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Dow Jones futures fell Monday night, as did S&P 500 and Nasdaq futures. House Speaker Nancy Pelosi told her Democratic caucus on Monday night that she is no longer tying the bipartisan $ 1,000 billion infrastructure bill to passing a much larger reconciliation package . It also comes as Senate Republicans blocked a bill to raise the debt limit and expand government funding.
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The stock rally had a mixed Monday, with the Dow Jones and Russell 2000 small caps rallying as the S&P 500 and Nasdaq retreated.
Tesla shares extended Friday’s breakout and hit another key level on Monday. It comes as You’re here (TSLA) plans to open the beta of FSD to tens of thousands of owners or subscribers of Full Self-Drive as of October 1.
Advanced micro-systems (AMD) rebounded bullish from its 50-day trendline and trendline, both offering early buy signals.
Energy stocks rose on strong gains in crude oil prices and the surge in natural gas futures. Whiting Oil (WLL) and Targa Resources (TRGP) escaped from the bases.
MGM Resorts (MGM) rose in a buy range as Hilton around the world (HLT) broke. Travel stocks have performed well overall, with cases of Covid continuing to decline. Airlines and cruise line stocks are rebounding after falling for months.
Finally, the rise in Treasury yields continued to support financials. JPMorgan Chase (JPM) escaped from a cup base with handle on Monday.
Tesla and AMD shares are listed on the IBD rankings. AMD action is also on SwingTrader and was the IBD action of the day Monday.
The video embedded in this article reviews Monday’s market action and analyzes TRGP, AMD and PerkinElmer (ICP).
Decision on Pelosi Infrastructure Bill
President Pelosi, after months of trying to tie the $ 1 trillion infrastructure bill to much larger partisan spending, has said she is no longer pursuing this plan. It’s a victory for centrist Democrats, who believe the bipartisan infrastructure package, with some $ 550 billion in additional funding, was held hostage. With a Democratic 3-seat majority in the House, Pelosi has little room for maneuver. It’s unclear whether left-wing Democrats will vote for the infrastructure deal, which will likely only get a handful of votes in the GOP House, without any sort of assurance on the reconciliation plan. Pelosi recently signaled that the reconciliation bill would be lower than the long-targeted $ 3.5 trillion, with Sen. Joe Manchin, DW.V. pushing $ 1 trillion to $ 1.5 trillion.
The vote on the infrastructure bill is currently set for Thursday. If the bill is not passed, the existing authority to spend on highways is also depleted.
Meanwhile, Senate Republicans have rejected a measure to avoid a partial government shutdown after September 30. Republicans also oppose raising the debt ceiling, saying Democrats should do it themselves.
Dow Jones Futures Today
Futures contracts on Dow Jones fell 0.1% from fair value. S&P 500 futures were down 0.2% and Nasdaq 100 futures were down 0.35%.
Keep in mind that overnight action on futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades during the next regular trading session.
Join the IBD experts as they analyze the exploitable stocks in the stock market rally on IBD Live
Stock exchange rally
The stock rally opened in a mixed way and stayed that way, with the 50 day line acting as support or resistance in many cases.
The Dow Jones Industrial Average rose 0.2% in Monday’s stock trading. The S&P 500 Index fell 0.3%. The Nasdaq composite sank 0.5%. The small cap Russell 2000 jumped 1.5%.
The 10-year Treasury yield climbed to 1.51% Monday morning, a three-month record. The benchmark yield closed two basis points higher at 1.48%.
Many stocks of medical products have fallen sharply, in particular Modern (MRNA), Charles River Laboratories (CRL), Idexx Laboratories (IDXX), Repligen (RGEN), Dexcom (DXCM), Thermo Fisher Scientific (TMO), Intuitive surgery (ISRG) and PerkinElmer. It is not clear why such a range of biotechnologies and manufacturers of medical products and systems would all be hit hard. A New York state warrant requires more than 665,000 hospital and nursing home workers to receive at least one dose of vaccine by midnight Monday or lose their jobs.
Meanwhile, a number of tech names have fallen hard, especially in software. Cloudflare (NET) fell 5.8% to essentially hit its 50-day line.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 2.3%, while the Innovator IBD Breakout Opportunities (BOUT) ETF fell 0.25%. The iShares Expanded Tech-Software Sector (IGV) ETF fell 1.7%. ETF VanEck Vectors Semiconductor (SMH) lost 0.4%, with AMD stock being a major component of SMH.
