Dow Jones futures rose slightly on Wednesday, along with the S&P 500 and Nasdaq futures. The stock market rally attempt had another split session on Wednesday.
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The Dow Jones hit a record when the Biden stimulus bill passed Congress. Meanwhile, Nasdaq has erased strong gains to close slightly lower, despite Treasury yields falling for the second consecutive session.
The stock market is undoubtedly in an uptrend and correction trend, with the Dow Jones and names of the real economy thriving while the technology-led Nasdaq plummeted. Can a divided stock market last for an extended period?
As for the names of the real economy, giant Dow Jones Boeing (BA) released a point of purchase on Wednesday. DR Horton (DHI) and Flagstar Bancorp (FBC) are in buying zones with Treasury yields retreating. CF Industries (CF) is also actionable.
About that, GameStop (GME) and other short-term moves have continued their wild ride while Bitcoin’s price is closing at record highs. Roblox (RBLX) had a strong debut.
Oracle (ORCL) reported earnings after closing, along with recent dating site IPO Bumble (BMBL) and Cloudera (CLDR). JD.com (JD) is due on Thursday.
Oracle’s earnings outpaced views, while revenue grew 3%, the best in years, with the software giant adding $ 20 billion. Oracle’s shares fell 5% overnight, signaling a move back to the buying zone after the early March breach. Bumble reported strong revenue and user growth and a solid outlook. Bumble’s stock rose solidly overnight, but has fallen sharply since the second day of trading. Cloudera’s shares plummeted with weak guidance for the entire year.
JD.com’s shares are modestly held below its 50-day line before earnings.
The CF stock is part of the IBD Leaderboard and SwingTrader. CF Industries was the stock of IBD’s day on Wednesday. Flagstar was also a recent selection of the Stock of the Day.
Why this IBD tool simplifies the search for the main stocks
Biden’s stimulus project approval
The House narrowly approved the $ 1.9 trillion Biden stimulus project. The stimulus project now goes to the White House, with President Joe Biden planning to sign it on Friday. The stimulus project includes checks for $ 1,400 for many Americans, expanded unemployment benefits and aid to schools and state and local governments. It also significantly increased spending on anti-poverty programs, ObamaCare and private pension bailouts. He offers a little money for vaccines and coronavirus tests.
After the massive Biden stimulus project – weeks after a second coronavirus aid package – Democrats in Congress are considering an even bigger spending package later this year focused on infrastructure. Such legislation is also likely to include large tax increases.
Dow Jones Futures Today
Dow Jones futures were up 0.2% against fair value. S&P 500 futures advanced 0.2%. Nasdaq 100 futures were up 0.4%.
Keep in mind 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 118.62 million. Deaths from Covid-19 reached 2.63 million.
Coronavirus cases in the USA reached 29.86 million, with deaths above 542,000.
Fall in treasury yields
The 10-year Treasury yield fell 3 basis points to 1.52%.
At 1 pm ET, the results of a 10-year Treasury auction were released. Demand was moderate for the $ 38 billion in long-term debt, but Treasury yields continued to decline after a significant drop on Tuesday. A poorly received seven-year auction on February 25th caused Nasdaq to fall below its 50-day line, pushing the market’s recovery into a “bullish trend under pressure”.
On Thursday, the Treasury will auction off 30-year debt.
Before the inauguration, the consumer price index showed that inflation remained weak in February, especially excluding food and energy.
Stock market rally
The stock market rebounded, with Dow leading and Nasdaq lagging behind. On Tuesday, the Dow faded to close with a small gain as the Nasdaq rose.
The stock opened strongly after the CPI data, but the Nasdaq quickly faded.
The Dow Jones Industrial Average rose 1.5% in Wednesday’s stock market trading, reaching a record high for the third consecutive session. The S&P 500 index rose 0.6%. The Nasdaq compound reversed to close a fraction below.
Growth stocks were mixed.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) was up 1.3%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 0.6%. The iShares Expanded Tech-Software Sector (IGV) ETF fell 0.7%. VanEck Vectors Semiconductor ETF (SMH) sank 2%.
Reflecting more speculative story stocks, Ark Innovation ETF was up 0.3% and Ark Genomics ETF was down 0.5%.
Bitcoin Rally
Bitcoin’s price traded just below $ 56,000 on Wednesday night, after reaching $ 57,000 intraday. The cryptocurrency is closing at its February 21 high of $ 58,356.27. On February 28, Bitcoin fell to almost $ 43,000, but had an upward trend in March.
