Dow Jones futures leaned further over Tuesday night, along with S&P 500 futures and Nasdaq futures, as weak Chinese economic data offset a late momentum with the repurchase of Microsoft shares. Tuesday’s stock rally reopened higher, but faded and continued a recent bearish trend. apple (AAPL) fell when it unveiled the iPhone 13 and other new products.
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Microsoft (MSFT) announced on Tuesday afternoon a quarterly rise of 11% in the dividend to 62 cents per share. The tech giant also announced a $ 60 billion share repurchase program for Microsoft. MSFT shares rose 1% in night trading.
Technology giants and chip stocks hold up reasonably well. MSFT shares, Applied Materials (AMAT), Integrity (ENTG), KLA Corp. (KLAC) i Advanced micro devices (AMD) is worth seeing. Microsoft, Applied Materials and AMD have tried to jump out of their 50- or 10-week lines. Shares ENTG and KLA cleared buying points, at least intraday, after intermittent first entries.
But investors should primarily look at, not buy, intriguing stocks as the market rally recedes.
The shares of Microsoft and Apple are in the IBD classification. MSFT shares are long-term IBD leaders. AMAT shares were the shares of IBD on Tuesday. The ENTG shares were Friday’s shares.
The video included in this article analyzed market action and reviewed it Outdoor decks (DECK), shares of Microsoft and AMD.
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Dow Jones Futures Today
Dow Jones futures exceeded 0.1% of fair value. The S&P 500 and Nasdaq 100 futures were up around 0.1%.
Microsoft offers a slight rise in the Dow Jones, S&P 500 and Nasdaq composite, but the Dow futures briefly erased the modest gains from weak Chinese economic reports.
Chinese retail sales rose just 2.5% from a year earlier, well below July’s 7% and 8.5% estimates. Industrial production rose 5.3%, losing views by 5.8% and slowing from 6.4% in July. The Chinese economy has been pressured amid Beijing’s crackdown on private enterprise and closures in response to several Covid outbreaks.
Earlier Wednesday, U.S. investors will receive the September Empire State Manufacturing Index and the August Industrial Production Report.
Remember that overnight action on Dow futures and elsewhere does not necessarily translate into real trades at the next regular stock market session.
Join IBD experts as they analyze the actions that can be taken at the stock market rally on IBD Live
Stock market rally
The stock market rally opened after colder-than-expected consumer inflation data. But the first modest gains did not last.
The Dow Jones industrial average sank 0.8% in the stock market on Tuesday. The S&P 500 index fell 0.6%. The Nasdaq compound fell 0.45%. The small Russell 2000 chapter fell 1.3%.
The Nasdaq has fallen in five consecutive sessions. The Dow Jones, S&P 500 and Russell 2000 have declined in six of the last seven.
Macau-centric casinos fell apart as China reflected on new restrictions for the Asian gaming center. Comcast (CMCSA) fell into weaker broadband growth.
Main ETFs
Growth stocks generally performed well on Tuesday. Meanwhile, many other sectors lost ground.
Among the best ETFs, the Innovator IBD 50 (FFTY) ETF rose 1.25%, after falling 2.7% on Monday. The ETF (BOUT) Innovator IBD Breakout Opportunities fell 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) ETF rose 0.1%. Microsoft shares are the first stakes in IGV. The VanEck Vectors Semiconductor (SMH) ETF was up 0.1%. AMD, AMAT and KLA shares are a key component of SMH.
The SPDR S&P Metals & Mining (XME) ETF sank 1.95% and the Global X US Infrastructure Development (PAVE) ETF was 1.3%. The United States Global Jets ETF (JETS) fell 1.2%. The SPDR S&P Homebuilders (XHB) ETF fell 1.5%. The Energy Select SPDR ETF (XLE) yielded 1.4% and the Financial Select SPDR ETF (XLF) 1.3%.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) fell 1.1% and ARK Genomics ETF (ARKG) lost 1.3%.
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Introducing the Apple iPhone 13
Apple promoted four versions of the iPhone 13, offering incremental upgrades to last year’s iPhone 12 series, the company’s first 5G phones. Technology technician Dow Jones also unveiled the Apple Watch Series 7 laptops, with larger screens and faster charging. Apple also showed off new iPad models.
Shares of Apple fell about 1% to 148.12. It closed just above the 50-day moving average. AAPL shares changed record highs last week and lost 3.45% as a federal judge punched their money machine from the App Store.
Stocks to see
Shares of Microsoft rose 0.9% to 299.79 on Tuesday, up slightly from its ten-week line. MSFT shares have an effective three-week limit, offering a buy point of 305.94. This narrow action could potentially become a flat base, but not until the end of next week. Stocks flirt with breaking a short trend line. Doing so, along with the ten-week line bounce, would provide a slightly early entry.
MSFT shares rose 1% in night trading, suggesting a potential buy opportunity Wednesday morning.
AMAT shares rose 0.5% to 140.14, achieving a third consecutive thin gain on its 50-day line. This could offer an early entry. Investors could use 145.35 or 146.10 as the official point of purchase. AMAT shares have flirted with new highs for several months, only to retire.
According to MarketSmith analysis, Integris shares rose 3.2% to 128.06, beating a flat-based buy point of 126.51. This came after ENT shares recovered from their 50-day line from late last week, offering early entry.
Shares of KLA rose to 364.79, but faded to close 0.2% to 356.39. It is the third consecutive session in which the chip maker achieved a cup buying point with a handle of 356.81, but was unable to close it above. On Thursday, KLA shares released an early buy signal, breaking a short trend line and removing some short-term resistance.
Shares of AMD advanced 0.9% to 105.73 after finding support for its ten-week line on Monday. The stock is about to break a short trend line, which would offer early entry along with the 50-day rebound. After this week, AMD shares are on track to achieve a new consolidation with a buying point of 122.49. It would be a base-to-base pattern, sitting on a longer base with a handle.
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Market Rally Analysis
Strictly looking at the closings, the stock market rally is in the middle of a normal setback. The S&P 500 index moves to its 50-day line, while the Nasdaq compound is around its 21-day moving average. The Dow Jones continues to hold its 50-day line. The Russell 2000 has fallen in its 50 days and is closing its 200-day line.
The S&P 500 has recovered close to its 50-day line several times in recent months. Maybe the market rally will do it again, creating another wave of buying opportunities. But that hasn’t happened yet.
Meanwhile, bullish openings, weak closures are not a good sign. This is a hallmark of weak markets. As a practical matter, strong openings will attract investors, as stocks weaken buy signals, which will only fall in a few minutes.
Growth stocks have held up better than most in the recent downturn, though it has been unexpected. Speculative growth, as shown by ARKK and ARKG, is not performing well overall. Meanwhile, steelmakers and home builders have had problems. Energy stocks, which have been returning, had difficulties on Tuesday. Finances and retailers have been mixed.
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What to do now
With the market rally back to test key support levels, don’t be fooled and try to bet on a rebound. Not a good time to add exposure. Instead, investors are likely to cut some stakes, even if it’s just a matter of trimming losers and trimming some winners.
Instead of trying to step on gas in a hectic or weak market, keep reworking these watch lists. Locate possible configurations so you can act quickly as the market reconfigures.
Read the overview every day to stay in sync with market leadership and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.
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