The SPDR S&P Metals & Mining ETF (XME) jumped 3.5% and the Global X US Infrastructure Development ETF (PAVE) rose 1.2%. The US Global Jets ETF (JETS) edged up 0.7%. The SPDR S&P Homebuilders ETF (XHB) rose 0.8%. The Energy Select SPDR (XLE) ETF jumped 3.6%. The Financial Select SPDR ETF (XLF) rose 1.4%, with JPM stock being a major holding.
Mirroring stocks with more speculative stories, the ARK Innovation ETF (ARKK) fell 0.1% and ARK Genomics (ARKG) fell 0.5%. Rising Tesla stock is the biggest holding among Ark Invest ETFs, but they have generally struggled in recent months.
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Tesla shares
Tesla rose 2.2% to 791.36, extending Friday’s breakout and erasing April’s short-term high of 780.79. The stocks are still in the 764.55 point buy point range, with the 5% pursuit zone rising to 802.78. Volume has been high for the past two sessions.
Tesla’s line of relative strength, although still well below its January high, is at its highest level in five months. The RS line, the blue line in the charts provided, tracks a stock’s performance against the S&P 500 Index.
The only negative point on the TSLA stock chart was the lack of a real rollback. Stocks have risen for five straight weeks, but not at such a breakneck pace that a pullback or pause seems almost inevitable.
On Friday night, Tesla let full self-drive owners and subscribers sign up for the FSD beta. But Tesla will first monitor their driving for seven days. This means that the beta of FSD could expand to a much larger group of drivers starting Friday, October 1. Meanwhile, Tesla could report third quarter deliveries as early as Friday or until next Tuesday.
AMD actions
AMD stock made a reversal to the upside, climbing 2.2% to 108.16 on Monday, breaking from its 50-day line and decisively breaking a trendline. The volume was below average, but was the highest for several weeks. AMD is aiming for a double bottom buy point of 114.59.
Whiting stock
WLL stock rose 6.1% to 59.49, erasing a buy point of 57.69 from a cup basis. RS line for Whiting stock hits new high on breakout, bullish sign. WLL shares returned to public markets in September 2020, after going bankrupt earlier in the year.
Targa Action
TRGP stock jumped 4.3% to 49.46, just breaking a 49.30 buy point from a cup basis, according to MarketSmith analysis. Targa Resources delivers natural gas and natural gas liquids. Natural gas prices are rising sharply in the United States and are white-hot in Europe.
JPMorgan stock
JPM stock rose 2.4% to 166.98, coming off a cup base with a handle and above its buy point of 163.93 by volume, slightly above normal. JPMorgan stock rallied for five consecutive sessions, recovering its 50-day line and breaking a trendline last Thursday.
MGM actions
MGM stock rose just over 1% to 45.09, remaining in a buy zone of up to 46.06. The casino giant broke through a base of 43.87 cups with a handle last Thursday after closing slightly below that entry on Wednesday. On Monday, MGM agreed to buy The Cosmopolitan hotel and casino for $ 1.6 billion from black stone (BX).
Hilton Shares
HLT stock climbed 2.45% to 138.80, topping a buy point of 136.99 cups, albeit in below-par volume. Arguably the best time to buy Hilton stock was Thursday, when it nearly hit a round in high volume. The RS line for Hilton stocks is not quite at a new high, but is at a peak of consolidation and at its best over six months.
Market rally analysis
The stock market rally went well. The Nasdaq and S&P 500 retreated, but found support at the 50-day line after last week’s strong rally. Meanwhile, the Dow Jones has reached resistance at its 50 day line, but at least it is trying to break above that key level after several weeks. The Russell 2000 simply had a very good day after recovering its 50-day and 200-day lines last week.
Growth stocks retreated on Monday, in part due to the continued rise in the 10-year Treasury yield. The FFTY ETF has shown real resilience over the past two weeks after hitting record highs.
Meanwhile, rising Treasury yields and energy prices pushed up the Dow Jones and Russell 2000 indices.
A partial government shutdown or defeat of the infrastructure bill could upend the market, but that would depend on how long the stalemate lasts.
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What to do now
Monday’s mixed market rally and pullback in growth stocks showed why investors shouldn’t be overly exposed, especially to a particular sector. Having said that, many sectors worked, but not necessarily all on the same day.
Continue to evaluate your actions. Are you in tune with the market rally? This doesn’t mean that all of your stocks are outperforming every day. But are you generally in the right stocks and sectors? Otherwise, you may want to exit some positions and reorient your portfolio, making sure not to chase extended stocks.
Read The Big Picture every day to stay in tune with the 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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