Dow Jones futures rose slightly early Wednesday, along with S&P 500 and Nasdaq futures, with the July CPI inflation report on tap before the open. Elon Musk sold $6.9 billion of Tesla stock in the last three trading sessions, citing his potential takeover on Twitter. Shares of Tesla and Twitter rose
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The stock market rally lost ground, retreating from resistance levels as Micron Technology (MU) triggered a selloff in chip stocks.
On the positive side, several natural gas-related stocks showed strength, including Range resources (PRC), EQT Corp. (EQT) and The equinox (EQNR), all of which broke downtrends on handles, sparking potential early entries. However, RRC stock was the only one moving on OK volume. LNG ( GLNG ) clears some short-term levels, still near its 50-day line, but earnings are expected on Thursday.
Apple Shares ( AAPL ) and Microsoft rose on Tuesday.
Elon Musk sells Tesla shares
Tesla ( TSLA ) CEO Elon Musk sold 7.9 million shares worth $6.9 billion, according to SEC filings released Tuesday night.
On the evening of August 4, Tesla held its annual shareholder meeting, with Musk promoting the EV giant’s growth prospects. Shareholders approved a 3-for-1 stock split, which will take place on August 25.
The next day, Friday, August 5, Musk sold 3.3 million shares. On Monday, he sold 1.58 million shares, followed by 3.04 million on Tuesday.
On Friday, TSLA shares fell 6.6% below its 200-day line. Shares of Tesla tried to recapture its 200-day line on Monday, but pared big intraday gains to just 0.8%. On Tuesday, the stock fell 2.4% to 850.
Musk said in a Tweet that once again he is done selling shares for now. He said he was selling shares to avoid emergency stock sales if he had to go through with $44 billion, $54.20 a share. I tweet receiving (TWTR). He said he would buy Tesla stock if there was no deal with Twitter.
Shares of TSLA rose 2% before the open. Shares of Twitter rose 3.5% to over 44, continuing to trend higher on the growing possibility that the deal will go through. Wedbush analyst Dan Ives raised his price target on TWTR to 50 from 30, with the deal likely to eventually go ahead. Musk and Twitter will face off in Delaware’s Court of Chancery in October.
Meanwhile, on Tuesday, China Li Auto (LI) sold a lot. Shares of Li Auto fell 7%, undercutting the recent consolidation and approaching the 200-day high. Li Auto had only 800 insurance registrations from August 1-7, down 74% compared to the last week of July, according to a Chinese blog report. Li Auto’s earnings are on August 15.
Among Li’s EV China rivals, Neo (NIO) fell 5% on Tuesday, stabbing through its 50-day line, while the giant BYD ( BYDDF ) lost 2.5%, settling below its 50-day high. Both the Nio and BYD saw roughly 25% declines from the last week of July, a more normal decline after the drop in delivery at the end of the month.
BYD has started supplying Blade batteries to Tesla at the latter’s factory in the Berlin area, according to CnEVPost.com, citing local media.
Main earnings
centigrade (CELH) and Exelixis ( EXEL ) headlined notable gains after the close, along with declining growth Coinbase (currency), Roblox (RBLX) and Trading desk (TTD).
Shares of CELH rose slightly early Wednesday after initially retreating. Triple-digit Celsius earnings EPS and sales growth led views in the second quarter. But gross margins came off slightly. Shares of Celsius fell 7.8% on Tuesday to 93.38 as they retreated from an Aug. 2 high of 109.74. A huge three-month run was capped by an early August jump in a PepsiCo (PEP) investment and distribution agreement.
EXEL shares rose modestly in extended trading after Exelixis earnings beat expectations. Shares were down 2.3% at 21.06 on Tuesday. Exelixis stock is working on a messy cup-with-handle base with a 22.57 buy point. Investors can use a downward sloping trend line to find a slightly lower entry.
COIN stock fell solidly early Wednesday after Coinbase posted revenue below expectations and a loss that was much worse than expected. The cryptocurrency exchange fell nearly 11% to 87.68 on Tuesday. Coinbase stock had doubled since late June, but is well below its April 2021 opening day high of 429.54.
Cryptocurrency prices and news
Shares of RBLX fell in extended action after Roblox reported a bigger-than-expected loss while revenue fell. Bookings and user growth were also lacking. Shares fell 3.35% to 47.26 on Tuesday. RBLX stock had more than doubled since late May. But shares of the video game platform are well below their November 2021 peak of 141.60.
TTD shares rose as the Trade Desk met EPS views but beat revenue views and gave bullish guidance. The Commerce stock fell 0.9% to 54.50 on Tuesday, but is up from a 52-week low of 39 on July 14.
EQNR shares are on the IBD Leaderboard watch list. RRC stock is on SwingTrader and is Tuesday’s IBD Stock of the Day. Microsoft (MSFT) is a Long-Term IBD Leader. Shares of CELH and Equinor are in the IBD 50.
