Dow Jones futures fell modestly after hours, along with S&P 500 futures and Nasdaq futures. First Solar headlined Tuesday night’s earnings, while Nio and other Chinese EV makers released key earnings early Wednesday. TSLA shares are ramping up with Tesla’s Investor Day on Wednesday night.
The rally in the stock market remains contained, with major indices falling and fading back to the close. A few leading stocks flashed buy signals, while others were setting up. But the uptrend remains under pressure with significant short-term resistance.
First solar energy (FSLR), Axon Enterprise (AXON), Monstrous drink (MNST), Duolingo (DUOL) and Tesla rival Rivian (RIVN) reported late Tuesday. FSLR stock, Axon and Duolingo could take action Wednesday, while Monster Beverage and RIVN stock retreated in extended trading
early wednesday, Nio (NIO) will release Q4 earnings, featuring Nio, Li Auto and XPeng (XPEV) also reports deliveries in February. Li Auto topped the fourth quarter early Monday and issued a bullish supply forecast for the first quarter. China EV and battery giant BYD (BYDDF) should release February sales by Friday.
Chinese EV registrations for the week ending Feb. 26 showed BYD registrations were picking up, but still well below the pace seen at the end of 2022. Nio, Li Auto and XPeng also showed increases.
Tesla (TSLA) China’s EV registrations rebounded over the past week but missed forecasts, suggesting local sales could fall below fourth-quarter levels despite major price cuts.
All eyes will be on the Tesla Investor Day event, with the big news kicking off on Wednesday. Expect a new Tesla EV platform and confirmation of a planned factory in Mexico. Elon Musk plans to draft his “Master Plan 3” and may come with other news.
Tesla shares fell on Tuesday, but allow for a possible aggressive entry.
Dow Jones Futures Today
Dow Jones futures lost 0.2% from fair value. S&P 500 futures fell 0.4%. Nasdaq 100 futures fell 0.5%.
Nvidia (NVDA) filed for a $10 billion mixed securities offering. NVDA shares fell slightly in extended trading.
The yield on 10-year Treasury bills rose 4 basis points to 3.95%.
The ISM manufacturing index for February will be released at 10am ET.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
FSLR shares rose modestly in extended action after First Solar reported a smaller-than-expected Q4 loss, in-line earnings and an upbeat forecast. First Solar share rose 1.8% to 169.14 on Tuesday, rising from the 50-day line and breaking a trendline, offering early entry in addition to earnings risk. FSLR shares have a buy point of 185.38 from a shallow consolidation.
AXON shares rose solidly in late trading as Axon Enterprise earnings topped views. Shares of the Taser and body camera maker rose 2.7% to 200.31 on Tuesday. That is within the range of a buy point of 193.95. Investors could use 205.09 as an alternate entry.
MNST shares modestly retreated into overnight action as Monster Beverage earnings and sales lagged. Shares fell 0.55% on Tuesday to 101.76, just below the 50-day mark. Monster Beverage stock has a buy point of 104.75 from a 6% deep flat base, part of a base-to-base formation. Shares broke out on February 15, but immediately fell back. Centigrade Holdings (CELH), Monster’s smaller but faster-growing rival, reports Wednesday night.
DUOL’s share rose overnight after Duolingo’s loss and revenue surpassed views, with active users increasing. Duolingo shares rose 2% to 90.79, recovered from the 200-day line and closed right on the 21-day line. DUOL stock could offer an early entry on Wednesday if it breaks the steep downtrend of a handle from a deep cup base. The official buy point is 105.56.
RIVN shares plummeted as Rivian reported a smaller-than-expected loss, but earnings lagged. The manufacturer of luxury EVs expects production to roughly double to 50,000 cars by 2023, but that is below par. Shares of Rivian rose 4.6% to 7:30 p.m. Tuesday, again above the 50-day line but well below the 200-day line.
Stock market rally
The stock market rally tried to make headway on Tuesday, but collapsed in the late afternoon action.
The Dow Jones Industrial Average fell 0.7% during Tuesday’s stock trading. The S&P 500 index fell 0.3%. The Nasdaq composite fell 0.1%. The small-cap Russell 2000 closed just above break-even.
The price of US crude oil rose 1.8% on Tuesday to $77.05 a barrel. Crude futures fell 2.1% in February, the fourth decline in a row.
Copper prices rose 2.2% on Tuesday, but fell 3.1% this month.
The 10-year Treasury yield fell 1 basis point to 3.91% after an intraday hit of 3.98%. That’s still 58 basis points higher than the intraday low on Feb. 2.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) was down 0.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 0.2%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.1%. The VanEck Vectors Semiconductor ETF (SMH) was just above break-even.
