Dow Jones futures rose overnight, along with S&P 500 futures and Nasdaq futures. Netflix (NFLX) subscriber growth in focus and Tesla earnings looming.
The stock market rally attempt made gains on Tuesday but closed higher in a volatile session. reports Apple (AAPL) iPhone manufacture didn’t help. Apple stock fell for a short time, but managed to close a little higher.
As the market rally continues, it has yet to confirm anything. Investors should be very careful and act cautiously.
Netflix subscriber growth was much stronger than expected in the third quarter, and the streaming TV giant was also on the rise in Q4 customers. Earnings also peaked. Netflix stock rose and signaled a breakout. Disney (DIS) and Roku (ROKU) also rose overnight.
Intuitive Surgery (ISRG) outperformed third-quarter EPS and revenue forecasts. ISRG stock took action overnight. Intuitive stocks are near bottoms. But for the manufacturer of robotic surgical systems, the results could bode well for other medical equipment companies.
United Airlines (UAL) delivered strong Q3 earnings and Q4 guidance. Delta Airlines (DAL) last week. UAL stock jumped in expanded trading as Delta added to its regular session earnings.
chip gear giant ASML (ASML) reports early Wednesday morning, followed by Lamb Research (LRCX) Wednesday night. They will offer a read on the chip industry, including possible comments on US controls over chip technology to China. Both ASML stock and LRCX are just above their lowest levels since 2020.
tesla (TSLA) is on the air Wednesday night. The EV giant should deliver strong earnings growth, but investors will want reassurance about the future.
Meanwhile, there was new evidence that Elon Musk did it. excitement (TWTR) takeover may be imminent. TWTR stock is not far from its purchase price of $54.20 per share.
Dow Jones Futures Today
Dow Jones futures rose 0.3%. fair value with the DIS stake offering a small increase. S&P 500 futures rose 0.6 percent. Nasdaq 100 futures rose 1.1 percent. NFLX stock and components of United Airlines, S&P 500 and Nasdaq 100.
Note that an overnight move in Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.
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The stock market rally started off strong but dropped high almost instantly. Although major indexes closed with solid to strong gains, it followed a volatile session.
The Dow Jones Industrial Average rose 1.1% in Tuesday’s stock market trading. The S&P 500 index rose 1.15 percent. The Nasdaq composite rose 0.9%. The small cap Russell 2000 gained 1.2%.
The 10-year Treasury yield fell 1 basis point to 4% after falling to 3.97% soon after the market opened, then rose to 4.07%, just below the 14-year high.
US crude oil prices fell 3.1% to $82.82 a barrel amid reports that the Biden administration will extract more crude from the Strategic Petroleum Reserve. Natural gas futures fell 4.2% after falling 7% on Monday.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) was up 1.15%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 1.3%. The iShares Extended Technology-Software Industry ETF (IGV) rose 1.7%. The VanEck Vectors Semiconductor ETF (SMH) closed just above the breakeven point. ASML and LRCX stock are important SMH holdings.
The SPDR S&P Metals & Mining ETF (XME) was up 1.3% and the Global X US Infrastructure Development ETF (PAVE) added 2%. U.S. Global Jets ETF (JETS), United Airlines and DAL stock were up 2.5% with key components.
The SPDR S&P Homebuilders ETF (XHB) was up 2.3%. The Energy Select SPDR ETF (XLE) was up 0.9% and the Financial Select SPDR ETF (XLF) was up 1.6%. The Healthcare Selected Sector SPDR Fund (XLV) rose 0.6%.
Reflecting the shares with more speculative stories, the ARK Innovation ETF (ARKK) gained 1.6% and the ARK Genomics ETF (ARKG) gained 1.3%. Tesla stock is the largest holding among Ark Invest’s ETFs.
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Apple iPhone Concerns
Apple is cutting production of the iPhone 14 Plus just two weeks after the big-screen phone went on sale. This is according to The Information, citing sources. This follows previous reports that the Dow Jones tech giant is reining in overall iPhone 14 production. However, the 14 Plus hasn’t been seen as a major seller, with investors focusing on the more expensive iPhone 14 Pro versions.
The iPhone Plus report came as Apple introduced the new iPads.
Apple earnings will be paid out in October. 27.
Apple shares rose 0.9% to 143.75 points on Tuesday. However, shares rose as much as 3.1% on the day and broke the 21-day mark.
