Dow Jones futures rose modestly on Wednesday morning, as did S&P 500 futures as well as Nasdaq futures. Salesforce.com ( CRM) highlighted key earnings after the closing bell and Nio as well as other China EV producers release sales figures prior to the opening. The rally in the stock market ended Tuesday with mixed sentiment after initially retracing after the Nasdaq was held at the key level after the big gain last week.
The market is currently in an uptrend that is confirmed and investors are given the opportunity to gain some risk. Don’t fall in the trap of investing in high-priced stocks that are being extended, like Schlumberger ( SLB) and Albemarle stock.
Salesforce, as well as HP Inc. ( HPQ) released their earnings following the closing.
The earnings of Salesforce declined, but beat expectations. Guidance was moderate-light. But CRM stock jumped 9% overnight. The stock recently hit a 2-year low, yet CRM remains a key industry indicator.
HP earnings also beat estimates while the printer-and-PC company pushed the bottom end of its EPS targets for the full year but the overall outlook was pretty much in line. HP shares climbed during extended trading. The stock gained 0.2 percent in the regular session to 38.84 4 consecutive gain after they retreated from the 200-day mark and returned to their 50-day range. HP shares have the 41.57 buy point for consolidation and 39.81 could be an early entry point.
China EV Sales
In the meantime, China EV makers Nio (NIO), Xpeng (XPEV) and Li Auto (LI) should be able to announce May deliveries before the market opens on Wednesday.
Nio stock rose on Tuesday, and so did Xpeng as well as Li Auto on easing Covid restrictions as well as improving economic data and several innovative EV incentives. But all three are currently in downward trends.
China battery and electric vehicle giant BYD ( BYDDF) will likely announce its the results for May on Friday after beating Covid effects by soaring revenue in the month of April. BYD shares are still within the range of an early buy price.
Tesla ( TSLA) China sales will be announced in a couple of weeks, after Shanghai plant production improves. TSLA stock has recovered from the lows of 2022 in the last few days.
Dow Jones Futures Today
Dow Jones futures rose 0.6 percent versus. the fair value. CRM stock is an Dow Jones component. S&P 500 futures climbed 0.4 percent, as did Nasdaq 100 futures increased 0.3 percent.
Ten-year Treasury yield climbed two basis points, bringing it to 2.86%..
U.S. crude oil futures increased a little.
The private Caixin manufacturing index climbed 2.1 points from May, to 48.1 just a hair above the expectations. That follows a much-stronger-than-expected official factory gauge. Both were lower than the 50 mark but indicated slowing down as Covid restrictions were eased. Shanghai has largely stopped lockdowns on June 1.
Stock Market Rally
The rally in the stock market gave some gains on Tuesday, but it closed at the day’s lows.
The Dow Jones Industrial Average fell 0.7 percent in Tuesday’s market trading. In the S&P 500 index declined 0.6 percent. The Nasdaq composite dropped 0.4 percent. Small-cap Russell 2000 skidded 1.3%.
U.S. crude oil prices fell 0.4 percent to $114.67 per barrel, following reaching $119 for a brief period. The European Union’s decision to block a portion of Russian imports of crude helped boost prices on Tuesday, along with China relaxing locks. However, OPEC is considering whether or not to exclude Russia that has seen its production drop due to sanctions and import restrictions and sanctions, from OPECand production limits, as reported by the Wall Street Journal. This could open the possibility to allow Saudi Arabia and the United Arab Emirates with an excess capacities, to be able to push substantially more.
Natural gas futures dropped 6.7 percent.
10 year Treasury yield increased 10-basis points and reached 2.84 percent, after rebounding from its 50-day mark. China has been easing Covid restriction and Fed Governor. Christopher Waller backing “several” more rate hikes of half-points contributed to the rise in Treasury yields down, which had been trending lower over the past few weeks.
In the top ten of the most popular ETFs The Innovator IBD 50 ETF ( FFTY) dropped 1.75 percent in the same period, while the Innovator Breakout Opportunities ETF ( BOUT) declined 1.2 percent. Its counterpart, the iShares Expanded Technology-Software Sector ETF ( IGV) decreased 2percent. CRM is a key IGV holding. Its VanEck Vectors Semiconductor ETF ( SMH) decreased 0.4 percent.
SPDR S&P Metals & Mining ETF ( XME) fell 3.5 percent, as did it was the Global X U.S. Infrastructure Development ETF ( PAVE) 1.4 percent. U.S. Global Jets ETF ( JETTS) declined 0.6 percent. The SPDR S&P Homebuilders ETF ( XHB) decreased 1.3 percent. The ETF Energy Select SPDR ( XLE) decreased 1.5 percent and SLB stock being an important holding. In the Financial Select SPDR ETF ( XLF) dropped 0.3 percent. In the Health Care Select Sector SPDR Fund ( XLV) decreased 1.3 percent.
