Dow Jones futures rose solidly early Wednesday, along with S&P 500 futures and Nasdaq futures. Micron Technology (MU) and Lululemon Athletica (LULU) headlined earnings overnight.
The stock market rally attempt had slim losses Tuesday, but the major indexes held key levels. Megacaps such as Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Tesla (TSLA) and Google parent Alphabet (GOOGL) retreated Tuesday but generally look healthy. Chip stocks slumped but came off lows.
Micron Earnings
MU stock rose 3% in premarket trade. The memory-chip giant reported a wider-than-expected loss and a 53% revenue drop that also missed views. Micron took an inventory write-down of more than $1.4 billion and gave weak Q3 guidance. But CEO Sanjay Mehrotra said in the earnings statement that “customer inventories have reduced in several end markets, and we see gradually improving supply-demand balance in the months ahead.” He added that the chipmaker is “close to a transition to sequential revenue growth.”
Chip investors have been betting on a recovery when it’s not clear that’s on the horizon yet. Micron tends to see industry cycle turns early.
Micron stock closed down 0.85% to 59.28, but rebounded to hold the 50-day line. MU stock has a 64.44 buy point from a bottoming base. But investors could use 61.88 as an early entry from a possible handle.
Lululemon Earnings
Lululemon earnings jumped nearly 31% while revenue rose 30% to $2.8 billion. Both slightly accelerated from Q3.
LULU stock gapped up 15% early Wednesday. Shares rose 1% to 320.32 on Tuesday. Lululemon stock recently reclaimed its 50-day and 200-day lines. LULU has a consolidation going back to early December with a 386.80 buy point.
Progress Software (PRGS) and egg producer Cal-Maine (CALM) also reported.
Cal-Maine climbed 2.5% on a 717% profit spike. PRGS stock fell nearly 5% on weak guidance.
META stock is on IBD Leaderboard and SwingTrader. Microsoft and Google stock are IBD Long-Term Leaders.
The video embedded in the article discusses Tuesday’s market action and analyzes Microsoft stock, Shift4 Payments (FOUR) and Skyline Champion (SKY).
Dow Jones Futures Today
Dow Jones futures rose 0.8% vs. fair value. S&P 500 futures climbed 0.9%. Nasdaq 100 futures popped 0.95%.
Crude oil rose slightly.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally Attempt
The stock market rally attempt declined slightly Tuesday, with the major indexes paring midafternoon losses.
The Dow Jones Industrial Average closed down 0.1% in Tuesday’s stock market trading. The S&P 500 index slipped 0.2%. The Nasdaq composite declined 0.45%. The small-cap Russell 2000 fell less than 0.1%.
Financial regulators testified Tuesday on the Silicon Valley Bank and Signature Bank failures. Lawmakers criticized banks, regulators and one another, suggesting that they won’t be pushing new measures to support banks right now, such as wider deposit insurance.
First Republic Bank (FRC), among the most-embattled regional banks, slumped 2.3%. But FRC stock came well off intraday lows near the close. First Republic is no longer for sale, Fox Business reporter Charles Gasparino tweeted Tuesday afternoon, citing sources. It could be a sign of strength that First Republic no longer needs a rescue. FRC stock popped nearly 12% on Monday but is down 89% for the month.
U.S. crude oil prices edged up 0.5% to $73.20 a barrel.
The 10-year Treasury yield rose 4 basis points to 3.57%. The two-year Treasury yield jumped 10 basis points to 4.06%.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) lost 1.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) dipped 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.4%, with MSFT stock a core holding. The VanEck Vectors Semiconductor ETF (SMH) slumped 0.7% but was well off intraday lows. MU stock is a big SMH holding.
Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) fell 1.5% and ARK Genomics ETF (ARKG) shed 2.2%. TSLA stock is a major holding across Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF (XME) climbed 1.1% and the Global X U.S. Infrastructure Development ETF (PAVE) gained 0.75%. U.S. Global Jets (JETS) ascended 0.9%. SPDR S&P Homebuilders ETF (XHB) rose 0.6%. The Energy Select SPDR ETF (XLE) lost a fraction, and the Health Care Select Sector SPDR Fund (XLV) dropped 0.6%
The Financial Select SPDR ETF (XLF) was just below break-even. The SPDR S&P Regional Banking ETF (KRE) dipped 0.1%. FRC stock is one of many KRE components.
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Megacap Stocks
Apple stock and Microsoft both dipped 0.4%, after the Dow tech giants declined more than 1% Monday. Apple is just above a buy point while MSFT stock is still below its entry. Both stocks’ retreats have come in light volume.
Google stock sank 1.4% to 101.03 after slumping 2.8% on Monday. Shares have undercut the 200-day line. However, GOOGL stock now has a proper handle. The cup-with-handle buy point is 106.69.
META stock fell 1.1% to 200.68 but is still holding above a 197.26 flat-base buy point, according to MarketSmith analysis.
Tesla stock slipped 1.4% to 189.19% after slashing Monday’s gain to 0.7%. Shares are holding the 50-day but below the 21-day and 10-week lines. TSLA stock is close to forging a bottoming base with a potential buy point of 217.75.
Market Rally Analysis
The stock market rally attempt lost ground, but the overall picture didn’t change much. The Nasdaq is holding above its 21-day and 50-day moving averages.
The S&P 500 is still between the 50-day and 200-day. The Dow Jones once again hit 21-day resistance but held its 200-day line. It was also an inside day after a relatively quiet Monday.
Megacap stocks such as Apple and Google are retreating this week after propping up the big-cap indexes for much of March.
Chip stocks were notable losers. Nvidia (NVDA), which is greatly extended, had only a slim decline, but many semiconductors trading around buy points lost 2%-4%.
Market breadth was so-so. Winners topped losers on the NYSE while lagging on the Nasdaq. Combined, winners just exceeded decliners.
The market rally attempt still hasn’t had a follow-through day to confirm the uptrend.
Homebuilders look strong, along with some building materials and housing-related retailers. Some software names are acting well, including MSFT stock but also several cybersecurity plays, among others. But market leadership is narrow.
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What To Do Now
A market rally attempt is still ongoing but hasn’t made a lot of headway. The stock market has been showing choppy action for several weeks. Certain areas have done well, but breadth has been poor.
If you’re getting into the right stocks, there have been opportunities to make gains. But many buying opportunities have fizzled. Some stocks make strong moves and then fall back. So staying nimble is key, exploiting early entries and taking profits quickly.
But overall exposure should be light. And there is nothing wrong with being mostly or entirely on the sidelines. Cash can be king, especially if it’s paying 4%.
Build your watchlists. Look for stocks near buy points but also names that are simply showing relative strength.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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