Dow Jones futures soared on Tuesday, along with S&P 500 and Nasdaq futures. The stock market rebound had a smooth Tuesday, although the major indices hit a record high during the day. The Nasdaq still looks stretched out, amid notable warnings. Lyft Stock, Enphase Energy (ENPH), Match Group (MTCH) and giant Dow Cisco Systems (CSCO) were notable drivers after hours.
X
On Tuesday, Tesla (TSLA) Nio’s rival shares and recent IPO C3.ai (AI) ran through the shopping areas. Bitcoin continued to rise in the purchase of Tesla while GameStop (GME) broke below another notable level.
Twitter (TWTR), Enphase Energy, Rapid7 (RPD), Lyft (LYFT) and Cisco Systems reported earnings on Tuesday. General Motors (GM) is due earlier.
Twitter’s earnings outpaced views, along with shares of Enphase, Rapid7, Lyft and Cisco Systems. Twitter shares rose overnight and Lyft soared after both closed with extended points of purchase. Enphase’s stock has exploded, moving towards a point of purchase on a new basis after a recent recovery of its 10-week line. RPD’s shares have changed little since they are traded on a flat basis. Cisco’s stock fell solidly with weak guidance after hitting a 52-week high on Monday.
Why this IBD tool simplifies the search for the best actions
Meanwhile, online dating giant Match Group announced on Tuesday that it will pay $ 1.725 billion for Hyperconnect, a South Korean social media company that has video and audio chat apps. The game stock rose modestly overnight, signaling a move beyond a consolidation area starting on December 17th.
GM shares fell on Tuesday from Monday’s highs.
Bitcoin rises, Tesla stock fades
Bitcoin’s price rose modestly on Tuesday to nearly $ 47,000 in late afternoon trading. Bitcoin increased on Monday with Tesla’s announcement that it bought $ 1.5 billion in cryptocurrency. Bitcoin’s price peaked at $ 48,200 on Tuesday.
Tesla’s shares fell 1.6% on Tuesday, erasing Monday’s small gain.
Nio, AI Stock stand out
Tesla’s rival in China, Nio, jumped 6.4% to 62.84, a record close and decisively eliminating a downward trend line in a new consolidation just above the previous base. At Tuesday’s close, Nio’s shares were slightly extended from that initial entry, but could have a new point of purchase at 67.09. On Monday, Nio’s stock regained a previous point of purchase and peeked past the trend line.
Recent IPO AI shares rose 12% to 168.92%, surpassing a 160.53 point of purchase from an IPO base. AI is just beyond the 5% chase zone, which extends to 168.56.
GameStop stock keeps falling
finally the GameStop (GME) saga has set a new dark milestone. On January 27, GameStop’s stock closed 1,054% above its 50-day line, according to MarketSmith’s analysis. GME’s shares are now below its 50-day line. The shares fell 16% on Tuesday to 50.31. This is 90% below the GME stock peak of 483 at the peak of January 28.
Biden and Yellen meet with CEOs
President Joe Biden, Vice President Kamala Harris and Treasury Secretary Janet Yellen met with key CEOs and business leaders. They included JPMorgan CEO Jamie Dimon and Walmart CEO Doug McMillon, who is also president of the Business Roundtable. Business leaders expressed support for a new sizeable stimulus package, but signaled concerns about a minimum wage, especially at the present time. Biden is pushing for a $ 1.9 trillion stimulus plan, although he has signaled that he can accept tighter restrictions on $ 1,400 direct checks. The president also hinted that a $ 15 increase in the minimum wage may not be part of a stimulus package if it comes through a budgetary reconciliation project. Such legislation should be limited to tax and expense measures.
Tesla’s stock is on the IBD Leaderboard. Nio’s shares are on SwingTrader.
Dow Jones Futures Today
Dow Jones futures were just above fair value. S&P 500 futures were up 0.1%. Nasdaq 100 futures were up 0.1%. Cisco shares are Dow Jones, S&P 500 and Nasdaq 100 components
Remember that overnight action on Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks at the stock market’s high on IBD Live.
Coronavirus News
Coronavirus cases worldwide reached 107.36 million. Deaths from Covid-19 reached 2.34 million.
Coronavirus cases in the USA reached 27.78 million, with deaths above 479,000.
Stock market rally
The rise in the stock market did not register much movement in the main indices, but they all reached new highs. The Nasdaq topped 14,000 for the first time. The high-tech index remains extended from the 50-day line.
The Dow Jones Industrial Average closed just below breakeven in Tuesday’s stock market trading. The S&P 500 index fell 0.1%. The Nasdaq compound rose 0.1%.
Among the best ETFs, Innovator IBD 50 ETF (FFTY) xx%, while Innovator IBD Breakout Opportunities ETF (BOUT) xxx. The iShares Expanded Tech-Software Sector (IGV) ETF xx%. VanEck Vectors Semiconductor ETF (SMH) xx%.
Market Rally Warning Flags
The stock market recovery has reached record levels, while the main stocks are doing well. But there are some caution flags.
Nasdaq Extended
Nasdaq is now 7.9% above its 50-day moving average and 4% above its 21-day exponential moving average. When the Nasdaq is more than 6% above its 50-day line, the risk of a retraction increases. The further the index extends, the risks continue to rise, with greater chances of a significant retraction.
On Monday, Nasdaq closed 8.1% above its 50-day line and 4.3% above its 21-day line. On January 25, just before a downturn, these figures were 8.2% and 4.1%, respectively. On September 2, just before a correction, those numbers were 11.6% and 6%. At the dot-com peak of March 10, 2000, Nasdaq closed 17% over its 50 days and 7.8% over its 21 days.
Therefore, Nasdaq could definitely continue to run higher from here. What happens after that …
Ideally, the rise in the stock market could move sideways or recede gradually over several weeks, allowing the 50 days to reach it without causing serious losses to investors.
Investor Leverage
The debt margin increased 34% in December compared to the previous year. It is a seven-year high, but below the 55% gain normally associated with tops before a bear market. However, call options exploded 437% in January compared to the previous year. Along with the rise of leveraged ETFs, it is clear that investor leverage is waving at least one yellow flag.
Market Foam
The huge gains in several major stocks also raise some eyebrows over the foam in the general market.
Digital Turbine (APPS), EXP World (EXPI), Futu Holdings (FUTU) and Tilray (TLRY) are looking very extended and maybe starting to show climax action. They could keep running or even go to the side, as Tesla’s stock did after looking like a climax race in early January. But the risks of a sharp retreat are high. Investors should definitely have a game plan and exit strategy for these names.
There seems to be a strong desire for the next rocket, ignoring the risks. GME shares and related Reddit plays are a clear example. Investors should not jump into an already extended stock or asset without worrying about what they are buying. CAN SLIM investment means buying the right stocks – with solid foundations and new products or services – at the right time, when the chances of success are greatest.
The right moment definitely includes the market, the M in CAN SLIM. It is a confirmed recovery of the stock market, so investors can still make new purchases. But, given the warning signs, they should be cautious when increasing exposure and may consider making some profits from extended stocks and cutting back latecomers.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MIGHT LIKE:
IBD stock of the day flashes on top of possible climax
Meet the next grand prize with MarketSmith
Best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock lists, tools and analytics today