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Stocks Rebound, But Still Must Do This; Tesla Races Into Buy Area

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Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures.




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The stock market rebounded Tuesday, led by the Nasdaq as the 10-year Treasury yield backed off 16-year highs. Tesla (TSLA) made a bullish move Wednesday as the EV giant continues to shrug off bad news.

But the market rally attempt has not staged a follow-through day. Aside from the Nasdaq, Wednesday marked just day one of a rally attempt for the S&P 500 and Dow Jones. Stocks are clearly at the mercy of Treasury yields.

Along with Tesla, fellow Magnificent Seven stocks Meta Platforms (META) and Google parent Alphabet (GOOGL) continue to act well, trading around buy points. ANET stock and Synopsys (SNPS) rose for a key level., close to possible buy points.

TSLA stock joined IBD Leaderboard and SwingTrader on Wednesday. Arista Networks (ANET) and Meta Platforms are already on Leaderboard. SNPS stock is on IBD Long-Term Leaders. META stock, Arista Networks, Tesla and Synopsys are on the IBD 50. Arista Networks was Wednesday’s IBD Stock Of The Day.

Dow Jones Futures Today

Dow Jones futures edged lower vs. fair value. S&P 500 futures lost a fraction and Nasdaq 100 futures tilted higher.

The 10-year Treasury bond yield edged lower to 4.71%.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.


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Stock Market Rally

The stock market rally attempt stayed alive Wednesday, with the Nasdaq having a strong session.

The Dow Jones Industrial Average rose 0.4% in Wednesday’s stock market trading. The S&P 500 index climbed 0.8%, led by Tesla stock. The Nasdaq composite jumped 1.35%.

Market breadth was modestly positive after abysmal readings Wednesday.

The small-cap Russell 2000 closed essentially flat, erased solid intraday losses.

The Invesco S&P 500 Equal Weight ETF (RSP) rose 0.6% after hitting a fresh six-month low intraday.

The 10-year Treasury yield climbed nearly 7 basis points to 4.735%, but after soaring 23 basis points over the prior two days. The Treasury bond yield fell amid a weak ADP employment figure. The Labor Department’s August jobs report is due Friday morning.

U.S. crude oil prices tumbled 5.6% to $84.22 a barrel, after Energy Information Administration data showed a decline in U.S. crude stockpiles but an unexpected jump in gasoline supplies. Gasoline futures plunged 6.9%, extending a sharp drop from early August to the lowest level since December 2022.

The Nasdaq and S&P 500 advanced, but they were just inside days after Tuesday’s sell-off.

The Nasdaq, now six days into its stock market rally attempt, could stage a follow-through day at any time. Wednesday’s price gain was strong enough to qualify as an FTD, but Nasdaq volume fell vs. Tuesday.

The S&P 500 and Dow Jones, which undercut recent lows earlier this week, have just started new rally attempts.

A handful of tech stocks are holding up, along with a few other discounters. But most recent leading stocks and sectors are struggling. Energy stocks are tumbling with oil and gasoline prices.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) and VanEck Vectors Semiconductor ETF (SMH) rose 1.6%. SNPS stock is in IGV and SMH.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) bounced 1.5% and ARK Genomics ETF (ARKG) fell 0.8%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs.

SPDR S&P Metals & Mining ETF (XME) declined 0.9% and the Global X U.S. Infrastructure Development ETF (PAVE) gained 1%. U.S. Global Jets ETF (JETS) ascended 2%. SPDR S&P Homebuilders ETF (XHB) rebounded 1.45% The Energy Select SPDR ETF (XLE) tumbled 3.3% and the Health Care Select Sector SPDR Fund (XLV) picked up 0.4%.

The Industrial Select Sector SPDR Fund (XLI) edged up 0.3%.

The Financial Select SPDR ETF (XLF) advanced 0.7%.


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Tesla Stock

Tesla stock flashed an aggressive buy signal Wednesday. Shares jumped 5.9% to 261.16, moving above the 50-day line decisively in higher volume. A move above Wednesday’s high would offer another early entry from breaking the downtrend in the handle. TSLA stock has an official 278.98 buy point from a cup-with-handle base.

Bulls have shrugged off bad news, including a big drop in Q3 deliveries and a new, lower-priced base Model Y, pinning their hopes on an updated Model 3, the upcoming Cybertruck and speculative bets on self-driving, robots and more.

Meta Stock

Meta stock rose 1.5% to 305.58, back above the 50-day line, where it’s been trading tightly for several weeks. The consolidation buy point is 326.20, though investors could use 310.94 or 312.87 as early entries. The 310.94 entry could become an official handle buy point on a daily chart after Thursday, but investors may still prefer 312.87.

The relative strength line, the blue line in the charts provided, is at a record high. That reflecting Meta stock’s outperformance vs. the S&P 500. The RS line hitting a new high before the stock breaks out is especially bullish.


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Google Stock

Google stock climbed 2.1% to 135.24, rebounding from the 50-day line and retaking a 133.74 shelf entry. The RS line for GOOGL stock is the highest since early 2022, according to MarketSmith analysis.

Arista Stock

ANET stock edged up 0.6% to 186.03, nudging up from the 21-day line and just above the 50-day in light volume. Arista stock should have a flat base after this week with a 198.70 buy point. Investors could use Monday’s high of 189.90 as an early entry for the networking giant. The RS line for ANET stock is near a high.

Synopsys Stock

SNPS stock gained 2.35% to 461.32, rebounding from the 50-day in a low-volume, inside day for the electronics-design software leader. Investors could use 471.15 as a buy point from a flat base going back to the end of May. The RS line is at record highs.


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What To Do Now

A mixed market session, with even the Nasdaq staging a low-volume, inside day, is nothing to get excited over. The stock market remains at the mercy of the 10-year Treasury yield, which is still in a near-vertical ascent.

Tesla and Google stock offering buying opportunities Wednesday. If the market rally revives from here, those entries stand a decent chance of working. But if the market falters, then these names will likely fall back, even if they outperform the S&P 500.

Remember, in a market correction, relative winners can still be absolute losers.

Still, investors should keep looking for those relative winners. Meta stock, Arista Networks and Synopsys could be leaders in the next uptrend.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on X/Twitter at @IBD_ECarson and Threads at @edcarson1971 for stock market updates and more.

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