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Dow Jones futures rose slightly on Wednesday, as did S&P 500 futures and Nasdaq futures. The stock rally faltered on Wednesday, reversing the intraday decline before closing tightly mixed.
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The Nasdaq remains somewhat extended, while climax-type stocks Tilray (TLRY), Futu Holdings (CLIMB), Digital turbine (APPLICATIONS), EXP World Holdings (EXPI) and Exon (XONE) were big players on Wednesday.
You’re here (TSLA) fell dramatically when Bitcoin fell, but could the electric vehicle maker be in the early stages of creating a new buying opportunity? As for the price of Bitcoin, it edged down slightly on Wednesday, but the energy-hungry cryptocurrency still holds much of Monday’s big gain thanks to the disclosure of Tesla’s purchase of Bitcoin.
Meanwhile, Nvidia (NVDA) once again stood out, ignoring the intraday downturn in the stock rally. After months of lackluster action and one-day pop, the Nvidia stock sees a more meaningful move, erasing a flat base on Wednesday.
Uber Technologies (UBER), tax software publisher Avalara (AVLR), Spirit Airlines (SAVE), real estate information game Zillow (Z) and pet insurer Trupanion (TRUP) were among the notable earnings reports. Avalara stock could test a base cup buying point on Thursday.
Why you should profit from this IBD stock of the day
Big moves for wild stocks
A growing number of stocks show climax-type rises. Tilray stock rocketed 51% to 63.91 in massive volume on Wednesday as Reddit investors rush into cannabis stocks. TLRY stock is now 117% above its 10-day moving average. Traditionally, 20% was a sign that a stock was likely to have a pullback. In today’s market, 40% or more has often been the trigger. But Tilray’s stock was still rising sharply overnight.
Hong Kong Futu brokerage rebounded 7% to 165.24, but moved away from intraday highs of 204.25. That’s 36% over its 10-day limit. Meanwhile, EXPI stock fell 15% to 136.34, closing in on its 10-day intraday line. APPS stock sank 3.5% while XONE stock slipped 16.5%.
Tesla stock and Nvidia are on the IBD ranking. Nvidia share is on SwingTrader.
Dow Jones Futures today
Dow Jones futures contracts increased 0.1% from fair value. S&P 500 futures were up 0.1%. Nasdaq 100 futures contracts were slightly above breakeven.
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 107.80 million. Covid-19 deaths have exceeded 2.36 million.
Coronavirus cases in the United States have reached 27.88 million, with deaths exceeding 482,000. New coronavirus cases and hospitalization levels continue to decline sharply, while deaths are also on the decline. Vaccinations are continuing, with the likelihood of increased supply and more vaccine options within weeks. Big concern is the spread of the more contagious variant of Covid first detected in the UK
Wednesday stock rally
The stock rally opened up, retreated, and ultimately ended in a tightly mixed fashion.
Fed chief Jerome Powell briefly helped prop up stocks on Wednesday afternoon by once again reiterating his support for aggressive monetary policy to support the economy. He says there is no reason to think about limiting support until the pandemic is over.
The Dow Jones Industrial Average rose 0.2% in stock trading on Wednesday. The S&P 500 Index closed slightly lower. The Nasdaq composite lost 0.25%.
Growth stocks were also mixed.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 0.8%. The iShares Expanded Tech-Software Sector (IGV) ETF was down 0.3%. The VanEck Vectors Semiconductor ETF (SMH) rose 0.3%, with Nvidia stock being a notable item.
Tesla stock
Tesla stock fell 5.3% to 804.82, undercutting its 21-day exponential moving average. Tesla pulls back after Monday’s slight gain, as the electric vehicle maker revealed it bought $ 1.5 billion worth of Bitcoin. But a withdrawal or an extended hiatus could give investors something they haven’t had with Tesla stock in nearly three months: a buying opportunity.
Tesla stock is just 4.9% above its 10 week line. If stocks could fall to week 10 or move sideways and wait for week 10 to catch up, a rebound would offer a chance to start or add to a TSLA stock position. It could also be the start of a new base, with an additional buying opportunity.
But this is all hypothetical. At this time, Tesla stock is off its 10 week line and is not rebounding. The maker of EV has had a long, huge run since the coronavirus crash or even late 2019. There is a strong possibility that TSLA action will take a long hiatus or correction. Much of this will have to do with the market.
Nvidia stock
Nvidia stock rose 3.5% to 590.57, rising above a fixed-base buy point of 587.76 and breaking all-time high on September 2, according to MarketSmith analysis . This follows Monday’s 6.2% jump, erasing an early entry of 560.07 which could have been the place to start a position.
Nvidia’s line of relative strength is starting to pick up, but is well below its early November high. The RS line, the blue line in the charts provided, tracks a stock’s performance against the S&P 500 Index.
Analysis of stock market rallies
Wednesday’s stock action recalled January 25, when the Nasdaq opened at record highs, sold off sharply, but rallied to modest gains. This presaged a notable sale later in the week. Wednesday’s stock was less volatile, but more growth names suffered losses like Tesla stock than gains like Nvidia.
As at the time, the Nasdaq was extended from the 50 day line. After closing 8.1% above its 50-day line on Monday and 7.9% on Tuesday, the Nasdaq is still 7.4% above this key level.
This means that the risk of a pullback in the stock market recovery remains high, although it doesn’t have to happen right away or be so fierce.
Yet the Nasdaq is expanding, a growing number of stocks are climax-type moves, as investors are increasingly in debt and more novices are embarking on GameStop (GME), Bitcoin or other highly speculative investments. There is certainly foam on the market right now.
Breakout Watch: 5G, IoT Trends Drive This Chip Stock Into The Buy Zone
What to do now
Investors may consider selling in force, especially with very broad stocks. Do not suffer from losing stocks in this environment. Consider stepping out of the sidelines.
If the stock rally sees a slight pullback in the near future, you’ll want purchasing power to take advantage of opportunities as strength returns. If the market rally falls into a correction, you’ll be glad you took profit near the top.
So have a game plan for your holdings. What will you do if your actions reach certain levels? If you have an exit strategy in place, you will be able to deal with market fluctuations without panics or selling or freezing.
Read The Big Picture every day to stay in tune 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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