Dow Jones futures rose slightly late Wednesday, along with S&P 500 futures and Nasdaq futures. The stock market rally attempt had another solid session, with the major indexes rallying Wednesday on stimulus hopes. But they came off big intraday gains as Senate Majority Leader Mitch McConnell cooled optimism for a stimulus deal. Talks remain ongoing.
Amazon.com (AMZN) and Microsoft (MSFT) failed to close above their 50-day lines, with the latter forming a strategic partnership with Datadog (DDOG). Apple (AAPL) extended its move above the 50-day line.
Tesla (TSLA) had another quietly constructive day, with Q3 delivery figures due soon.
The S&P 500 moved above its 50-day moving average, joining the Nasdaq and Dow Jones Industrial Average. The Nasdaq came close to its Sept. 10 high, another short-term resistance area.
Tesla, Microsoft are on IBD Leaderboard, with Alibaba, JD.com and SailPoint joining Wednesday. Alibaba stock is on SwingTrader. Alibaba and Microsoft stock are on IBD Long-Term Leaders. Entegris, Alibaba, Amazon, Microsoft are all on the IBD 50.
Dow Jones Futures Today
Dow Jones futures rose 0.5% vs. fair value. S&P 500 futures advanced 0.3% and Nasdaq 100 futures climbed 0.3%.
Coronavirus cases worldwide reached 34.14 million. Covid-19 deaths have hit 1.01 million.
Coronavirus cases in the U.S. have cleared 7.44 million, with deaths above 211,000.
Moderna (MRNA) reported fresh data from early-stage trials of its coronavirus vaccine, saying it was “well received” among older adults. The vaccine candidate is one of five already in Phase three trials. Moderna stock jumped intraday, but closed up just 0.3% after its CEO said a vaccine wouldn’t be ready before Election Day.
Regeneron Pharmaceuticals (REGN) reported its Covid-19 antibody treatment reduced viral load and sped recovery in an early-stage trial. After initially rising, Regeneron stock fell 2.4%.
Stock Market Rally Wednesday
The stock market rally looked powerful for much of Wednesday’s session. All of the major indexes rose significantly more than 1% intraday. NYSE and Nasdaq volume was significantly higher than in the prior session, perhaps fueled by the end-of-quarter window dressing and profit taking. NYSE volume got a big boost from Palantir Technologies (PLTR), which traded 336 million shares in its direct-listing debut.
Treasury Secretary Steven Mnuchin said Wednesday morning that there was an “overall understanding” with Democrats on a new coronavirus stimulus package and he was “hopeful” about talks. But Mnuchin and House Speaker Nancy Pelosi failed to reach a stimulus deal in a meeting. Later, however, Senate Majority Leader Mitch McConnell said Democrats and Republicans are still “far apart” on terms.
That sent the major indexes briefly plunging to slim gains before rebounding late afternoon. Stocks faded again somewhat right at the close.
After the close, the House delayed a vote on its $2.2 trillion stimulus bill to give more time for talks. Also, the Senate approved a bill to keep the government open through Dec. 11, sending it on to President Donald Trump.
The Dow Jones Industrial Average rose 1.2% in Wednesday’s stock market trading, with Apple, Walmart (WMT), UnitedHealth (UNH) and new blue-chip member Salesforce.com (CRM) leading. If you want to be persnickety, the Dow rose 1.1986%.
The S&P 500 index advanced 0.8%. The Nasdaq composite climbed 0.7%.
This is an important day to read The Big Picture.
Apple stock rose 1.5%, moving close to reclaiming a $2 trillion valuation. Amazon faded badly, closing up 0.1%. Microsoft rose 1.5%. But both remain below their 50-day lines after crossing that key level intraday.
Alibaba jumped 6.2% and JD.com stock 3.3%. Both are continuing to rebound from the lows of their current consolidation, with BABA stock bouncing from its prior buy point and 50-day line.
Market Rally Breakouts
Datadog stock spiked on the Microsoft alliance news. DDOG shot up 12% to 102.16, vaulting above a 99.09 buy point, according to MarketSmith analysis.
SailPoint rose 2.9% to 39.57. The cybersecurity stock extended a rebound from its 10-week line and cleared short-term resistance at 39.50. Both of those are still actionable. SailPoint stock briefly cleared a 41.39 entry from a consolidation high, hitting 42.62 intraday. SAIL was Wednesday’s IBD Stock Of The Day.
Entegris stock rose 1.6% to 74.34, just below the official 74.38 buy point after reaching 75.16 intraday. The chip-equipment maker had already cleared some early entries, including 71.74 on Tuesday.
Lennar stock popped 3.4% to 81.68, topping an 80.10 buy point. It was basically a flat base that didn’t quite show up because Lennar peeked above the 80 level last week.
Cloudflare stock advanced nearly 1% to 41.06, just, closing above a 40.94 early entry. NET has an official buy point of 45.38.
But while there was a lot of strong action by individual leaders, overall growth stocks lagged.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.55%. The iShares Expanded Tech-Software Sector ETF (IGV) inched up 0.2%, despite key holdings Microsoft and Salesforce doing well. The VanEck Vectors Semiconductor ETF (SMH) fell a fraction, partly due to Micron Technology (MU), down 7.4% on weak guidance, with the memory-chip giant also weighing on some related semiconductors.
Tesla stock rose 2.4% to 429.01. Shares this week have been relatively calm, slowly building the right side of an emerging base. Right now there is no proper buy point. Sure, if you squint you can find an entry point or two. But you don’t have to. While TSLA stock is extremely volatile, there have been times when it has settled down, providing better buying opportunities. The June 1 and June 30 breakouts are prime examples.
Keep in mind, big news is on the horizon for Tesla and Tesla stock.
Tesla deliveries and production figures for the third quarter will come out in early October, possibly on Thursday but Friday is more likely.
With two factories running normally, Tesla is going to smash its old quarterly delivery record of 112,000 vehicles, the only question is how much. Expect at least 135,000, with the most-accurate forecaster predicting just over 143,000.
Tesla is benefiting from the first year of the Shanghai plant and early demand for the Model Y in the U.S.
However, competition does appear to be impacting Tesla’s European sales. Overall European electric-car sales are roughly doubling vs. a year earlier while Tesla sales there are likely to be flat or modestly lower.
For Q4, analysts are predicting even-higher Tesla deliveries. New Model Y variants are in the works, along with perhaps the start of made-in-China Model Y deliveries. But competition will also intensify in Europe and China.
There’s speculation of more Tesla price cuts coming in October, with reports of a notable made-in-China price reduction due Oct. 1.
Stock Market Rally Bottom Line
The stock market rally is showing strength, with the Dow Jones leading Wednesday’s solid gains in heavy volume. The major indexes are all above their 50-day lines with the Nasdaq closing in on short-term highs.
An increasing number of leading stocks are breaking out or setting up. That’s a bullish sign for the new market rally, as well as offering investors buying opportunities.
Investors should be switching out of a defensive mindset. But don’t go on an all-out offensive either. Make some modest buys, perhaps using early entries or rebounds to begin stakes, with official breakouts offering a chance to fill out positions.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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