Dow Jones futures edged lower overnight, while S&P 500 futures, especially Nasdaq futures, fell more, Microsoft (MSFT) and Google parent letter (GOOGL) headlines on a heavy earnings night.
Stocks rose again strongly as Treasury yields and the dollar retreated. But the S&P 500 and Nasdaq are rising to key resistance levels. Investors should participate in a confirmed uptrend, but not rush into it.
Intel (INTC) will price its IPO moving eye (MBLY) Self-Driving Vehicles Division Tuesday. Twitter (TWTR) in latest sign that its acquisition price is close to Tesla (TSLA) CEO Elon Musk is set to close the deal on Friday.
Microsoft and Google reported earnings from big tech stocks late Tuesday. In-phase energy (ENPH) and Chipotle Mexican BBQ (CMG) also reported.
Microsoft’s earnings and revenue beat estimates, but shares of Microsoft fell sharply overnight on disappointing cloud revenue and weak guidance. Google stock plummets after losing pageviews. Enphase rose on strong results. CMG stock initially rose, but then edged lower.
Microsoft and Google stocks are on IBD’s list of long-term leaders. ENPH shares are on the IBD Big Cap 20.
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Intel plans to sell 41 million shares of Mobileye at $18 to $20 per share. That would raise $820 million at the high end of its range. Intel is targeting a valuation of $16 billion, slightly higher than the $15.3 billion it acquired from Mobileye in 2017.
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Musk-Twitter latest deal
Investors in Tesla CEO Elon Musk’s planned takeover of Twitter received filings today, CNBC reported Tuesday, the latest sign that Musk will close the $44 billion deal by Friday.
Bloomberg reported that Musk told banks that he intends to complete the Twitter acquisition on Friday. Twitter stock added to its intraday gains, closing up 2.6% at $52.84, not far from where it was trading at $54.20. Tesla shares briefly pared gains on Tuesday afternoon, but closed up 5.3 percent at 222.41.
Fears that Musk will need to sell more stock to pay for the Twitter deal weighed on TSLA’s stock.
The video embedded in this article discusses and analyzes Tuesday’s market rally Shockwave Medical (SWAV), Excellent Energy (EE) and US dollar average (dangerous goods).
Dow Jones Futures Today
Dow Jones futures fell 0.3% to fair value. S&P 500 futures fell 0.95%. Nasdaq 100 futures fell 1.9%. Microsoft stock is a powerhouse of the Dow, S&P 500, and Nasdaq. Google stock and Enphase are components of the S&P 500 and Nasdaq.
Remember, overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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stock market rebound
Stocks continued their gains on Tuesday, led by technology and small-cap stocks.
The Dow Jones Industrial Average rose 1.1% in Tuesday’s stock market trading. The S&P 500 rose 1.6%. The Nasdaq Composite rose 2.25%. The small-cap Russell 2000 rose 2.7%.
The 10-year Treasury yield fell 13 basis points to 4.11%. Falling U.S. Treasury yields also weighed on the dollar. Still, the two-year U.S. Treasury yield, which is more closely tied to Fed policy, fell just 3 basis points to 4.47%.
U.S. crude rose 0.9 percent to $85.32 a barrel. Natural gas futures rose 8%, continuing to rebound after plunging 23% last week.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) edged up 0.55%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 2.5%. MSFT stock is a huge IGV holding. The VanEck Vectors Semiconductor ETF (SMH) rose 1.6%.
SPDR S&P Metals & Mining (XME) rose 1.8%. SPDR S&P Homebuilders (XHB) rose 4.35%. The Energy Select SPDR ETF (XLE) edged up 0.1%. The Healthcare Select Sector SPDR Fund (XLV) rose 0.8%.
The ARK Innovation ETF (ARKK) rose 6.7% and ARK Genomics (ARKG) rose 5.4%, reflecting stocks with more speculative stories. Tesla stock is a major holding of the Ark Invest ETF.
