Dow Jones futures were up slightly after the close, along with S&P 500 futures and Nasdaq futures. Micron technology (MU) and Tesla (TSLA) were in focus overnight.
X
The stock market rally had a solid advance on Tuesday Nike (NKE) Waves and FedEx (FDX) is leading gains and also boosting some peers and related stocks.
The S&P 500 index rallied to just above its 50-day moving average, a positive sign but not a decisive one.
Apple (AAPL) managed to edge higher, extending a rebound from just above Tuesday’s bear market lows. Tesla (TSLA) failed to gain gains and ended slightly lower. Tesla reportedly doubled its year-end delivery discount in the US
Investors should remain cautious. The market rally remains under pressure and has a nasty habit of pulling back after showing strength.
In the meantime, first sun (FSLR), Medpace (MEDP), Aehr test systems (AEHR), impinj (PI) and Schlumberger (SLB) are leading stocks still close to their 50-day or 10-week moving averages.
MEDP stock was added to the IBD leaderboard on Wednesday, with PI stock on the leaderboard watchlist. SLB Stock and KLA Corp. are located on the IBD Big Cap 20.
micron revenue
Micron reported a bigger-than-expected loss as first-quarter sales plummeted 47%. The memory chip giant forecast slightly lower for the current Q2.
Micron said it will continue to cut capital spending. This is not good news for manufacturers of memory-exposed chip devices Applied Materials (AMAT), Lam Research (LRX) and KLA (KLAC)
MU shares fell 2% in extended trading. Shares were up 1% to 51.19 in Wednesday’s regular session.
Meanwhile, AMAT shares and Lam Research fell 2% overnight, while KLAC shares fell less than 1%.
Hard Drive Manufacturers Western digital (WDC) Seagate Technology (STX) declined 2.2% and 1.5% respectively.
Dow Jones futures today
Dow Jones futures rose 0.2% versus fair value. S&P 500 futures were up 0.3% and Nasdaq 100 futures were up 0.35%.
The 10-year government bond yield fell 3 basis points to 3.65%.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
stock market rally
The stock market rally rallied on Wednesday, quickly climbing well over 1% and largely holding those gains through the close.
The Dow Jones Industrial Average rose 1.6% in trading on Wednesday. The S&P 500 index was up 1.5%, with Dow Jones giant Nike posting the S&P 500’s best for the day. The Nasdaq Composite also gained 1.5%. Small-cap Russell 2000 rallied 1.7%.
Apple shares rose 2.4% to 135.45 on Wednesday, still well below the moving averages. On Tuesday, AAPL stock hit 129.89, just above its June bear market low of 129.04.
US crude prices rose 2.7% to $78.29 a barrel.
The 10-year government bond yield remained unchanged at 3.68%.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) is up 2.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) is up 1.6%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.2%. The VanEck Vectors Semiconductor ETF (SMH) is up 2.2%. Micron stock is a notable SMH holding, along with chip equipment stocks AMAT, LRCX, and KLAC.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) was up 1.7% and ARK Genomics ETF (ARKG) was up 2.2%. Tesla stock is a key position in Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF (XME) is up 2.6% and the Global X US Infrastructure Development ETF (PAVE) is up 1.7%. The US Global Jets ETF (JETS) rose 1.3%. The SPDR S&P Homebuilders ETF (XHB) is up 1.9%. Energy Select SPDR ETF (XLE) and Financial Select SPDR ETF (XLF) are up 1.55%. The Health Care Select Sector SPDR Fund (XLV) gained 1.3%.
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Tesla delivery discount
Tesla has started offering $7,500 for delivery of a Model 3 or Model Y to the United States before the end of the year, Electrek reported late Wednesday. That’s up from $3,750 in early December with 10,000 free Supercharger miles. Tesla is trying to increase its deliveries for the fourth quarter.
Many potential buyers may be delaying delivery until January 1, when new U.S. tax credits of up to $7,500 take effect. Tesla US sales could also be negatively impacted by Elon Musk’s Twitter actions and politically charged tweets.
Tesla stock tried to rally on Wednesday but failed to end its losing streak on a strong market day. TSLA shares fell 0.2% to 137.57 on Wednesday, hitting another bear low. Shares are down 8.4% so far this week and 29% in December.
stocks to look at
First Solar shares rose 3.5% to 162.06 after falling to 150.25 on the day and found support just above the 50-day moving average. FSLR stock is now 5.7% above the 10-week moving average and right at short-term highs. The solar power leader could be working on a new base but needs a few more weeks.
MEDP shares rose 3.4% to 210.59, recovering from the 50-day moving average and back to its 21-day moving average. Investors could buy Medpace shares now or wait for a trendline break starting Nov. 15. MEDP stock has a buy point of 235.82 from a 16% deep consolidation next to a 45% deep cup base.
PI shares rose 2.3% to 117.15, continuing to recover from the 10-week moving average but just 4% above that level. This RFID chip game is actionable from this pullback after a late October profit breakout.
AEHR rose 1.3% to 22.80, recovering from its 50-day moving average. A move above the 21-day moving average would provide entry into the volatile stock. EV-exposed chip testing company delivers booming sales growth.
SLB shares rose 3% to 53.31, continuing Tuesday’s rally off the 50-day and 21-day moving averages. Schlumberger stock, now clearly breaking a trendline in a brief consolidation, still has room for action here.
Analysis of the market rally
OK, now the stock market rally has gotten a bounce. After posting gains on Tuesday, the major indices had a strong session on Wednesday.
The Dow Jones continued to recover from its 50-day moving average, helped by Nike.
The S&P 500 Index and S&P MidCap 400 just reclaimed their 50-day moving averages, but only by a hair’s breadth. The S&P 500 needs a decisive move above the 50-day moving average and that would only be a first step in the market rally.
Nasdaq and Russell 2000 remain below their 50-day moving average.
Other leading stocks found support or rebounded from key levels including First Solar and Aehr Test Systems. Some flash buy signals but in a shaky market.
Time the market with IBD’s ETF market strategy
What now
After last week’s ugly downturn week and Monday’s losses, the past few days have been positive, but don’t get excited.
Market exposure should remain low. The uptrend remains under pressure as the S&P 500 is squarely at a key level and several other hurdles lie ahead.
Even if the market rally erases much of the previous week’s losses, there is still a risk that this is yet another trap investors are lured into on the eve of a pullback.
So while some stocks have flashed buy signals, investors should be cautious about entering into new positions. Yes, if the major indices continue to rally, fresh buying is likely to work over the past few days. But if the S&P 500 falls to Tuesday’s lows or worse, those new purchases are likely to fail.
If you are trying to play the current market, keep positions small and take at least partial profits quickly. Broad-market ETFs could be a way to try a mini-rally without risking individual stocks.
But a lot of stocks are built up. So investors should be ready to trade, update watchlists, and stay engaged.
Read The Big Picture every day to keep up to date with 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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