The attempted rally in the stock market was lackluster on Tuesday, as the Dow turned negative and the Nasdaq pared initial gains. Major indices remain below key levels while breadth was once again weak.
The market is still in a correction with huge news ahead. Investors should act accordingly.
Nvidia stock reversed lower from the breach on Tuesday after Monday’s strong move.
It’s hard to overstate the importance of Nvidia’s earnings with the market in such uncertainty. Not only will the reaction of Nvidia’s stock be a big factor for the technology and the broader market, but Nvidia’s earnings and guidance will be of great importance to dozens of companies, both chipmakers. Broadcom (AVGO) And Marvell technology (MRVL) to software makers such as service now (now) And Adobe (ADBE), as well as Megacaps e.g Microsoft (MSFT), Meta platforms (meta) and the parent of Google the alphabet (Google).
Many of these stocks are close potential buy signals, but may also be potential short candidates.
The video included in this article reviewed AVGO, ServiceNow, and Baker Hughes (BKR).
Dow jones futures today
Dow futures rose 0.25% above fair value. S&P 500 futures rose 0.3%, and Nasdaq 100 futures rose 0.4%.
The 10-year Treasury yield fell slightly to 4.3%.
Remember that an overnight move in Dow futures and elsewhere does not necessarily translate into an actual trade in the next regular stock market session.
TOL stock was little changed in the extended trade after Toll Brothers’ earnings and revenue topped hits in the third quarter, as the luxury homebuilder saw higher deliveries and margins in the third quarter. Shares rose 1.2% to 75.92 on Tuesday, but are still below the 50-day line after falling in the previous four sessions. Toll Brothers stock has a steady buy point of 83.72, according to MarketSmith’s analysis of the weekly chart.
URBN rose overnight, indicating a move back above the 50-day moving average. Urban Outfitters’ earnings beat handily and sales topped slightly. Shares of the youth clothing retailer fell 4.3% to 34.09 on Tuesday, undermining the 50-day period.
Trying to climb the stock market
The attempt to rally in the stock market got off to a strong start, but indices quickly erased the gains or headed lower.
The Dow Jones Industrial Average fell 0.5% in stock market trading Tuesday. The S&P 500 fell 0.3%. The Nasdaq Composite Index rose. Small Russell 2000 stock fell 0.3%.
S&P Global downgraded several regional banks, following a similar move by Moody’s a few weeks ago and a widespread bank warning from ratings agency Fitch.
The losers outweighed the winners again on Tuesday, as the market breadth has been worryingly weak so far in trying to rally.
Invesco S&P 500 Equal Weight Fund (RSP) fell by 0.4%, a performance slightly below the S&P 500 and just above the 200-day line. On Monday, the RSP lost a small chunk as the S&P 500 rose 0.7%.
US crude oil prices fell 0.5% to $80.35 a barrel. Copper futures rose 1%, or 2.7% in a four-day winning streak.
The yield on the 10-year Treasury fell 1 basis point to 4.33%, after hitting a new 15-year high of 4.36%.
Exchange Traded Funds
Among the growth ETFs, the Innovator IBD 50 ETF (FFTY) lost fraction. iShares Expanded Tech Software Sector Fund (ETF)IGV) was down 0.1%, with Microsoft, Adobe and NOW shares of all major members. VanEck Vectors Trading Semiconductors Corporation (SMH) lost 1%. Nvidia stock is SMH’s No. 1 ownership, with components of AVGO and MRVL as well.
SPDR S&P Metals & Mining Fund (XME) by 0.5% and the Global X US Infrastructure Development ETF (cradle) were flat. US Global Gates ETF (Planes) decreased by 0.5%. SPDR S&P Homebuilders ETF (XHB) by 0.3%, with the acquisition of TOL shares of XHB. Energy Select SPDR ETF (xle(Sinking by 0.8% and SPDR Health Care Fund)XLV) decreased by 0.35%.
SPDR Fund for Selected Industrial Sector (xli) decreased by 0.2%.
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Nvidia’s earnings are scheduled to be announced on Wednesday night, with expectations high. At least seven analysts have upgraded or raised price targets for NVDA stock in the past several sessions.
Nvidia stock rose to an all-time high of 481.87 on the day, briefly edging out the short consolidation. But shares fell 2.8% to 456.68 points. The price is still above the 50-day line after rising 8.5% on Tuesday, triggering buy signals. The RSI line, the blue line in the provided charts, reached a new high on Monday.
Artificial intelligence stocks await Nvidia’s results
Meanwhile, AVGO and Marvell are down slightly, both facing resistance at the 50-day moving average. Marvell’s earnings are due on Friday, with Broadcom next week.
NOW rose slightly, and also reached the 50-day resistance. ADBE declined, continuing its short consolidation with support at key levels. Adobe and ServiceNow both have established AI partnerships with Nvidia. snowflake (snowWednesday night’s earnings could also drive software names, along with AI chip leader Nvidia.
MSFT stock remains below the 50-day line following the post-earnings sell-off. META stock is just below this key level, while Google stock is in overbought territory. All three are major buyers of Nvidia AI chips.
Stocks close to the 50-day lines can provide buy signals with a strong reaction to Nvidia’s earnings. But they can also be potential shorts.
Market rally analysis
Major indices pulled back from their highs on Tuesday morning to finish mixed, but the overall picture remained unchanged. The market continues to attempt to rise within an ongoing correction, with a narrow range for the time being.
Investors should look for a follow-up day to confirm the rally attempt. That could come as early as Wednesday, but it would be hard to get excited about FTD moments before Nvidia’s earnings. An FTD after Nvidia’s earnings Wednesday night or Fed Chair Jerome Powell’s speech at Jackson Hole Friday morning seems more plausible.
Also, if Treasury yields and the US dollar continue to rise, it is difficult to see the stock market continue to rally, especially high-value growth names.
While some technology stocks like Broadcom and ServiceNow may be in the works, don’t neglect the energy sector or various construction-related groups.
It’s time to market with IBD’s ETF Market Strategy
What are you doing now
Few stocks flash buy signals, which is probably for the best.
The stock market is still in a correction. This is not the time to get aggressive, especially in the area of technology.
When the market rally shows real signs of strength, investors can increase their exposure. Nvidia’s earnings or Fed Chair Powell’s speech in Jackson Hole are likely to be the positive catalyst confirming the new rally. But don’t try to guess how these events will play out or how the market will react.
Definitely have a list of stocks to buy ready to go. You may also want a list of potential shorts.
Read the big picture every day to stay on top of the market trend, leading stocks and sectors.
Please follow Ed Carson on Twitter at @employee For stock market updates and more.
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