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Microsoft’s earnings and revenue were slightly ahead of expectations for the fiscal first quarter. Cloud computing revenue leads, but at least falls short of some targets. The software giant then warned about second-quarter revenue from advertising, PC and currency headwinds.
MSFT shares sold off in overnight trading. Shares rose 1.4 percent to 250.66 on Tuesday, rising to their 50-day line. But Microsoft stock is well below its 200-day line and not far from a bear market low. Cloud software stocks tumbled on Microsoft’s results.
Neither Google’s revenue nor revenue materialized. YouTube revenue fell, while online advertising grew only 2.5%. Cloud computing revenue beat expectations. GOOGL stock tumbled in extended action. Shares rose 1.9 percent to 104.48 on Tuesday, also closing near the 50-day line. But, like Microsoft, Google’s stock isn’t far from a bear market low and is still some way from 200 days away.
Cloud computing results from Microsoft and Google could herald Amazon Web Services growth into Amazon.com (AMZN) Thursday night’s earnings. AMZN stock fell slightly overnight.
Enphase’s earnings beat handily as revenue weighed on views. ENPH stock rose strongly overnight. On Tuesday, Enphase shares rose 4.85% to 265.59, back above the 21-day line. Shares may start building new bases to the right, but remain below the 50-day line.
First Solar (FSLR) reported late Thursday that Enphase’s earnings were little changed.
Chipotle beat earnings estimates, with impressive same-store sales and margins. CMG stock edged lower in extended trading amid concerns about future margins. Shares rose 2.5 percent to 1,584.02 on Tuesday. According to MarketSmith analysis, Chipotle stock is near the 50-day line as it works to the right of a bearish base with a buy point at 1,754.66.
Boeing (BA), General Dynamics (GD), waste management (West Malaysia) and Hilton Worldwide (HLT) reported earlier Wednesday.
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Market rebound analysis
The stock market rally continued to gain momentum, with Treasury yields and a falling U.S. dollar providing tailwinds for stocks.
The Nasdaq and small-cap stocks led gains on Tuesday. The Dow trailed on Tuesday but remained the rally leader, pushing above its 50-day line. The S&P 500 and Russell 2000 are approaching that key level. The Nasdaq is still some way away from 50 days. But the S&P, Russell and Nasdaq were all above their 10-week lines.
It’s unclear if this is just another bear market rally. Can the S&P 500 and Nasdaq move decisively above their 50-day moving averages. If so, can the major indices clear 200 days?
On the upside, several growth stocks are showing bullish action, including Shockwave, two-factor authentication (DV) and Robles (RBLX).
These people join the ranks of medical leaders, including biotech companies, health insurers and drug distributors. Auto parts retailers are doing well.
Energy stocks continued to perform well.
Treasury yields, earnings and economic data could derail this nascent rally.
Microsoft and Google reported Tuesday night, meta platform (Yuan), apple (AAPL) and Amazon’s earnings later this week.
It’s no coincidence that shares of Microsoft, Google, Amazon and Apple all closed at or just below their 50-day line on Tuesday. Even Meta stock, which nearly hit a bear market low on Friday, is heading back to its 50-day mark.
Microsoft, Google and Amazon are all poised to exit this critical level. Futures imply that the S&P 500 and Nasdaq will do the same at Wednesday’s open.
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what to do now
Confirmed stock market rebounds are on the rise, with some leading stocks flashing buy signals or breaking out, including some high-growth stocks.
Investors should therefore be cautious about participating in this market rally and building positions in high-quality stocks or large-cap ETFs. Walk in slowly. If your positions and the market rally are in play, you can gradually increase your exposure.
A major index facing a series of resistance levels is another reason to step in rather than step in.
But be prepared to take a quick profit or stop loss.
Stay tuned to the watchlist. A few days of market gains brought more stocks into position.
Read the big picture every day to stay abreast of market direction and leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson Stock market updates, etc.
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