Overnight Dow Jones futures were slightly lower, along with S&P 500 futures and Nasdaq futures. The stock market rally had a strong response on Tuesday to another targeting (TGT) Earnings warning, bouncing off early lows to close higher.
China EV and battery giant BYD (BYDDF) will supply batteries Tesla (TSLA), a BYD executive said Wednesday local time, after months of speculation. That comes with the passing of Tesla’s BYD car sales. Investors may get more clarity on Tesla China sales ahead of Wednesday’s open.
VRTX stock, Ulta Beauty (ULTA), ZIM Integrated Shipping (ZIM), Albemarle (ALB), Ashland International Holdings (ash), Timken Steel (TMST) and chevron (CVX) stocks are in or near buying areas. Vertex Pharmaceuticals (VRTX), Ulta Beauty and Albemarle on hand. ZIM stock flirts with ASH stock below an official buying point but is arguably actionable now. TMST stock broke out on Tuesday while Chevron maintains a buying range.
The relative strength lines of these stocks are at or close to the highs. The RS line, the blue line in the provided charts, tracks the stock’s performance against the stock’s performance. S&P 500 Index.
ALB stock is on the IBD Leaderboard, while Ashland stock is on the Leaderboard Watch. ZIM stock is listed at IBD 50. CVX stock is at IBD Big Cap 20. Vertex Pharmaceuticals was IBD stock today. The video included in this article discusses market action on Tuesday and analyzes TimkenSteel, Chevron, and ULTA stocks.
Booming EV Giant Takes Over Tesla’s EV Crown
BYD-Tesla Battery Deal
In an interview with state-owned television, a senior BYD executive said BYD will supply the batteries to Tesla, according to CnEVPost.com. It is a major verification for BYD as a supplier of batteries to third-party automakers. Tesla has relied on battery giant CATL for its China-made vehicles. There have been rumors for months that Tesla will use BYD Blade batteries, a specialized LFP battery.
It comes as Tesla almost guaranteed to lose its EV crown in the second quarter to BYD, even though the latter includes additional EVs and hybrids. So the Tesla-BYD battery deal is a bit like stronghold (f) Approval of the supply of motors general motors (GM).
The China Association of Automobile Manufacturers is likely to release auto sales data for May early Wednesday morning. In addition to industry-wide electric vehicles and overall vehicle sales, investors will receive Tesla China deliveries.
Tesla China production and deliveries in May definitely improved vs. April, when the Shanghai factory was closed for most of the month. Tesla production remained limited through May, although it has rebounded in recent weeks and could reach full capacity sometime in June.
Most other automakers reported an improvement in China’s production and delivery last month, but they remain restricted. The big exception is BYD, which hit record sales in April and again in May thanks to its internal battery and chip operations.
Tesla stock rose 0.25% to 716.66 on Tuesday, rebounding from its morning lows. While it is far from its lows in late May, TSLA stock is well below its 50-day and 200-day moving averages.
BYD stock fell 0.5% to 38.12. Shares have risen strongly over the past four weeks, approaching 41.34 buying points from a deep cup base.
Dow jones futures contracts today
Dow Jones futures fell 0.1% against stocks. fair value. S&P 500 futures lost 0.1% and Nasdaq 100 futures lost 0.1%.
Remember that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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stock market rise
Target said early Tuesday that big cuts to counter the sudden stockpile would hurt profit margins more than it expected a few weeks ago. This raised concerns about consumer spending and the economy. But the target stock, which fell to 147.15 shortly after opening, closed down just 2.3% to 155.98.
The stock market, which opened sharply lower, quickly erased losses and moved aggressively higher.
The Dow Jones Industrial Average rose 0.8% in the stock trading session on Tuesday. The S&P 500 advanced 0.95%. The Nasdaq Composite Index rose 0.9%. Small cap Russell 2000 jumped 1.6%.
US crude oil prices rose 0.8 percent to $119.41 a barrel.
The 10-year Treasury yield fell 7 basis points to 2.97%.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) rose 2.9%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.65%. The iShares Expanded Tech-Software Sector (IGV) ETF (IGV) advanced 1.6%. The VanEck Vectors Semiconductor Index (SMH) was up 0.8%.
The SPDR S&P Metals & Mining ETF (XME) jumped 3.5%, and TimkenSteel stock was a small component. Global X US Infrastructure Development Corporation (PAVE) gained 1.65%. The US Global Jets ETF (JETS) rose 1.3%. The SPDR S&P Homebuilders ETF (XHB) is up 0.4%. The Energy Select SPDR ETF (XLE) is up 3%, with CVX holding a large stock. The Financial Select SPDR ETF (XLF) is up 0.8%. The healthcare fund SPDR (XLV) closed 1.3% higher.
