Dow Jones futures fell barely overnight, together with S&P 500 futures and Nasdaq futures. A robust stock market rally Tuesday morning faded, briefly turning mixed after Russian missiles reportedly hit Poland.
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Goal (TGT) headlines Wednesday morning earnings, while chip giant Nvidia (NVDA) looms large Wednesday night.
The stock market rallied Tuesday morning on one more tame inflation report. Walmart (WMT) earnings also helped. So did Warren Buffett’s Berkshire Hathaway disclosing that it took an enormous latest position in Taiwan Semiconductor (TSM).
The main indexes pared gains somewhat, but then quickly turned mixed on the reported Russian missile news. However the Dow recovered to show positive again.
Poland Missile Attack?
In midafternoon, stocks faltered on reports that Russian missiles hit Przewodow, a Polish village just across the border from Ukraine. The missiles reportedly killed two people. It’s possible that Russian missiles strayed from targets in Ukraine, or that Ukraine’s military shot down the missiles, landing in Poland. Moscow launched massive attacks vs. Ukrainian cities Tuesday.
Russia has denied any responsibility.
Deliberately striking Poland can be extremely dangerous. All NATO members are pledged to defend all other members from attack. NATO ambassadors will meet Wednesday morning for an Article 4 consultation, not the more-aggressive Article 5 defense provision. But a much-wider conventional war would raise the risks of nuclear weapons, creating an existential threat for the world and in fact the stock market.
Setting aside the Poland missile attack news, the market rally may very well be due for a pause after a powerful run and the S&P 500 nearing key resistance.
Still, MercadoLibre (MELI) and Pure Storage (PSTG) cleared buy points on Tuesday, though PSTG stock backed off the official entry for a second straight session.
Retail Earnings
Goal, Lowe’s (LOW) and TJX Cos. (TJX) report earnings early Wednesday, together with October retail sales. That follows Dow Jones giants Walmart and Home Depot (HD) earnings early Tuesday. WMT stock jumped 6.5% on strong earnings, guidance and an enormous buyback, breaking out from a handle buy point. HD stock climbed 1.6%, attempting to forge a handle.
TGT stock rose 3.6% Tuesday, but hit resistance on the 200-day line, near a bottoming-base buy point. Lowe’s advanced 2.15%, working on a bottoming-base handle. TJX stock climbed 2.9%, still in range from a 10-month cup-with-handle base.
Nvidia reports Wednesday night. Nvidia stock rose 2.3% on Tuesday, adding to big gains over the past month, buoying the chip sector. Strong earnings and guidance from Nvidia, in addition to from chip-equipment giant Applied Materials (AMAT) on Thursday night, will probably be necessary for the sector and broader market rally.
The video embedded in this text discussed Tuesday’s market rally and analyzed MELI stock, Pure Storage and Albemarle (ALB).
MercadoLibre stock has joined IBD Leaderboard and was Tuesday’s IBD Stock Of The Day. ALB stock is on the Leaderboard watchlist. MercadoLibre and PSTG stock are on SwingTrader. Pure Storage is on the IBD 50.
Dow Jones Futures Today
Dow Jones futures dipped 0.2% vs. fair value. S&P 500 futures lost 0.2% and Nasdaq 100 futures sank 0.1%.
On Tuesday night, former President Donald Trump is anticipated to announce he’ll run for the White House again in 2024.
October retail sales are due at 8:30 a.m. ET. Economists expect the Commerce Department to report a 1% gain, or simply 0.2% excluding autos and gas.
Do not forget that overnight motion in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the subsequent regular stock market session.
Join IBD experts as they analyze actionable stocks within the stock market rally on IBD Live
Stock Market Rally
The stock market rally opened strongly because the producer price index got here in lower than expected, with core PPI flat vs. September. Walmart earnings also helped. TSM stock skyrocketed 10.5% on Tuesday night news that Warren Buffett had take a stake. Buffett’s Berkshire also took latest positions in in addition to latest stakes in Louisiana-Pacific (LPX) and Jefferies (JEF).
But the key indexes pared gains, with the Dow briefly turning negative on the report of Russian missiles striking Poland.
The Dow Jones Industrial Average edged up 0.2% in Tuesday’s stock market trading, even with WMT stock and Home Depot providing a lift. The S&P 500 index climbed 0.5%. The Nasdaq composite popped 1.45%. The small-cap Russell 2000 gained 1.5%.