The video embedded in the article discussed Tuesday’s market action and analyzed RRC stock, Costco wholesale (COST) and Hyatt (H).
Dow Jones Futures Today
Dow Jones futures rose 0.3% against fair value. S&P 500 futures advanced 0.4% and Nasdaq 100 futures rose 0.55%.
U.S. crude oil prices fell more than 1%, below $90 a barrel.
The 10-year Treasury yield fell 1 basis point to 2.79%.
The Labor Department releases its July CPI inflation report at 8:30 a.m. ET. Inflation data is sure to have a big impact on Dow earnings and Treasury yields.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD’s experts as they analyze actionable stocks in the stock market roundup on IBD Live
Inflation Report
Economists expect July’s consumer price index to show a 0.2% increase from June, following last month’s 1.3% increase. The CPI inflation rate is expected to ease to 8.7% from June’s 40-year high of 9.1%. This reflects the drop in petrol prices, which will also provide some relief in August.
But core CPI, which excludes food and energy, should show a 0.5% gain after June’s 0.7% advance. Core inflation is seen rising to 6.1% from 5.9%.
Markets give a 67.5% chance of another 75-basis-point Fed rate hike on September 21, followed by quarterly moves in November and December.
Rally Marketing
The stock market rallied on Tuesday, led by chip stocks.
Micron warned of revenue and capital spending cuts. This came the day after Nvidia (NVDA) lowered sales forecasts. MU shares fell 3.7% while chip stocks were big losers on Tuesday, particularly makers of memory-focused devices such as Lam Research (LRCX).
Apple shares rose 5 cents to 164.92, continuing to trade firmly above its 200-day line. Apple’s relative power line is now at a new level. Microsoft rose 0.7% to 282.30, still below its 200-day low.
The Dow Jones Industrial Average fell 0.2% in Tuesday’s stock market trading. The S&P 500 lost 0.4%. The Nasdaq composite gave up 1.2%. The small-cap Russell 2000 fell 1.3%.
U.S. crude oil prices turned lower, closing up 0.3% at $90.50 a barrel. Natural gas prices increased by 3.2%.
The 10-year Treasury yield rose 3 basis points to 2.8%. The 2-year Treasury yield rose 5 basis points to 3.27%. The yield curve has inverted from the 1-year to the 10-year, often seen as a recession warning.
ETFs
Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) fell 2%, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) fell 0.4%. The iShares Expanded Tech-Software Sector ETF ( IGV ) gave up 1.5%, with MSFT shares topping the IGV. VanEck Vectors Semiconductor ETF ( SMH ) fell 4.2%. MU stock is an obvious SMH holding.
Reflecting the more speculative story stocks, the ARK Innovation ETF ( ARKK ) slid 5.45% and the ARK Genomics ETF ( ARKG ) 5.4%. Tesla shares remain a large holding in all of Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF ( XME ) rose 0.8% and the Global X US Infrastructure Development ETF ( PAVE ) fell 0.5%. The US Global Jets ETF (JETS) fell 1.7%. The SPDR S&P Homebuilders ETF ( XHB ) fell 3.3%. The Energy Select SPDR ETF (XLE) rose 1.8% and the Financial Select SPDR ETF (XLF) rose 0.5%. The Healthcare Select Sector SPDR Fund ( XLV ) fell 0.3%.
The five best Chinese stocks to watch right now
Market Rally Analysis
Stock market gains retreated on Tuesday as major indexes pulled back from various resistance levels.
The Nasdaq, which erased strong morning gains on Monday, led Tuesday’s slide. It is supported by a trend line going back to January, but is still above the highs of early June. The Russell 2000, which cleared its June highs on Monday, is back in that resistance zone. The S&P 500 and Dow Jones, which tested those levels on Monday morning, are also pulling back.
A pause in market growth around current levels could be positive. Many top stocks that have come up on the right side of the bases could use stronger handles and action.
Major indices may also begin a sharper pullback. This does not necessarily mean lowering the market low. It is also possible for the market to pull back, then fall into a tricky range for a significant period.
Selling in the semi-finals is a bad sign. Chip stocks usually play an important role in any significant market rally. Chips’ recent progress had been encouraging.
On the other hand, aerospace/defense, energy and health insurers held up or continued to advance. Biotech broadly retreated modestly after strong gains.
Wednesday’s inflation report will provide a short-term catalyst, but stocks’ opening won’t necessarily be how they close.
Time the market with IBD’s ETF Market Strategy
What should you do now?
The growth of the market has hit some resistance. This may be temporary or the beginning of a larger withdrawal. Either way, investors may want to reduce exposure and take some partial profits. If it’s just a pause, new buying opportunities will appear soon.
There are several buying opportunities in natural gas plays, such as Range Resources. If you inhale, it should probably be in the context of not increasing your net exposure. And be resourceful. Energy prices and market conditions can change quickly.
Keep working on the watch lists. This is a confirmed bullish market with a number of stocks trying to rise. You want to be ready.
Read the Big Picture daily to stay in sync with market direction and key stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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