The Dow Jones futures were little changed on Wednesday, along with those of the S&P 500 and Nasdaq, after a strong recovery in the stock market on Wednesday. The Dow Jones jumped to a new high and the Nasdaq continued to recover. Meanwhile, the GameStop The (GME) saga is back, with GME and other short-term stocks skyrocketing on Wednesday, with big gains continuing overnight.
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Nvidia (NVDA) published earnings reports after closing, along with Teladoc Health (TDOC), NetApp (NTAP), Proginia (PGNY) and Innovative Industrial Properties (IIPR).
Nvidia’s stock reversed down overnight, despite strong gains. The shares of IIPR, Teladoc, NetApp and Progyny fell significantly. All five shares have been traded close to points of purchase.
Chinese EV boot Li Auto (LI), maker of coronavirus vaccine Modern (MRNA) and new IPO of mobile games Playtika (PLTK) report on Thursday.
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Stock market recovery
After a brief early retreat, the stock market rebound prolonged Tuesday afternoon’s recovery, restoring some confidence. The Treasury’s 10-year yield, which hit the biggest 52-week high, declined, easing the pressure on growth stocks.
Tesla jumped 6.2% to 742.02, extending a recovery after a huge intraday drop on Tuesday to 619, and fueling support for EV stocks and speculative growth names in general. ARK Invest bought many more Tesla shares on Monday and Tuesday, after a series of purchases in recent weeks. TSLA shares, ARK’s largest share of all its ETFs, are still 6.2% below its 10-week line.
But the Dow Jones Industrial Average led the way on Wednesday, amid a continuing rotation of the industry in cyclical names in the real economy, such as Boeing (BA).
The price of Bitcoin, which plummeted to less than $ 45,000 on Tuesday morning and rebounded to more than $ 51,000 that night. Bitcoin traded just under $ 51,000 on Wednesday night.
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Increase in GME stock
GME shares, which fell after an impressive rise and fall, shot up 103% to 91.70 on Wednesday. This pushed GameStop back above its 50 and 21 day lines to its best close since February 3. GME’s stock closed 81% below the January 28, 483 peak.
GameStop said Tuesday that CFO Jim Bell resigned. The resurgence in GME’s share price could give GameStop another chance at a share offering, something AMC Entertainment (AMC) did last month during his short squeeze.
AMC’s shares jumped 18% on Wednesday. AMC rose 36% from Monday to Tuesday, as New York City said it would allow partial reopening of cinemas in March. Clothing retailer Express (EXPR) jumped 43%.
GME’s shares rose 83% in volatile overnight trading. AMC increased 22% and the express stock 26%.
The shares of Nvidia, Tesla and Innovative Industrial Properties are on the IBD Leaderboard. The shares of Nvidia and Tesla are in the IBD 50.
Dow Jones Futures Today
Dow Jones futures were up 0.2% against fair value. The S&P 500 futures remained stable. Nasdaq 100 futures fell 0.1%, with Nvidia’s shares falling and Moderna’s rising.
Remember that overnight action on Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.
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Coronavirus News
Coronavirus cases worldwide reached 113.08 million. Deaths from Covid-19 reached 2.5 million.
Coronavirus cases in the US reached 28.97 million, with deaths above 518,000.
Moderna said it would start clinical trials of its coronavirus vaccine, designed to better treat the South African variant of the virus. Current vaccines have shown weaker efficacy compared to the South African mutation, but they generally prevent death and serious illnesses.
MRNA stock increased solidly overnight. The shares fell 3.6% to 144.79 on Wednesday, just above its 50-day line. Moderna’s shares fell from a record high of February 8 at 189.26.
Stock market rally
The recovery of the stock market strengthened support among growth stocks, while real economy names gained momentum.
For the second day in a row, the Nasdaq fell solidly in the morning, but Wednesday’s drop was much less than Tuesday’s intraday drop. This time, Nasdaq tested its 50-day line instead of diving below it. Meanwhile, the intraday recovery was faster, with the main indices moving rapidly into positive territory.
The Dow Jones Industrial Average led the way, up 1.35% in Wednesday’s stock market trading to a record high. The S&P 500 index gained 1.1%, just below all-time levels. The Nasdaq compound added 1%, still below its 21-day exponential moving average.
The 10-year Treasury yield, which rose above 1.4% for the first time in a year, reduced earnings to about 1.38%. The increase in Treasury yields has put pressure on growing stocks in recent weeks.
