innovative industrial properties (IIPR).
Nvidia stock reversed the decline overnight despite strong earnings. IIPR, Teladoc, NetApp and Progyny shares have declined significantly. All five stocks trade near the buy points.
Chinese EV boot Li Auto (LI), manufacturer of coronavirus vaccines Modern (MRNA) and new mobile games IPO Playtika (PLTK) report early Thursday.
Today’s stock clears point of purchase as EV plans ramp up
Stock market rebounds
After a brief morning retreat, the stock rally extended Tuesday afternoon’s rebound, restoring some confidence. The 10-year Treasury yield, which hit a 52-week high, fell, easing pressure on growth stocks.
Tesla jumped 6.2% to 742.02, prolonging a rally after a huge intraday decline Tuesday to 619, and fueling support for EV stocks and speculative growth names in general. ARK Invest bought significantly more Tesla shares on Monday and Tuesday, following a number of purchases in recent weeks. TSLA stock, ARK’s first hold on all of its ETFs, is still 6.2% below its 10 week line.
But the Dow Jones Industrial Average led the way on Wednesday, amid the continued rotation of the sector to cyclical real economy names such as Boeing (BA).
The price of Bitcoin, which fell below $ 45,000 on Tuesday morning and rebounded to over $ 51,000 late overnight. Bitcoin traded above $ 50,000 on Wednesday night.
IBD Screen of the Day: 5 Top Growth Stocks Create New Point of Buy
Increase in GME stocks
GME stock, which had drifted lower after a surprising rise and fall, climbed 103% to 91.70 on Wednesday. This pushed GameStop above its 50 and 21 day lines to its best close since February 3. GME stock closed 81% off its January 28 high of 483.
GameStop said on Tuesday CFO Jim Bell had resigned. A resurgent GME share price could give GameStop another chance for a stock offering, something AMC Entertainment (AMC) did it last month on its short press.
AMC stock jumped 18% on Wednesday. AMC rallied 36% Monday-Tuesday as New York City announced it would allow theaters to partially reopen in March. Clothing retailer Express (EXPR) jumped 43%.
GME shares climbed 97% in volatile overnight trading. AMC climbed 20% and Express stock by 31%.
Nvidia, Tesla and Innovative Industrial Properties shares are listed in the IBD rankings. Nvidia and Tesla shares are on IBD 50.
Dow Jones Futures today
Dow Jones futures contracts increased 0.2% from fair value. Futures contracts on S&P 500 climbed 0.15%. Nasdaq 100 futures were up 0.1% as Nvidia stock fell and Moderna rallied.
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 113.07 million. Covid-19 deaths have exceeded 2.5 million.
Coronavirus cases in the United States have reached 28.96 million, with deaths exceeding 517,000.
Moderna has said he will begin clinical trials for his coronavirus vaccine designed to better treat the South African variant of the virus. Current vaccines have shown lower efficacy compared to the South African mutation, but they generally prevent death and serious illness.
The stock of mRNA increased sharply overnight. Shares fell 3.6% to 144.79 on Wednesday, just above its 50-day line. Moderna stock fell from an all-time high on February 8 to 189.26.
Stock exchange rally
The stock market rally reinforced the support for growth stocks, while real economy stocks increased their momentum.
For a second day in a row, the Nasdaq fell solidly in the morning, but Wednesday’s drop was well below Tuesday’s intraday drop. This time around, the Nasdaq tested its 50-day line rather than diving below. Meanwhile, the intraday recovery has been faster, with major indices quickly moving into positive territory.
The Dow Jones Industrial Average led the way, rising 1.35% on Wednesday in the stock market to a record high. The S&P 500 Index gained 1.1%, just below historical levels. The Nasdaq composite added 1%, still below its 21-day exponential moving average.
The 10-year Treasury yield, which topped 1.4% for the first time in a year, reduced gains to around 1.38%. Rising Treasury yields have put pressure on growth stocks in recent weeks.
