Dow Jones futures were little changed Wednesday morning, along with S&P 500 futures and Nasdaq futures.
Stock market rally in big cap indices had a slightly positive session on Tuesday. But smallcap and midcap stocks had a big day.
Shop stocks rose solidly, extending Monday’s advance and lighting up early entry. Transmedics Group (TMTX), Taiwan Semiconductor Manufacturing (TSM), Lifetime Group (LTH) and Marriott International (March) made elegant moves.
Meanwhile, the SEC charged Coinbase with being an unlicensed broker and violating other securities laws. COIN stock fell 12%, though it hit an intraday low. Coinbase stock fell more than 9% below its 50-day and 200-day lines on Monday after the SEC filed a lawsuit against the world’s largest cryptocurrency exchange.
Dow Jones Futures Today
Dow Jones futures fell slightly against fair value. S&P 500 futures were flat and Nasdaq 100 futures were little changed. Tesla stock helped lift the S&P 500 and Nasdaq composite, extending its recent run.
The 10-year Treasury yield fell 2 basis points to 3.68%.
Crude oil prices rose 1% and copper futures rose slightly.
China’s exports fell 7.5% in May. The year before that. It was much worse than expected. However, it raises hopes for new economic stimulus. Hong Kong’s Hang Seng index rose 0.8%.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Stock market rally
Stock market gains showed strong market breadth even as major indices traded in a tight range.
The Dow Jones Industrial Average posted a fractional gain in stock market trading on Tuesday. The S&P 500 index rose 0.2%. The Nasdaq composite rose 0.4%. The small-cap Russell 2000 rose 2.7%.
US crude oil prices were down 0.6% at $71.74 a barrel. The 10-year Treasury yield was up 1 basis point to 3.7%.
Among growth ETFs, the innovator IBD 50 ETF (FFTY) rose 1.5% to peak in 2023. iShares Expanded Technology-Software Sector ETF (IGVUp 0.2%. VanEck Vectors Semiconductor ETF (SMHUp 0.7%. The TSM role is a key SMH component.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) gained 1.5% and the ARK Genomics ETF (ARKG) up 2.3%. As mentioned above, COIN stock and Shopify are the main holdings for Arc Invest’s ETFs. Tesla (D.S.L.A), year (year) and Draft Kings (D.K.N.G) were other major components with solid gains on Tuesday.
SPDR S&P Metals & Mining ETF (XME) rose 2.4% and the Global X US Infrastructure Development ETF (sidewalk) 1.5% US Global Jets ETF (JETS) rose 1.7%. SPDR S&P Homebuilders ETF (XHBincreased by 2.9%. Energy Select SPDR ETF (XLE) advanced 0.8% and the Health Care Sector SPDR Fund (XLVretreated 0.8%.
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Stocks in procurement zones
Shares of Shopify rose 6.2% to 63.66, clearly breaking a trendline in a short consolidation. Volume was higher after a big three-day run following Q1 earnings. Schop stock was already active on Monday as it bounced off its 21-day streak. It begins to stretch. The e-commerce giant is likely to launch a new platform, but not until next weekend.
Shares of Transmedics rose 6.2% to 79.40, rebounding from a strong volume 50-day line. TMDX stock has a 90.15 buy point, but is actionable here.
The Taiwan Semiconductor stock rose 1.8% to 99.82, according to MarketSmith analysis. The chip foundry company sees strong performance in the second half of 2023, and guided capital spending at the low end of previous guidance. Following key client decisions and guidance, TSM stock bounced off its plateau on May 25. Nvidia (NVDA), but was soon withdrawn. On Monday, stocks retreated just above their 21-day line before recovering.
Lifetime shares rose 4.2% to 20.94, a strong recapture of the 20.35 cup-base buy point. Investors can view the last few weeks as a flat floor with an entry of 21.39. LTH stock hit an 18-month high of 21.75 intraday.
Marriott shares rose 2.1% to 180.90, providing an early entry into an emerging flat base next to a year-old cup-with-handle base. MAR stock will not fake a flat base until Friday, but has a 183.27 buy point. A move above the old buy point of 181.55 would mark another entry and 52-week high.
Market rally analysis
The stock market rally was a dull day in terms of major indices, but there was fundamental strength.
The Nasdaq rose but was not significantly extended. The S&P 500 remains below its August 2022 high. The Dow Jones returned to its 50-day range before retracing the highs.
Meanwhile, both the Russell 2000 and S&P 500 MidCap 400 hit their best levels since March 9.
Invesco S&P 500 Equal Weight ETF (RSP) rose 0.7% to hit a one-month high after retracing the 50-day and 200-day lines last Friday.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) rose 0.2% to a 52-week high.
Overall, winners beat losers 3-to-1 on the NYSE and 5-to-2 on the Nasdaq. The number of stocks hitting new highs easily beats setting new lows.
A market rally was led by a limited number of tech titans and AI plays. Many of those names are suspended or at least not outpacing the field. That’s probably healthy for those stocks and the broader market. This will help keep the Nasdaq from overheating, and teams align with leadership.
Home builders, building materials, medical products and travel names show some strength.
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What to do now
Investors can gradually add purchases as major indices show stable, market breadth positive, temporary trend and limited number of buying opportunities. As those riding the AI wave diversify their portfolios, it’s an opportunity for traders who invest lightly to bulk up their exposure.
Shakeouts are common, while many stocks with deep bases appear to have extended past traditional buy points. So look for early entries and try to buy stocks as close to buy points as possible. This is where creating your watch lists and setting up alerts can come in handy. If you have done your homework, the actual tests will be much easier.
Read the big picture every day to stay in tune with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.
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