Among cyclical actions, Vulcan Materials (VMC) and Ford Motor (F) canceled short consolidations. GM’s shares extended a 10-week line recovery, resuming its 21-day line. General Motors (GM) executives said the automaker has overcome the chip shortage that is affecting the industry, adding that they are “highly confident” in meeting the 2,021 EPS targets.
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Generally higher growth stock
Growth stocks were generally higher, but still mixed.
Among the best ETFs, Innovator IBD 50 ETF (FFTY) rose 0.8%, while Innovator IBD Breakout Opportunities ETF (BOUT) fell 0.2%. The iShares Expanded Tech-Software Sector (IGV) ETF gained 1%. The VanEck Vectors Semiconductor (SMH) ETF jumped 3.2%. NVDA inventory is a large SMH component
Reflecting more speculative history stocks, Ark Innovation ETF fell 0.5%, even as Tesla’s shares recovered. The Ark Genomics ETF was up 0.2%.
ARK Innovation saw a record $ 456 million withdrawal on Monday, after months of huge inflows. ARKG also large withdrawals Monday. Although ARK’s biggest stakes are in net names like Tesla, Roku (ROKU), Square (SQ), Baidu (BIDU) and Teladoc shares, has large stakes in many smaller shares. Getting out of those positions, especially with ARK reporting daily purchases and sales, would be tricky.
ARK did not buy more Tesla shares on Wednesday, but did acquire 660,000 shares of Tesla Workhorse Group (WKHS), which fell 47% on Tuesday and sank 8% on Wednesday after the delivery vehicle manufacturer EV lost a major USPS fleet contract.
Key earnings
Nvidia’s shares initially rose, but later reversed downward, dropping 2% to 567. Nvidia’s earnings and sales exceeded, while driving upward in current quarter revenue. On Wednesday, NVDA shares rose 2.5% to 579.96 after re-testing the most actionable entry point of 560.07. The official point of purchase is 587.76. Investors could also use 615, just above the historic maximum of Nvidia’s shares on February 16, as an entry.
Progyny’s shares plunged 10% in expanded trade. The fertility benefits specialist slightly outperformed views, but underperformed revenue for the first quarter and the full year. PGNY shares rose 4% to 53.34 on Wednesday, releasing a tight three-week buying point of 51.98.
IIPR’s shares fell 5% overnight, as the lucrative REIT pot lost views. The shares jumped 5.6% to 220.16 on Wednesday, briefly releasing a tight three-week entry of 221.13. IIPR’s shares fell and recovered from its 50-day line on Tuesday.
Teladoc’s shares fell 6% in overnight trading, threatening to test its point of purchase once again. The telehealth leader reported an adjusted loss online, but exceeded revenue. The shares fell 0.6% to 254.53, continuing to decline compared to the January break, closing near the top of the previous base. TDOC’s shares briefly lowered the 50-day line and 236.76 buying points on Tuesday.
NTAP’s shares plunged 7% in extended trade. NetApp’s profit and sales surpassed, but its orientation was not impressive. NTAP’s shares rose 3.2% to 71.57. Stocks have found support at key levels this week, just above the buying zone. But NTAP’s shares threaten to fall below the 66.10 point of purchase.
Bullish stock market analysis
Although the stock market is looking to the future, Wednesday’s stock was important in understanding the Nasdaq’s big recovery on Tuesday. At the time, it was unclear whether Tuesday was just a continuation of a general retreat or the beginning of an retreat. With the stock market recovery gains on Wednesday, Tuesday’s stock looks more like the last one. But with Nasdaq still below its 21-day line, growth stocks may not be free and released.
In addition, the volume of the NYSE and especially of the Nasdaq fell from Tuesday, suggesting a possible lack of conviction. Of course, much of Tuesday’s volume came from the afternoon’s recovery.
Ideally, the stock market rally would move sideways for a few weeks, allowing leading stocks to form new bases or find bullish support on the 10-week lines. But the market will do what it will do. That could mean distance trading, or it could mean a quick run for record highs or undermine Tuesday’s lows.
It is not yet a time to be particularly aggressive, in part because few quality stocks are giving signs of buying adequate bases. Investors should review their portfolio according to recent events and trends. Are you very focused on speculative growth names that are prone to violent swings? Do you have any cyclical action, capitalizing on this recent trend?
If you make new trades with positions, be more selective. Insist that quality companies lay a solid foundation.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
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