Reflecting stocks of speculative stories, the ARK Innovation ETF (ARKK) is up 3% and the ARK Genomics ETF (ARKG) is up 3.6%. Tesla stock is still the number one. 1 contract via Ark Invest ETFs.
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stock to watch
ULTA stock rose 1.8% to 421.02, advancing despite a recent target warning. Ulta Beauty stock has a handle cup purchase point of 426.93. Last month, shares of the beauty supplies retailer tumbled in the wake of Target’s initial warning, but it returned strongly on Ulta’s earnings.
ZIM stock rose 1.9% to 68.52, flirting with some short-term levels that one would treat as a semi-handle. On the weekly chart, ZIM stock has a small handle, offering 68.63 buying points. But on the daily chart, the container-based shipping company has a cup base with 75.81 official purchase points.
ALB stock rose 10 cents to 257.89 on Wednesday. The shares of the lithium giant have 273.78 buy handle points in a large cup base. In late May, ALB stock jumped past 248 early entries following its second big earnings upgrade in a month, but then briefly fell below those levels a few days later.
ASH stock closed up 0.3% at 110.51 to close at its lowest level on the day. On Monday, the chemical additives company crossed 111.15 buying points for the flat base of the day, but closed below that level. An investor can use 108.95 as early income for Ashland stock.
TimkenSteel stock jumped 8.8% to 26.18, clearing 24.90 cups of a point of purchase with a handle, MarketSmith said. TMST stock has been extended a bit. Specialized steel companies stand out, with Howmet Aerospace (HWM) shows strong action. Other steelmakers are starting to turn back.
Chevron stock advanced 1.9% to 180.21, a new closing high and moving up in a buying range of 174.86 entry points with a flat base. CVX stock is less volatile than many energy names, and so far is only 5.9% above its 10-week streak.
VRTX stock rose 1.4% to 271.86. Vertex stock has a buy point of 276.10 cup handle, finding support at the 50-day line.
Market Rise Analysis
Major economic, business and political news is important to the stock market, but what really matters is the market’s reaction to that news.
Target’s earlier warning on May 18 triggered a massive sell-off in the market, indicating that the just-confirmed uptrend was in serious trouble. Two days later, the major indexes cut their lows in mid-May.
But on Tuesday, the current confirmed market rally responded well to the latest target’s warning, and rebounded after the initial sell-off. Even the target came from morning lows – above late-May lows after his initial earnings warning. Other retailers pared losses or even turned positive.
Major indices, lowering their 21-day moving averages, rose Tuesday morning to post solid gains.
The 10-year Treasury yield, which fell below 3% after Monday’s big gains, was quietly a major contributor to Tuesday’s uptrend reversal.
However, the stock market rally has not quite figured out whether it wants to move higher or test the May lows.
Extended lateral action may be positive. A number of handles have been formed in the past few days. Longer pauses will allow more knobs and bases to be developed, as well as allow moving averages to catch up.
If the major indicators move above their recent ranges, they will soon reach the 50-day moving average. The S&P 500 index is just below the 10-week line, with Dow Jones closing above that key level. Small Capital Russell 2000 is above the 50-day and 10-week average.
Energy stocks continue to lead the market. A number of other sectors are trying to bounce back, including metals and mining plays like TimkenSteel. Lithium plays like Albemarle can be viewed as a metal mining game but also as an energy store. Pharmaceutical makers and large biotech companies are generally holding up, as is Vertex stock. Even some retailers like Ulta Beauty are sassy.
But it is clear that all of these non-energy sectors need the market rush to at least hold, and may struggle to make much progress without broad progress.
Time to Market with IBD’s ETF Market Strategy
What are you doing now
After fading out on Monday, Tuesday’s action was more positive. But as the market continues to rise in flux, investors still have to keep their overall exposure from negligible to modest. They should also keep the individual poses small, at least to start. Consider taking partial profits relatively quickly, given the current market conditions.
If the market rally breaks through the recent levels and the major indicators cross the 50-day lines, investors can take advantage of buying opportunities. But continue to gradually increase exposure.
Investors should keep their watch lists up to date. Some fertilizer names may be swept aside, paying more attention to retail and steel names. Make sure you are ready and aware when the market is building momentum.
Read the big picture every day to stay in sync with market trend, stocks and leading sectors.
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