The S&P 500 index rose just above its 50-day line, a positive but not a decisive sign.
Apple (AAPL) managed to rally modestly, extending a bounce from just above the bear market lows on Tuesday. tesla (TSLA) failed to turn a profit, closing slightly lower. Tesla has reportedly doubled its end-of-year delivery discount in the US.
Investors should remain cautious. The market rally remains under pressure and has had a bad habit of pulling back after showing some strength.
Micron reported a higher-than-expected loss while first-quarter revenue fell 47%. The memory chip giant is oriented slightly lower for the current second quarter.
MU shares fell 2% in extended trading. The shares had risen 1% to 51.19 in regular trading on Wednesday.
Meanwhile, AMAT and Lam Research shares fell 2% overnight, while KLAC shares sank less than 1%.
Dow Jones Futures Today
Dow Jones futures were up 0.2% against fair value. S&P 500 futures advanced 0.3% and Nasdaq 100 futures rose 0.35%.
The 10-year Treasury yield fell 3 basis points to 3.65%.
The stock market rally picked up on Wednesday, rapidly rising more than 1% and largely holding onto those gains until close.
The Dow Jones Industrial Average rose 1.6% on Wednesday stock trading. The S&P 500 Index rose 1.5% with Dow Jones giant Nike the day’s top performer in the S&P 500. The Nasdaq Composite also advanced 1.5%. The 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 shares hit 129.89, just above their June bear market low of 129.04.
US crude prices rose 2.7% to $78.29 a barrel.
The 10-year Treasury yield was unchanged at 3.68%.
Between best ETFsthe Innovator IBD 50 ETF (ffty) rose 2.2%, while the Innovator IBD Breakout Opportunities ETF (COMBAT) was 1.6% higher. The iShares Expanded Technology Software Sector ETF (IGV) rose 1.2%. The VanEck Vector Semiconductor ETF (HMS) rose 2.2%. Micron shares are a notable SMH holding, along with shares of chip teams AMAT, LRCX and KLAC.
SPDR S&P Metals and Mining ETF (XME) rose 2.6% and the Global X US Infrastructure Development ETF (TO PAVE) 1.7%. US Global Jets ETF (JETS) rose 1.3%. SPDR S&P Home Builders ETF (XHB) rose 1.9%. The Energy Select SPDR ETF (XLE) and the Financial Select SPDR ETF (Four. Five) advanced 1.55%. The SPDR Select Healthcare Sector Fund (XLV) added 1.3%.
Tesla Delivery Discount
Tesla began offering $7,500 to take delivery of a Model 3 or Model Y in the United States before the end of the year, Electrek reported Wednesday night. That’s over $3,750 in early December, with 10,000 free Supercharger miles too. Tesla is trying to boost its fourth-quarter delivery numbers.
Many prospective buyers can delay delivery until January 1, when new US tax credits of up to $7,500 will kick in. Tesla’s US sales may also be facing a negative impact from Elon Musk’s Twitter actions and politically charged tweets.
Tesla shares tried to rally on Wednesday but were unable to end their losing streak on a strong market day. TSLA shares fell 0.2% on Wednesday to 137.57, hitting another bearish low. Shares are down 8.4% so far this week and 29% in December.
Actions to watch
First Solar shares rose 3.5% to 162.06 after falling to 150.25 intraday, finding support just above the 50-day line. FSLR shares are now 5.7% above the 10-week line and right at near-term highs. The solar energy leader may be working on a new base, but it needs a few more weeks.
MEDP shares rose 3.4% to 210.59, rebounding from the 50-day line and recovering its 21-day line. Investors could buy Medpace shares now or wait for a trend line break from November 15. MEDP shares have a buy point of 235.82 from a 16% deep consolidation along with a 45% deep cup base.
PI shares were up 2.3% at 117.15, continuing to bounce from the 10-week line but only 4% above that level. That RFID chipset is actionable from that pullback following an earnings break in late October.
AEHR rose 1.3% to 22.80, rebounding from its 50-day line. A move above the 21-day line would offer an entry into volatile stocks. The EV-exposed chip testing firm is delivering booming revenue growth.
Shares of SLB rose 3% to 53.31, continuing Tuesday’s rebound from the 50-day and 21-day lines. Now clearly breaking a trend line in a short consolidation, Schlumberger stock is still actionable here.
Market recovery analysis
OK, now the stock market rally has had a bounce. After taking gains on Tuesday, the major indices had a strong session on Wednesday.
The Dow Jones, driven by Nike, continued to recover from its 50-day line.
The S&P 500 Index and S&P MidCap 400 have just retraced their 50-day moving averages, but only by a hair. The S&P 500 needs to move decisively above the 50-day line, and that would just be a first step for the market to rally.
The Nasdaq and Russell 2000 remain below their 50-day averages.
More leading stocks found support or rallied from key levels, including First Solar and Aehr Test Systems. Some are showing intermittent buy signals, but in a shaky market.
What to do now
After last week’s ugly reversal to the downside and losses on Monday, the last two days have been positive, but don’t get excited.
Market exposure should remain light. The uptrend remains under pressure with the S&P 500 right at a key level, with several other hurdles ahead.
Even if the market rally recoups much of the previous week’s losses, there is still a risk that this is yet another trap to entice investors just before a pullback.
So while some stocks showed signs of buying, investors should be careful when taking new positions. Yes, if the major indices continue to rally, the new buying in the last few days is likely to work. But if the S&P 500 falls to Tuesday’s lows or worse, those new buys are likely to fail.
If you try to play the current market, keep your positions small and take at least partial profits quickly. Broad Market ETFs could be a way to get into a mini rally without the risk of individual stocks.
But, many actions are being set up. Therefore, investors need to be ready to act, update watch lists, and stay engaged.
Read The panorama daily to stay in sync with market direction and major stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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