In a sign of more speculation-driven story stocks are undergoing a reversal, the The ARK Innovation ETF ( ARKK) dropped 2.9 percent as did ARK Genomics ETF ( ARKG) 4.1 percent. Tesla stock is the biggest holding of Ark the Invest ETFs. Ark also holds BYD stocks.
Schlumberger stock in the last few hours of Tuesday climbed to 48.67 which is a record high for the company and has just risen from the 46.37 purchase point for consolidation that was that was cleared on Thursday. At that time, SLB stock was more than 15% higher than its 50-day mark. However, as the price of crude oil were able to erase huge gains from the day, SLB stock reversed lower and fell below the official buy-point. Investors who purchased the oil-service giant from earlier buy points, such as 44.61 Still remain positive, although they may wish to have taken partial profits on Tuesday or Friday morning. However, SLB shares show the dangers that come with buying outs and breakouts particularly those that extend the price past the 50-day mark.
Albemarle stock dropped 3.9 percent down to 260.42 on Tuesday following huge gains the previous week and in May. After flashing an initial entry of 248 on Thursday ALB stock was clearly stretched from the previous level on Friday. Maybe the lithium giant will create an envelop.
China EV Sales
EV-focused startups Nio, Xpeng and Li Auto will show improved sales and production after an extremely difficult April, which was a time when Covid lockdowns hit production along with supply chains. A complete recovery is likely to occur in June because Shanghai is easing Covid restrictions beginning on Wednesday.
Li Auto stock rose 3.25 percent in the range of 25.07 the previous day, following recovering its 50-day line on Friday. Li Auto shares remain in a downwards trend, but with some distance from the 200-day.
Nio stock rose around 5 percent to 17.39 just under its 50-day moving line, which has been sliding since the beginning of. Xpeng stock surged 4.4 percent to 23.50 which is lower than its 50-day line too.
BYD was a standout with the highest sales of April due to its own battery production and chip manufacturing. BYD shares climbed 2.8 percent to 35.80 which is a record for 2022. In the last week, shares have cleared an earlier entry of 34.60 from a handle that isn’t quite finished. BYDDF shares are trading at the 41.34 purchase price that comes from a deep cup base.
Tesla Shanghai production is getting closer to normal levels, but the May output was far lower than normal. Tesla China sales data won’t be released until the next few weeks, as it’s part of data on trade in the industry. Tesla stock fell 0.2 percent on Tuesday to 758.26 after hitting 10-month lows on the 24th of May however, it rebounded for a 14% gain over the course of the week.
Market Rally Analysis
The market’s rally was not able to progress on Tuesday , but it didn’t drop any ground.
The major indexes fell on Tuesday morning, which was not a major surprise following last week’s impressive gains, especially when Treasury yields increasing dramatically to begin the week. However, the Nasdaq has found support near its 21-day moving mean, whereas both the Dow Jones and S&P 500 did not fall that far.
It was, however, day of distributions and volumes were up in Nasdaq and the NYSE in addition to Nasdaq.
The market is in a steady uptrend due to that Nasdaq’s follow-through day on Thursday. The Nasdaq continued to gain momentum with a huge price gain amid rising numbers on Friday. It is worth noting that the Dow Jones and S&P 500 have not seen follow-throughs yet, but they are close to achieving their 50-day moving mean.
The 50-day line is an important test for the current stock market rising. It could be the point at which major indexes revert back to lower levels. If they make a significant move above the 50-day line suggests that this is more than a bear market rise. However, there is ample overhead resistance with the 200-day level and the peak of the month in late March also crucial levels.
Growth stocks, particularly the speculative growth sector, saw difficult Tuesdays, but China E-V and Internet stock generally increased. Pharmaceutical companies and some major biotechs have slowed down. Metals and mining stocks, that were showing some signs of life experienced an uneasy day.
What To Do Now
The market on Tuesday was a normal. With a lack of stocks to purchase Tuesday, there was no justification to boost the slim-to-moderate exposure.
It’s not recommended to purchase extended stocks, especially in a volatile and uncertain market. Oil stocks moved a lot on Tuesday morning. Many were extended by buy points or their 50-day lines, like Schlumberger.
Although investors must look at opportunities to invest, there’s an appropriate time to be cautious. Be calm and keep track of your list of watchlists.
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