Dow Jones futures changed little late Tuesday, along with S&P 500 futures and Nasdaq futures, and the House would eventually give the $ 1.9 billion Biden stimulus bill. The stock market rally effort had a strong session on Tuesday as treasury yields declined. The Dow Jones reached a record high before retreating while the S&P 500 index regained key levels. The Nasdaq has bounced back strongly, but is still one of the recent highs.
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Similarly, names like Tesla (TSLA), Nine (NIO), Nvidia (NVDA) and Zoom video communication (ZM) were big winners on Tuesday, but are still deeply inclined.
New eruptions come from real economy names. Specialist chemicals manufacturer Element Solutions (ESI) and motor giant Stellantis (STLA) broke out, while steelmaker Ternium (TX) and car dealer CarMax (KMX) has expanded profits within buying zones. Microsoft (MSFT), less than a high-octane, high value as Tesla stock, has regained a buy point as well as several key levels.
Microsoft and Nvidia shares are on IBD Leaderboard and on the IBD 50 list. MSFT shares are also on IBD Long-Leaders. KMX shares were Tuesday’s IBD stock of the day.
Why this IBD tool simplifies the search for the best stocks
Biden Stimulus Bill Stemming
The House will on Wednesday give the final rule for the $ 1.9 billion Biden Stimulus Bill, which will vote on the Senate version of the legislation. The Senate passed the Biden Stimulus Bill on Saturday with some adjustments. After the vote in the House, the stimulus bill will go to President Biden’s test for his signature.
The stimulus bill provides $ 1,400 checks for many Americans, extensive unemployment benefits, aid to schools, state and local governments, as well as significant boosts to spending on poverty programs, ObamaCare and private retirement savings. It also contains some money for coronavirus vaccinations and tests.
Following the huge Biden stimulus bill – coming weeks after a second coronavirus aid package – Congress Democrats are considering an even larger spending package that will later focus on infrastructure. This latter package is also likely to include large tax increases.
The looming spending spree has driven interest rates and equities in the real economy, with rising Treasury yields hurting growth.
Dow Jones Futures Today
Dow Jones futures were low against fair value. S&P 500 futures fell 0.1% and Nasdaq 100 futures lost a fraction.
The ten-year treasury yield was 1.53%, but little changed in the expanded trade.
At 08:30 ET on Wednesday, the Labor Department will announce the February Consumer Price Index. The CPI has not moved Dow Jones futures for some time, but the treasury markets are worried about future inflation.
Remember that overnight actions in Dow futures and elsewhere do not necessarily translate into stocks in the next regular session.
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Coronavirus News
Coronavirus cases worldwide reached 118.13 million. The deaths from Covid-19 were 2.62 million.
Coronavirus cases in the US hit 29.79 million, with deaths above 540,000.
Stock market Tuesday
The stock market rally effort had a very encouraging session on Tuesday, but the disappearance to the end was not great. The 10-year Treasury yield fell by 6 basis points to 1.53% after climbing several days. It was a catalyst for growth stocks.
The Dow Jones industrial average rose 0.1% in Tuesday’s stock market trading and faded badly in the final minutes after hitting another record high. The S&P 500 index rose 1.4% and bounced above its 50- and 21-day line. The Russell 2000 climbed 2.1%, above its 21 days.
The Nasdaq Composition has risen 3.7% but is still below its 50-day line.
Tesla share rose nearly 20%, the largest percentage in 13 months, fueled by overall growth and strong China sales. Nine share jumped 17%. Nvidia jumped by 8% and the zoom share by 10%. But all four stocks are still well below their 50-day line and need time to repair their damaged cards. Nvidia share was able to recover its 200-day average while Zoom is still below it.
TSLA shares and Nio rose modestly overnight.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 4.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose just over 5%, both closing their 50-day lines. The iShares Expanded Tech-Software Sector ETF (IGV) rose 4.4%, with Microsoft’s largest stake and ZM shares a notable component. The VanEck Vectors Semiconductor ETF (SMH) rose 5.9%, with Nvidia a major stake.