The ten-year Treasury yield fell 7 basis points to three.8%. The U.S. dollar also declined.
U.S. crude oil prices rose 1.2% to $86.92 a barrel after briefly spiking greater than 3% on the Russian missile news. Natural gas futures advanced 1.7%.
ETFs
Amongst the most effective ETFs, the Innovator IBD 50 ETF (FFTY) rise 1.4%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 2.3%. The VanEck Vectors Semiconductor ETF (SMH) leapt 3.15%, with Taiwan Semi and Nvidia stock huge components, together with AMAT.
SPDR S&P Metals & Mining ETF (XME) climbed 0.85%. SPDR S&P Homebuilders ETF (XHB) advanced 2.1%, with HD stock and Lowe’s each significant holdings. The Energy Select SPDR ETF (XLE) rose just over 1% and the Financial Select SPDR ETF (XLF) edged up 0.2%. The Health Care Select Sector SPDR Fund (XLV) dipped 0.1%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rallied 2.7% and ARK Genomics ETF (ARKG) was just above break-even.
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Stocks Near Buy Points
MELI stock popped 6.4% to 1,020.68, clearing a 1,018.10 cup-with-handle buy point. MercadoLibre’s volume was below normal, however the recent consolidation has quite a lot of gains on above-average volume. The Latin American e-commerce giant enjoys strong earnings growth.
PSTG stock rose 1.6% to 31.56. Intraday, Pure Storage got to 32.47, clearing the 32.07 cup-with-handle buy point for a second straight session but failing to shut above that entry, in line with MarketSmith. PSTG stock did finish right at an early entry of 32.57.
The info storage firm also enjoys strong earnings growth.
Market Rally Evaluation
The stock market rally began Tuesday strong, booming on the PPI inflation report. But the key indexes backed off intraday highs, then turned mixed on reports of the Poland missile attack.
Perhaps the inflation/Fed narrative has shifted. But that doesn’t suggest the key indexes cannot hit resistance, especially after a powerful recent run. And, as Tuesday’s motion showed, there’s at all times the potential for geopolitics or other wild cards upending a market trend.
The Dow Jones and Russell 2000 have each surpassed their 200-day moving averages. The S&P 500 is getting near the 200-day line, where it hit powerful resistance back on Aug. 16.
The Nasdaq is moving from its 50-day toward its 200-day line, but has an extended method to go.
Notably, the Invesco S&P 500 Equal Weight ETF (RSP) is just above its 200-day line. The Direxion Nasdaq-100 Equal Weighted Index ETF (QQQE) is closing in on that key long-term level.
Tech giants are rebounding with the market, but definitely aren’t leading. Many titans hit bear-market lows just last week. The one semi-exception is Nvidia stock, which has surged over the past month. But even the chip giant remains to be working toward its 200-day line.
Numerous sectors are showing strength, nonetheless.
Solar, networking, contract electronics manufacturers and a number of other medical products firms are doing well. So are a select variety of chips, with several others attempting to arrange. A slew of housing-related stocks are looking interesting, from builders to suppliers to housing retailers.
Other retailers looking good, including WMT stock, BJ’s Wholesale (BJ) and Ulta Beauty (ULTA). BJ’s reports Thursday.
Trucking firms are moving on up, as investors bet the worst is over, or no less than priced in, for shipping stocks.
Biotechs and health insurers have paused or pulled back but generally are in decent shape. Energy stocks are also doing well, though many look prolonged.
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What To Do Now
The main indexes are looking strong, more stocks are flashing buy signals and organising. Inflation data could have reached a turning point, raising the prospect of a slowdown in Fed rate hikes and — perhaps — an end to tightening within the not-too-distant-future.
So investors needs to be making the most of the present market rally. But they need to be cautious about how much they add within the short term, given the potential for a market pullback or resistance.
Don’t chase prolonged stocks. Be wary of shopping for stocks which are significantly prolonged from their 50-day moving averages, even in the event that they are in official buy zones. Do not be too concentrated. A portfolio focused on lithium stocks reminiscent of Albemarle would have been burned Tuesday.
But work on those watchlists, stay engaged and be able to act.
Read The Big Picture every single day to remain in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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