Among cyclical stocks, Vulcan materials (VMC) and Ford engine (F) compensated for short bindings. GM stock extended a rebound from its 10-week line, resuming its 21-day line. General Motors Executives at (GM) said the automaker got past the chip shortage plaguing the industry, adding that they were “very confident” of meeting BPA 2021 targets.
Why this IBD tool makes it easier to find the best stocks
Generally higher growth stocks
Growth stocks were generally higher, but still mixed.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 0.2%. The iShares Expanded Tech-Software Sector (IGV) ETF gained 1%. The VanEck Vectors Semiconductor ETF (SMH) jumped 3.2%. NVDA stock is a big SMH component
Reflecting more speculative stocks, the Ark Innovation ETF fell 0.5%, even with the rebound in Tesla, the largest holding company. The Ark Genomics ETF edged up 0.2%.
ARK Innovation posted a record withdrawal of $ 456 million on Monday, after months of huge inflows. ARKG also has big withdrawals on Monday. While ARK’s largest holdings are in liquid names like Tesla, Year (YEAR), Square (SQ), Baidu (BIDU) and Teladoc, it has significant stakes in many smaller stocks. Exiting those positions, especially with ARK revealing daily buys and sells, would be tricky.
ARK did not buy more Tesla shares on Wednesday, but acquired 660,000 shares of Workhorse Group (WKHS), which fell 47% on Tuesday and 8% on Wednesday after the EV delivery vehicle maker lost a big USPS fleet contract.
Main gains
Nvidia stock first rose, then reversed lower, 2% to around 567. Nvidia’s profits and sales beat, while guiding a rise in revenue in the current quarter. NVDA stock rose 2.5% to 579.96 on Wednesday after testing the most exploitable entry point of 560.07 again. The official point of purchase is 587.76. Investors could also use as an entry 615, just above the all-time Nvidia share high of February 16.
Progyny’s stock plunged 9% in extended trading. The fertility benefits specialist slightly beat views, but guided low on first quarter and full year earnings. PGNY stock rose 4% to 53.34 on Wednesday, releasing a tight three-week buy point of 51.98.
IIPR stock fell 5% overnight as the profitable pot REIT missed views. Shares jumped 5.6% to 220.16 on Wednesday, briefly erasing a tight three-week entry at 221.13. IIPR stock fell and rebounded from its 50-day line on Tuesday.
Teladoc stock fell 6% in overnight trading, threatening to test its buy point again. The telehealth leader reported an adjusted loss online, but beat on revenue. Shares fell 0.6% to 254.53, continuing a pullback from the January breakout, closing near the high of the previous base. TDOC action briefly undermined the 50-day, 236.76-point buy line on Tuesday.
NTAP’s stock fell 7% in extended trading. NetApp’s revenue and sales beat, but its forecast failed to impress. NTAP’s stock rose 3.2% to 71.57. Stocks have found support at key levels this week, just above a buy zone. But NTAP stock is threatening to fall below the 66.10 buy point.
Analysis of stock market rallies
As the stock market looks to the future, Wednesday’s action was important in understanding the big Nasdaq rebound on Tuesday. At the time, it was not clear whether Tuesday was just the continuation of a general pullback or the start of the rebound. With gains from Wednesday’s stock rally, Tuesday’s stock looks more like the latter. But with the Nasdaq still below its 21-day line, growth stocks may not be free and clear.
Additionally, the volume of the NYSE and especially the Nasdaq was down from Tuesday, suggesting a possible lack of conviction. Of course, much of Tuesday’s volume came from the afternoon bounce.
Ideally, the stock rally would move sideways for a few weeks, leaving major stocks to form new bases or find 10 week bullish support. But the market will do what it will do. It could mean limited trading, or it could mean a quick run to record highs or a reduction from Tuesday’s lows.
Now is not the time to be particularly aggressive, in part because few quality stocks are flashing buy signals from the right bases. Investors should review their portfolios in light of recent events and trends. Are you too focused on speculative growth names that are prone to wild swings? Do you have cyclical stocks, capitalizing on this recent trend?
If you do new position trades, be more selective. Insist that quality companies clean up the solid foundation
Read The Big Picture every day to stay in sync with market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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