Dow Jones futures rose after hours, as did S&P 500 and Nasdaq futures. The stock market rally had a slightly positive session on large-cap indices on Tuesday. But small and mid cap stocks have had a great day.
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Two large Cathie Wood farms, Shopify (SHOP) and Coinbase global (COIN), went in opposite directions on Tuesday.
SHOP’s stock rose solidly, extending Monday’s advance and posting early entry. TransMedics Group (TMDX), Semiconductor manufacturing in Taiwan (TSM), Lifetime group (LTH) and Marriott International (MAR) made bullish moves.
Meanwhile, the SEC accused Coinbase of being an unlicensed broker and violating other securities rules. COIN stock fell 12%, despite hitting intraday lows. Coinbase stock fell just over 9% on Monday, below its 50- and 200-day lines, after the SEC sued Binance, the world’s largest cryptocurrency exchange.
SHOP’s stock was added to the IBD rankings and SwingTrader on Tuesday. TMDX stock is on the IBD 50. Shopify was also Tuesday’s IBD stock of the day.
Dow Jones Futures Today
Dow Jones futures rose slightly from fair value. S&P 500 and Nasdaq 100 futures tipped higher.
Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join the experts at IBD as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally showed strong market momentum, even though major indices were trading in a tight range.
The Dow Jones Industrial Average made a fractional gain in trading on Tuesday. The S&P 500 index rose 0.2%. The Nasdaq composite climbed 0.4%. The small-cap Russell 2000 jumped 2.7%.
U.S. crude oil prices fell 0.6% to $71.74 a barrel. The 10-year Treasury yield edged up 1 basis point to 3.7%.
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Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.5% to a 2023 high. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.2% . ETF VanEck Vectors Semiconductor (SMH) climbed 0.7%. TSM stock is a major component of SMH.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) gained 1.5% and ARK Genomics ETF (ARKG) jumped 2.3%. As noted above, COIN and Shopify stocks are important holdings for Ark Invest’s ETFs. You’re here (TSLA), Roku (ROKU) and DraftKings (DKNG) were other major components that posted solid gains on Tuesday.
The SPDR S&P Metals & Mining ETF (XME) rose 2.4% and the Global X US Infrastructure Development ETF (PAVE) rose 1.5%. The US Global Jets ETF (JETS) climbed 1.7%. SPDR S&P Homebuilders ETF (XHB) rose 2.9%. The Energy Select SPDR ETF (XLE) rose 0.8% and the Health Care Select Sector SPDR Fund (XLV) fell 0.8%.
The Financial Select SPDR ETF (XLF) climbed 1.3%. The SPDR S&P Regional Banking ETF (KRE) climbed nearly 5% to its best levels since late April.
Five best Chinese stocks to watch now
Stocks in shopping areas
Shopify stock jumped 6.2% to 63.66, clearly breaking a trendline in a short consolidation. The volume was the heaviest since the huge three-day run following the first quarter results. SHOP’s stock was already actionable on Monday as it rebounded from its 21-day line. It’s starting to stretch. It is possible that the e-commerce giant will forge a new base, but not before the end of next week.
TransMedics stock jumped 6.2% to 79.40, rebounding from the 50-day line in strong volume. The TMDX stock has a buy point of 90.15, but is exploitable here.
Taiwan Semiconductor’s stock climbed 1.8% to 99.82, returning above the 98.99 consolidation buy point in an above-average trade, according to MarketSmith analysis. The chip foundry giant is reporting stronger performance in the second half of 2023 and has also guided capital spending down from previous forecasts. TSM’s stock deviated from its base on May 25, following the results of the explosion and advice from a key customer Nvidia (NVDA), but quickly withdrew. On Monday, stocks fell just above their 21-day line before rebounding.
Life Time’s stock jumped 4.2% to 20.94, recouping a buy point of 20.35 cups on strong volume. Investors could view the past few weeks as a flat base with an entry at 21.39. LTH stock hit an 18-month high at 21.75 intraday.
Marriott stock rose 2.1% to 180.90, offering an early entry into an emerging flat base alongside a one-year cup-handle base. The MAR stock flat base will not be forged until Friday, but would have a buy point of 183.27. A move above the former buy point of 181.55 would be another entry and mark a 52-week closing high.
Market rally analysis
The stock market rally had a lackluster day according to major indices, but there was underlying strength.
The Nasdaq rose but did not expand much further. The S&P 500 continues to hold just below the August 2022 highs. The Dow Jones returned to its 50-day line before reversing higher.
Meanwhile, the Russell 2000 and S&P 500 MidCap 400 both hit their best levels since March 9.
The Invesco S&P 500 Equal Weight (RSP) ETF rose 0.7% to a one-month high after recovering the 50- and 200-day lines last Friday.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) edged up 0.2%, just to 52-week highs.
Overall, the winners beat the losers by more than 3 to 1 on the NYSE and by 5 to 2 on the Nasdaq. The number of stocks setting new highs easily beat those setting new lows.
The market rally was led by fewer tech titans and AI games. Many of these names pause or at least don’t cross the field. This is probably healthy for these stocks and for the market as a whole. This could help prevent the Nasdaq from overheating as more groups hopefully join management.
Homebuilders, building products, medical products and travel names are showing some strength.
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What to do now
With the major indices remaining stable, the breadth of the market showing a positive and tentative trend and a small number of buying opportunities, investors may continue to add buying gradually. This is an opportunity for lightly invested traders to increase their exposure, while those who have ridden the AI wave can diversify their portfolio.
Jerks remain common, while many stocks with deep bases appear extended to traditional buy points. So look for early entries and try to buy stocks as close to the buy points as possible. This is where creating your watchlists and setting alerts pays off. If you’ve done your homework, the real tests are much easier.
Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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