The Nasdaq and S&P 500 posted their best gains since March as Apple stock, Nvidia (NVDA), Tesla (TSLA), Microsoft (MSFT) et Google parent Alphabet (GOOGL) helped lead the advance. Apple (AAPL) shares Tesla and Nvidia registered the largest percentage gains, but MSFT and Google shares offered entries.
It was a large-scale breakthrough far beyond the titans of technology. The names of energy have been among the top performers. Companies related to shipping were strong. Retail, financial and housing-related games posted solid gains.
While aggressive traders might choose to take pilot positions, the attempted stock rally has yet to be confirmed.
Earnings after hours
After closing, Toll brothers (To land SentinelOne (S) declared income.
Toll Brothers profits far exceeded expectations, a positive sign for the now leading real estate sector. TOL stock rose 1% in extended trading. Shares of the luxury automaker edged up 0.55% to 71.24 on Tuesday, slightly higher from a buy point of 67.43.
SentinelOne stock fell overnight despite third quarter results and better-than-expected earnings forecasts. S stock jumped 13% on Tuesday, but the cybersecurity firm plunged from its highs in early November.
Also late move: technical services company Epam Systems (EPAM) jumped on the announcement that it would join the S&P 500. EPAM stock is expected to rebound above its 50-day moving average and cross a trendline.
Tesla, Google, Microsoft and Nvidia stocks are listed on the IBD rankings. Google stock is on SwingTrader. The stocks of Google, Epam Systems and Microsoft are among the long-term leaders IBD. Nvidia and Tesla shares are on the IBD 50. GOOGL stock was also the IBD stock of the day.
The video embedded in this article discussed Tuesday’s positive market action and analyzed Silicon movement (SIMO), community (CIVI) and Google actions.
Dow Jones Futures Today
Dow Jones futures were 0.2% above fair value. S&P 500 futures were up 0.2% and Nasdaq 100 futures were up 0.3%.
Keep in mind that overnight trading in futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades in the next regular trading session.
Join the IBD experts as they analyze the exploitable stocks in the stock market rally on IBD Live
Attempted stock market rally
The stock rally followed Monday’s rebound with even stronger gains.
The Dow Jones Industrial Average climbed 1.4% in stock trading on Tuesday. The S&P 500 Index climbed 2.1%. The Nasdaq composite jumped 3%. Small cap Russell 2000 gained 2.3%.
Apple shares rose 3.5% to an all-time high. The tech titan Dow Jones is extended from any point of purchase. Nvidia stock jumped 8% after rebounding just above its 10-week line on Monday. But stocks are now 16% above their 10 week mark.
Tesla stock jumped 4.2% after surviving a 50-day line test on Monday. But the electric vehicle giant is still below its 21-day line and possible trendlines. The China Passenger Car Association will publish Tesla’s sales and exports in China on Wednesday morning, as well as overall sales of electric vehicles and automobiles in the industry as a whole.
Crude oil futures rose 3.7% to $ 72.05 a barrel after jumping 5% on Monday. The 10-year Treasury yield climbed 5 basis points to 1.48%. The two-year Treasury yield also gained 5 basis points to 0.69%, the highest since March 2020.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) climbed 4.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 2.8%. The iShares Expanded Tech-Software Sector (IGV) ETF rose 3.8%. The MSFT stock is a major component of the IGV. The VanEck Vectors Semiconductor (SMH) ETF jumped 4.85%. The NVDA share is a key stake of SMH.
The SPDR S&P Metals & Mining ETF (XME) rose 2.2% and the Global X US Infrastructure Development ETF (PAVE) rose 1.75%. The US Global Jets ETF (JETS) edged up 0.05%. The SPDR S&P Homebuilders ETF (XHB) rose 1.3%. The Energy Select SPDR ETF (XLE) rose 2.3% and the Financial Select SPDR ETF (XLF) rose 1.8%.
Reflecting more speculative historical stocks, ARK Innovation ETF (ARKK) rose 5.4% and ARK Genomics ETF (ARKG) rose 7.7%, after both hitting 52-week lows recently. Tesla shares are number 1 among ARK Invest ETFs.
Five best Chinese stocks to watch right now
Google stock rose 1.9% to 2,945.39, bouncing off its 50-day moving average, erasing its 21-day line and breaking a short trendline. A 50 day line bounce can be a good time to buy a long term leader.
GOOGL stock also recovered the former flat-based buy point of 2,925.17. It’s unclear whether investors should focus too much on this entry yet, but it’s a good sign.
Finally, Google stock has a tight three-week pattern with an entry of 3,019.43.
Microsoft stock rose 2.7% to 334.92, breaking a short bearish trend and rising above its 21-day line. It comes a day after his 50-day / 10-week lines rebounded. At 3.3% above its 10 week line, investors may choose to take a position in MSFT stock.
Analysis of the stock market rally
After Monday’s strong session, the Nasdaq posted its best percentage gain in nine months, topping its 50-day moving average and 21-day line. So, is the market correction over? Not so fast. Historically, some of the best days in the market have been corrections or bear markets.
This is still only the second day of an attempted stock rally on the S&P 500 and the Nasdaq. It was the fourth day of an attempted rally on the Dow Jones. The Dow’s price gain was strong enough for a tracking day to confirm the new rally, but NYSE volume fell from Monday. So Tuesday was not a Dow Jones tracking day.
The volume also fell on the Nasdaq.
It was still a positive session. The winners easily overtook the losers for a second straight session. New highs prevailed over new lows, especially on the NYSE.
The S&P 500, after regaining its 50-day line on Monday, broke above its 21-day line on Tuesday and broke a downtrend. The Dow Jones climbed above its 50 day and trendline. The Russell 2000 has rallied to its 200-day line.
As the indices suggest, the market posted widespread gains.
Home builders continue to do well. The 10-year Treasury yield, which isn’t rising much, probably helped. The energy kept running. Shipping companies and trucking companies have done well. Many chip and software names have seen huge gains, but many of those graphics look damaged.
Even though a small study has suggested that the Covid variant partially escapes the Pfizer coronavirus vaccine, investors are increasingly convinced that the omicron variant is not a serious threat. It’s bullish for energy stocks. This should be good news for travel stocks, although they closed mixed after Monday’s rebound. If omicron isn’t going to derail the economic recovery, the Federal Reserve has signaled it could speed up bond reduction, perhaps as early as next week’s policy meeting.
Ultimately, the stock market is going to do what it is going to do.
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What to do now
If you’ve added some exposure over the past couple of sessions, you’re probably in these positions. But be prepared to resize quickly. There’s a reason IBD is looking for a follow-up day to confirm a new rally attempt. After a market sell off, it’s no surprise to see stocks rebound for a day or two, often powerfully.
Investors could start to test the rally attempt. One argument for tiptoeing into a name like Microsoft or Google stock is that they’re unlikely to suddenly dive 5%, 10% or more. There is nothing wrong with standing right now either.
You want to see real evidence of institutional support for a new rally before you make a massive commitment. If the stock rally ends with a tracking day and continues for several weeks, investors will have plenty of opportunities.
Read The Big Picture every day to stay in tune with the market direction and the major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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