Reflecting stocks with more speculative narratives, the ARK Innovation ETF (ARKK) popped 2.1%. ARK Genomics ETF (ARKG) clung to 1.4%. Tesla stock is an important part of Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF (XME) recovered 1.9% and the Global X US Infrastructure Development ETF (PAVE) rose 0.4%. US Global Jets (JETS) were up 1.2%. SPDR S&P Homebuilders (XHB) rose 0.5%. The Energy Select SPDR ETF (XLE) fell 1.4% and the Financial Select SPDR ETF (XLF) rose 0.2%. The Health Care Select Sector SPDR Fund (XLV) fell 0.7%.
Five best Chinese stocks to watch right now
Tesla Investor Day
Tesla’s investor day is on Wednesday and the big news is expected shortly after the market closes. Here are five big announcements investors are looking for, along with other potential news.
New EV platform: Tesla has said it will reveal details about a new EV platform, likely for a lower-cost model that can compete in China and Europe. But how much information will Tesla provide and when would the new model arrive? Any low-cost Tesla would already face numerous rivals in China, most notably from BYD.
Model 3 Upgrades: Tesla can confirm a long-rumored “Project Highland” Model 3 upgrade and say when production will begin.
New EV factory: Mexico’s president said Tuesday that Tesla will build a factory in the country, near the Texas border. Tesla may also discuss the planned expansion of its Nevada 4680 battery protection and Tesla Semi-assembly plant.
HW 4.0: Tesla can tout its soon-to-launch updated hardware suite for Tesla EV driver assistance systems, featuring improved chips, more cameras and the return of radar. In 2016, Tesla said all of its EVs were “hardware-ready” for fully autonomous driving.
Master plan 3: Elon Musk has hinted that he will release his third “Master Plan,” outlining his Tesla vision for the next few years. His second Master Plan, released in 2016, is still largely a to-do list.
Tesla will also likely discuss its growing energy storage business and tout its artificial intelligence efforts. There is also speculation that the EV giant will announce a TSLA stock buyback.
Tesla shares fell 0.9% to 205.71 on Tuesday, after rising 5.5% on Monday. Stocks arguably have a cup-and-handle pattern dating back to early November (or too low a handle in a base from September). That would suggest a buy point of 217.75. But investors should probably wait for TSLA stock to clear its 200-day line, currently just above 221.
Tesla shares have doubled from the bear market low of 0f 101.81 on January 6. Much of that reflects the rush of Tesla investors. So how much of that good news is priced in?
Analysis of the market rally
The stock market rally had a relatively quiet session and ebbed again towards the end.
The S&P 500 fell a fraction below its 50-day line after just retaking that level on Monday. The limit of 200 days is not far below it.
The Nasdaq composite also reversed slightly lower, trading above the 200 days and below the falling 21 days.
The Dow Jones, which has been a laggard in recent months, fell to a two-month low and its worst closing since early November.
Outperforming the big-cap indices, the Russell 2000 met resistance at the 21-day moving line for a second session in a row.
Some leading stocks flashed buy signals on Tuesday, including Book holdings (BKNG), Applied materials (AMAT), Deckers outside (DEK) and Meta platforms (META).
But the market rally remains under pressure.
The S&P 500 and Nasdaq should hold their current levels and retake the 21-day lines along with the Russell 2000. The highs of early February would provide further resistance. But yields on 10-year Treasury bills and the US dollar also remain below key levels. If yields and the dollar rise, equities are likely to struggle.
The market could be in a holding pattern until investors receive another set of Fed-critical economic data. The February jobs report isn’t due until March 10, with the February CPI inflation report due the following week.
Time the market with IBD’s ETF market strategy
What to do now
The stock market rally is trading within a very narrow range. Major indices faded from intraday highs for a second session in a row.
With the S&P 500 and Nasdaq below their 21-day lines and at risk of breaking more key levels, now is a time to be patient with a large cash position. Don’t get excited about a strong opening.
But if the market rally shows renewed vigor, investors will want to get their watchlists ready.
Arista Networks (A NET), Alteryx (AYX) and United Airlines (UAL) are examples of stocks that are setting up close to official buy points or early entries. Just like Tesla stock.
Also, don’t ignore stocks that are relatively strong, even if they don’t yet have a clear buying point.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Why this IBD tool simplifies your search for top stocks
Catch the next big winning stock with MarketSmith
Do you want to make a quick profit and avoid big losses? Try Swing Trader
Best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock lists, tools and analytics today
Leave a Reply