Futures for Dow Jones, S&P 500, and Nasdaq all leaned lower after hours.
The stock market experienced significant increases on Tuesday following a varied session on Monday. The Nasdaq and S&P 500 recovered from close to their 21-day exponential moving averages, including megacaps Tesla (TSLA) and Nvidia (NVDA). The overall market breadth was robust.
United Airlines (UAL), American Airlines (AAL), FedEx (FDX), Amkor Technology (AMKR), and On Holding (ONON) have all surpassed their buy points.
Tesla, On Holding, and Nvidia stocks are listed on the IBD Leaderboard, whereas UAL stock is on the Leaderboard watchlist. Both United Airlines and ONON stocks are featured on the IBD 50. Tesla stock is also included in the IBD Big Cap 20. United Airlines was recognized as Tuesday's IBD Stock Of The Day.
Has the market pullback ended or is it merely a one-day anomaly? This is a significant query. Investors may seize buying opportunities with caution, but should be prepared to withdraw if their positions or the overall market decline once more.
The video included in this article examined the robust market rally on Tuesday and provided an analysis of FDX stock, United Airlines, and Datadog (DDOG).
In related news, Spirit AeroSystems (SPR) has reportedly reached a preliminary agreement with its striking workers, according to a Tuesday night report by CNBC. Spirit Aero is known for manufacturing 737 fuselages for Boeing (BA). Following the news, SPR's stock experienced a slight increase in after-hours trading, while BA's stock also saw a marginal rise.
Today's Dow Jones Futures
Futures for Dow Jones slightly declined against fair value, despite a minor lift from Boeing stock. Futures for both S&P 500 and Nasdaq 100 dropped by 0.1%.
Recall the overnight activity in the Dow futures stock market session.
Rise in the Stock Market
The stock market rally experienced a robust, widespread surge. The Dow Jones Industrial Average increased by 0.6% in Tuesday's stock market transactions. The S&P 500 index ascended by 1.1%. The Nasdaq composite soared by 1.65%. The small-cap Russell 2000 made a leap of 1.5%.
The prices of U.S. crude oil dropped by 2.4% to $67.70 per barrel.
The 10-year Treasury yield increased by 5 basis points to 3.77%, maintaining a range that has been consistent since the end of May.
Exchange Traded Funds
The Innovator IBD 50 ETF (FFTY), a growth ETF, surged by 2.6%, while the Innovator IBD Breakout Opportunities ETF (BOUT) saw a 2.5% increase. The iShares Expanded Tech-Software Sector ETF (IGV) also experienced a rise, climbing close to 2%.
The VanEck Vectors Semiconductor ETF (SMH) experienced a 3.2% increase. NVDA stock, which is SMH's leading holding, saw a 3.1% rise, recovering from a close proximity to the 21-day line. However, this was an inside day following a 3.7% decrease on Monday.
The ARK Innovation ETF (ARKK) and ARK Genomics ETF (ARKG), which are known for their speculative story stocks, saw increases of 3.4% and 0.7% respectively. Tesla, the top component in Ark Invest's ETFs, saw its stock rise by 3.8% to 250.21 on Tuesday, recovering from a 6.1% drop on Monday. The stock, which has been consolidating since September, potentially has a buy point at 274.75.
The SPDR S&P Metals & Mining ETF (XME) rose by 1.3%, while the Global X U.S. Infrastructure Development ETF (PAVE) increased by 1.7%. The U.S. Global Jets ETF (JETS) surged by 4.4%, largely due to the performances of UAL stock and American Airlines. The SPDR S&P Homebuilders ETF (XHB) also saw an increase, stepping up by 2.9%. Meanwhile, the Energy Select SPDR ETF (XLE) saw a slight increase of 0.2%, and the Health Care Select Sector SPDR Fund (XLV) experienced a minor decrease of 0.2%.
The Industrial Select Sector SPDR Fund (XLI) rose by 1.2%.
XLF KRE rebounded by 3.2%.
Stocks in Purchase Areas
UAL shares surged 5.1% to 56.03, surpassing a 54.05 cup-with-handle purchase point. AAL shares soared 5.5% to 17.35, exceeding a 16.72 entry from its own cup with handle, as per MarketSmith's analysis. Both United and American's stocks increased following Delta Air Lines' (DAL) announcement of raised full-year guidance. DAL shares, which were already extended, jumped 6.8%.
The FDX stock surged by 5% to 246.76, surpassing a 235.81 flat-base purchase point. FedEx had briefly exceeded that threshold in mid-June, but then dropped due to inconsistent earnings. However, shares swiftly bounced back from the 50-day line.
The stock of AMKR soared by 11.4% to 29.37 in a large volume, comfortably surpassing a 27.20 purchase point. The chip-equipment manufacturer is now significantly beyond the 5% purchase zone, which extends to 28.56.
The stock of ONON increased by 2.2% to 31.30, remaining within the range of its 50-day line and a trendline. The premium athletic shoe manufacturer surpassed these crucial levels on Monday. During Tuesday's intraday trading, the shares briefly exceeded a short-term high of 31.45.
Analysis of Market Rally
The surge in the stock market was evidently optimistic. The indexes bounced back at a crucial short-term point with increased volume, displaying robust breadth and several stocks indicating buying signals.
The Nasdaq and S&P 500 recovered from their positions near their 21-day lines. At the same time, the Dow Jones and Russell 2000 also bounced back to that crucial level.
The Invesco S&P 500 Equal Weight ETF (RSP) regained its 21-day position on Monday and surged by 1.2% on Tuesday. This significant increase clearly broke the recent downtrend and exceeded the 10-day line.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) only experienced a slight dip of 0.2% on Monday, but it rebounded significantly with a 1.7% increase on Tuesday, also recovering from the 21-day low.
On Tuesday, advancers effortlessly outperformed decliners.
Airlines and travel sectors emerged as major victors, however, sectors like chips, software, industrials, transports, and the extensive housing sector also displayed positive trends.
While biotechs and some sectors are facing challenges, energy continues to be a weak area.
The market rally may have embarked on a new phase starting Tuesday. The Nasdaq followed suit with a subsequent follow-through day. However, it hasn't completely overcome its recent slump and is slightly below its 10-day line.
Additionally, following the surge on Tuesday, the Nasdaq is now 6.5% higher than the 50-day moving average, with the Nasdaq 100 increasing by 7.5%. It wouldn't require much for these to reach extreme levels once more.
What to Do Next
The positive indications from the stock market rally could have prompted investors to seek areas to increase their exposure. However, there remains a risk that the pullback may not be over and that the buying opportunities presented on Tuesday may rapidly decline. Waiting for a clear sign that the pullback has ended, like the Nasdaq reaching a new peak, would mean it's too late to pursue stocks.
One alternative is to acquire smaller stakes in new purchases. Be prepared to act swiftly and contemplate securing partial profits quickly to ensure some earnings.
Try to make purchases as near as possible to entry points. This will offer some safeguard against fluctuations in stock and market reversals.
Ensure your watchlists are prepared. A widespread progression with varied leadership makes it more challenging to monitor all the potential stocks. However, this is a beneficial issue to encounter.
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