Netflix earnings beat estimates as subscribers increased by 2.41 million. Analyst opinions for about 1 million. And the tech giant sees subscribers increase by 4.5 million in Q4. The streaming giant will launch an ad-supported tier on November 3 for $6.99 per month. Netflix is also stepping up efforts to block password sharing in hopes of increasing its subscriber base.
But the days of easy subscriber growth are long gone. It’s a tough and expensive battle to retain existing customers, as Disney+, Apple+, HBO Max, Paramount+ and many more fight for viewers’ eyes and wallets.
NFLX stock rose 14% to nearly 274 in expanded trading. Shares were down 1.7% to 240.86 on Tuesday after rising 6.7% on Monday. According to MarketSmith analysis, Netflix stock has a buy point of 252.09 from the bottom. It should clear this level easily, but could test the long-standing 200-day streak.
Disney stock climbed modestly overnight. DIS stock rose 1.2% on Tuesday to stay below the 50-day and 200-day lines.
Roku stock rose solidly in expanded action. Shares have fallen since hitting a record 490.76 in July 2021, but were up 1.3% on Tuesday.
Tesla earnings will be announced late Wednesday. Analysts expect Tesla earnings to increase by 76%. a year ago, revenue rose strongly.
However, amid increasing production and decreasing savings, demand concerns are growing. Therefore, investors will be eager to comment on Tesla deliveries in Q4 and next year.
Tesla stock rose 0.4% to 200.19 on Tuesday after climbing as high as 229.75 in the morning. Tesla stock hit a 15-month low on Friday.
CEO Elon Musk may have an extra reason to be bullish on Wednesday night’s earnings call. Assuming the Twitter deal is closed, perhaps by October. On September 28, Musk may need to sell additional Tesla shares in the coming days to help pay for the $44 billion buyout.
Twitter locked down working stock accounts on Tuesday “in anticipation” of a deal, Bloomberg reported. Twitter stock rose just over 2% to 51.78.
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Market Rally Analysis
At Tuesday’s open, the S&P 500 and Nasdaq composite broke above their 21-day moving averages, joining the Dow Jones and Russell 2000. All major indices also climbed above Friday’s highs, despite huge gains on Monday after all.
Major indices slashed or erased gains as Treasury yields approached recent highs, bounced back a bit, and then pulled back again on the Apple iPhone news. The Nasdaq is well below the 21-day line, while the S&P 500 is just above this level but closed in the lower half of the range.
At one point, major indices were signaling a possible follow-up day to confirm the new uptrend. The Dow and S&P 500 closed with solid gains in volume above Monday’s level. But the gains weren’t strong enough to qualify as a follow-up. Closing session highs didn’t exactly signal strength.
There can be an FTD at any time. A confirmed market rally may be a positive signal, but not a guarantee. Even if it works, there could be another bear market rally facing resistance on the 50-day or 200-day lines.
Booz Allen Hamilton (BAH) closed close to session highs, crossing a flat-bottomed buy point. The relative strength line for BAH stock is at a new high, but the consulting firm’s growth has been rather modest.
Aehr Test Systems (AEHR) cleared a high volume 17.80 entry. The RS line for AEHR stock is at its 2022 peak. However, the shares are well above the 50-day line and are prone to major volatility.
DoubleVerify (DV) immediately hit a buy point, arguably outpacing slightly lower entries before cutting gains.
Meanwhile, shock wave medical (SWAV) and wolf speed (WOLF) encountered resistance around the 50-day lines.
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what to do now
This is an interesting time. The market rally attempt has made some progress, but the action has been choppy with both resistance and support at the 21-day line. Stocks are hard to buy because if you buy strong, gains can quickly disappear if the market bounces back from intraday highs.
So, if you make any moves, step slowly and be prepared to exit quickly.
There’s nothing wrong with expecting more market clarity while remaining entirely or almost entirely in cash.
But be busy with the market while you wait. And work on these watchlists. Stocks can jump in and out of position quickly in the current climate, so make sure your watchlists are up to date. When browsing a broader list of stocks that exhibit strong relative strength, focus on a specific set of tradable or tradable stocks.
Read the Big Picture daily to stay in tune with the market direction and leading stocks and industries.
Please follow Ed Carson on Twitter at: @IBD_ECarson for stock market updates and more.
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