Ark Innovation ETF reflects more speculative story stocks with 7.65% and Ark Genomics ETF with 10.4%, after both losing heavily in recent days. Tesla shares are number one in ARK Investments’ ETFs.
The latest outbreaks of the market find three important trends
Stocks In Sale Zones
According to MarketSmith, the stock of Element Solutions rose 7.2% to 20.24, exceeding a purchase point of 18.50 cups in large volume. The 5% chase zone for ESI shares lasts until 20.48. The relative strength line is at a new high, reflecting better performance than the S&P 500 index. The manufacturer of specialty chemicals, which hit electric vehicles, 5G, AI and smartphones, recently reported a 41% profit in the last quarter.
The share of Stellantis rose by 2.6% to 17.56, achieving a 17.31 cup base entry. Stellantis is the result of a recent merger between Fiat Chrysler and the French Peugeot. The STLA share lagged behind Ford (F), General Motors (GM) and especially Volkswagen (VWAGY), but earnings are rising sharply again and its RS line is at a new high.
Ternium share 3.9% to 35.43 above a buying point of 34.09 cups in large volume. TX shares originally broke out on March 2 and fell back a few days later. Shares only closed in the buy range on Monday, but fell below the entry level on Tuesday morning before recovering.
CarMax shares reached 132 intraday, but turned lower to 0.3% to 128.82, still slightly higher than the 128.68 buying point. KMX share jumped 4.85% to 129.17 on Monday. The RS line is high. CarMax’s earnings picked up again as tight supply of new cars fueled sales and used car prices. The giant used car also put a lot of pressure on digital sales during the pandemic.
Microsoft shares rose 2.8% to 233.78, above a 232.96 buy point. The Dow Jones technology giant also regained its 50-day and 21-day moving averages, as well as a short downward trend. In many ways, MSFT stocks over the past few weeks look a lot like the S&P 500 index. Buying Microsoft shares near the 50-day line makes sense as a long-term leader. Investors can also start a stake here and then fill the position if and when MSFT shares complete and approve a new consolidation, starting with the highest point of 246.13 on 16 February. The RS line for Microsoft stocks has been sluggish since July and lower than early February levels, but has held up better than many technology names over the past few weeks.
Analysis of stock market marches
Analyzing the current stock market effort is difficult because the major indices are so divided. It is normal for one index to lead to the downside or downside, but usually they all pull in the same direction. But that has not been the pattern in recent weeks.
On Tuesday, the stock market almost barely rose. The Nasdaq led with a strong setback as Tesla shares and very speculative growth took off after a few days. The S&P 500 index rose sharply, while the Dow Jones made a meager profit after a solid intraday rise.
But the Nasdaq and many hot stocks like Nvidia are still below their 50-day lines. The best one-day gains in history are all in bear markets, so one big day for growth stocks in a correction does not in itself mean much.
Tuesday was the third day of a stock market rally attempt. Especially for the Nasdaq and growth sectors is a follow-up day to confirm the new rally. A follow-up can now come any day. A strong Nasdaq gain from these levels could also raise the tech index to 50 or 21 days.
The Dow Jones traded, despite its flawed finish, at a record high. Several more real economy stocks entered the buying zones. In fact, if the Dow Jones and cyclical sectors embodied the stock market, IBD would not have declared a correction last week. With the Dow Jones and related sectors at a new high, it is easy to argue that this important segment of the market is on an upward trend – and that it has never been corrected.
The S&P 500 index also looks healthier and returns to key levels. So did the Russell 2000.
IBD stock from the day of purchase as earnings recover on these trends
What to do now?
Work on your watchlists and focus on relative strength. However, pay close attention to the stocks with strong RS lines that are close to buying points.
Investors can choose to take small positions in stocks that break out or flicker other buy signals. Apart from a few names like Microsoft stocks, these are generally going to be real-economy names. As for growth stocks, wait for a follow-up day. Even then, many stocks like Nio, Zoom or Tesla can take weeks or longer to create new buying opportunities.
This is an important day to read The Big Picture to understand the direction of the market.
Please follow Ed Carson on Twitter @IBD_ECarson for stock market updates and more.
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