GameStop Whipsaws
GameStop (GME) rose to 348.50, but reverted to 172 in a matter of minutes before closing 7% to 265. GME’s shares are still up 90% just this week. Express (EXPR), which reported mixed quarterly results on Wednesday but praised major digital sales plans, rose 26% to 4.25.
The AMC stock fell 6.2% to 9.85, but benefited from easing restrictions on coronavirus, as vaccinations increase and cases fall. AMC reported better-than-expected revenue in the fourth quarter on Wednesday night.
GameStop gained momentum after hiring Chewy co-founder Ryan Cohen, a major investor in GME shares, to help lead a shift to e-commerce.
AMC’s shares increased solidly overnight, with GME and Express shares falling modestly.
Where and when will the GME stock and the AMC roller coaster finally run out? Who knows? The potential for huge gains or losses is enormous. But investing is difficult enough with an investment margin. What is your advantage in buying GME shares?
Launch of Roblox shares
Speaking of online games, Roblox’s shares rose 54% to 69.50 on Wednesday’s debut, from its reference price of 45. An online gaming platform, Roblox’s shares were made public through a direct listing instead of a traditional IPO. The company’s namesake, “Roblox”, was the biggest mobile game of 2020 by revenue. Revenue growth is skyrocketing, but Roblox is still losing money.
Stock in purchase zones
Boeing shares jumped 6.4% to 245.34, freeing up a point of purchase of 244.18 cups, according to MarketSmith’s analysis. On a weekly chart, BA shares had a small handle at the base of the cup, giving it an entry of 229.71.
DR Horton’s shares rose nearly 3% to 82.09. This is above an earlier purchase point of 81.31 which is undoubtedly still actionable. Investors can also use a downward trend line from the February 11 peak of 84.11. DHI’s stock broke above that trend line last Friday.
Flagstar’s shares jumped 4.8% to 48.50, again above a flat base purchase point of 48.02. FBC shares burst briefly last week, but reversed sharply with the jump in Treasury yields. The savings and loan provider has seen tremendous profit growth in recent quarters, as low mortgage rates have fueled demand for real estate.
CF shares rose 2.9% to 49.33, again above a 48.98 point-of-purchase on an upside basis. It is also actionable for recently breaking a short trend line.
Bullish stock market analysis
The Dow Jones reached an intraday record for the third consecutive day. But this time, the Dow Jones index closed above the February 24 peak. The S&P 500 index rose 0.6%. The Russell 2000 rose 1.7%, also advancing towards record highs. GME stock and Plug Power (PLUG) are the two biggest names in Russell 2000.
The Nasdaq rose almost 1.6% during the day, but hit resistance at its 21-day exponential moving average, which fell below its 50-day line. After being briefly negative, the Nasdaq closed slightly higher. The stock was a little disappointing, given the falling Treasury yields, but follows Tuesday’s 3.7% jump. If the Nasdaq rises powerfully above its 21- and 50-day lines in the coming days, Wednesday’s action will be meaningless.
But now, the stock market remains heavily divided.
The Dow Jones rose 1.5% in volume higher than the previous session. It is a strong action, although it is not spectacular. On the positive side, the Dow Jones has now closed above its February 24 high.
The Dow Jones is literally in an uptrend, regardless of what you call it. The names of the real economy continue to do well, with more buying zones entering, while others extend the disruptions. With the decline in Treasury yields, real estate investments, such as shares in DHI and Flagstar, are intensifying.
The S&P 500, a mix of real economy and technology names, rose modestly after resuming its 21st day on Wednesday.
Meanwhile, Nasdaq still appears to be in a correction, below main levels. This can change quickly. But now it has not shown a real change of character.
The weakness in high-value growth stocks occurs despite continued speculative action in Bitcoin, as well as in GME stocks and other short-term plans.
It seems unlikely that the sharp divergence in the stock market could continue much longer. Either Nasdaq also has an upward trend – even if it is behind Dow – or Nasdaq puts pressure on Dow.
What you should do now
Investors can take advantage of the stock boom in the real economy. But given that the current market division is unstable, investors may not want to increase exposure much. As for growth stocks, expect more confirmation of the current market recovery, mainly from Nasdaq. Still, many tech-growing names are dealing with sharp bearish trends. Setting up suitable bases will take some time.
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