Dow Jones futures edged higher early Wednesday, along with S&P 500 futures and Nasdaq futures, with Hong Kong stocks soaring on upbeat Chinese economic data. First Solar headlined Tuesday night earnings, with Nio and other China EV makers releasing key figures early Wednesday. TSLA stock is setting up with Tesla's investor day due Wednesday night.
The stock market rally remains rangebound, with the major indexes down and fading into the close once again. A few leading stocks flashed buy signals, while others are setting up. But the uptrend remains under pressure with key near-term resistance.
First Solar, Axon Enterprise, Monster Beverage, Duolingo and Tesla rival Rivian reported late Tuesday. FSLR stock, Axon and Duolingo are flashing possible buy signals Wednesday, while Monster Beverage and RIVN stock retreated in extended trade.
Nvidia filed for a $10 billion mixed securities shelf offering. NVDA stock edged lower early Wednesday.
Nio reported Q4 results early Wednesday, with Nio, Li Auto, XPeng and China EV and battery giant BYD reported February sales.
Tesla China's EV registrations rebounded in the latest week but missed forecasts, suggesting that local sales may fall below Q4 levels despite big price cuts.
All eyes will turn to the Tesla investor day event, with the big news set to kick off at Wednesday's market close. Expect a new Tesla EV platform, confirmation of a planned Mexico factory and a Model 3 upgrade. Elon Musk plans to lay out his "Master Plan 3" and may offer up other news.
Tesla stock tilted higher early Wednesday after edging lower Tuesday, setting up a possible aggressive entry.
Dow Jones Futures Today
Dow Jones futures edged higher vs. fair value. S&P 500 futures climbed a fraction and Nasdaq 100 futures rose 0.2%. Futures improved overnight on strong Chinese economic data but are off morning highs.
Hong Kong's Hang Seng soared 4.2% on strong Chinese economic data, suggesting a post-"zero-Covid" recovery is finally gaining momentum. China's official manufacturing index rose 2.5 points in February to 52.6, the best in nearly 11 years and well above views for 50.5. Readings over 50 signal expansion. The non-manufacturing gauge gained 1.9 points to 56.3.
The 10-year Treasury yield rose 4 basis points to 3.95%.
Crude oil futures fell slightly, but copper rose more than 1%.
The ISM U.S. manufacturing index for February will be released at 10 a.m. ET. ISM's services index is due out Friday morning.
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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Key Earnings
FSLR stock rose 6% in extended action after First Solar reported a smaller-than-expected Q4 loss, in-line revenue and a bullish forecast. First Solar stock advanced 1.8% on Tuesday to 169.14, rising from the 50-day line and breaking a trendline, offering an early entry aside from the earnings risk. FSLR stock has a 185.38 buy point from a shallow consolidation.
AXON stock climbed 6% in premarket trade as Axon Enterprise earnings topped views. Shares of the Taser and body camera maker rose 2.7% to 200.31 on Tuesday. That's in range from a 193.95 buy point. Investors could use 205.09 as an alternate entry.
MNST stock fell 5% in overnight action as Monster Beverage earnings and sales fell short. Shares dipped 0.55% on Tuesday to 101.76, just below the 50-day line. Monster Beverage stock has a 104.75 buy point from a 6%-deep flat base, part of a base-on-base formation. Shares broke out on Feb. 15 but immediately fell back. Celsius Holdings, Monster's smaller but faster-growing rival, reports Wednesday night.
DUOL stock jumped 13% early Wednesday after Duolingo's loss and revenue beat views, with active users ramping up. Duolingo stock rose 2% to 90.79, rebounding from the 200-day line and closing right on the 21-day line. DUOL stock could offer an early entry Wednesday if it breaks the steep downtrend of a handle from a deep cup base. The official buy point is 105.56.
RIVN stock tumbled 8% as Rivian reported a smaller-than-expected loss, but revenue fell short. The luxury EV maker expects production to roughly double in 2023 to 50,000 cars, but that's below views. Rivian stock rose4.6% to 19.30 on Tuesday, back above the 50-day line but well below the 200-day.
Stock Market Rally
The stock market rally tried to make progress Tuesday but wilted in late afternoon action.
The Dow Jones Industrial Average fell 0.7% in Tuesday's stock market trading. The S&P 500 index sank 0.3%. The Nasdaq composite dipped 0.1%. The small-cap Russell 2000 closed just above break-even.
U.S. crude oil prices rose 1.8% to $77.05 a barrel on Tuesday. Crude futures fell 2.1% in February, the fourth straight decline.
Copper prices climbed 2.2% on Tuesday but fell 3.1% for the month.
The 10-year Treasury yield edged down 1 basis point to 3.91% after hitting 3.98% intraday. That's still up 58 basis points from the Feb. 2 intraday low.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF dipped 0.2%, while the Innovator IBD Breakout Opportunities ETF edged up 0.2%. The iShares Expanded Tech-Software Sector ETF ticked up 0.1%. The VanEck Vectors Semiconductor ETF was just above break-even.
Reflecting stocks with more speculative stories, the ARK Innovation ETF popped 2.1%. ARK Genomics ETF tacked on 1.4%. Tesla stock is a major component across Ark Invest's ETFs.
The SPDR S&P Metals & Mining ETF rebounded 1.9% and the Global X U.S. Infrastructure Development ETF advanced 0.4%. U.S. Global Jets ascended 1.2%. SPDR S&P Homebuilders stepped up 0.5%. The Energy Select SPDR ETF fell 1.4% and the Financial Select SPDR ETF climbed 0.2%. The Health Care Select Sector SPDR Fund retreated 0.7%.
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Tesla Investor Day
Tesla's investor day is on Wednesday, with the big news expected soon after the market close. Here are six big announcements that investors are looking for, along with other possible news.
New EV platform: Tesla has said it will unveil details about a new EV platform, likely for a cheaper model that can compete in China and Europe. But how much information will Tesla provide, and when would the new model arrive? Any cheap Tesla would already face myriad rivals in China, notably from BYD.
Model 3 upgrades: Tesla may confirm a long-rumored "Project Highland" Model 3 upgrade and say when production begins. Reuters reported an upgraded Model 3, with an emphasis on lower production costs, will begin in September in Shanghai. Reuters also said Tesla is working on updating the Model Y.
New EV plant: Mexico's president said Tuesday that Tesla will build a plant in the country, near the Texas border. Tesla also may discuss its planned Nevada plant expansion for 4680 battery protection and Tesla Semi assembly.
HW 4.0: Tesla may tout its soon-to-launch updated hardware suite for Tesla EVs' driver-assist systems, with upgraded chips, more cameras and the return of radar. In 2016, Tesla said all its EVs were "hardware ready" for fully autonomous driving.
Artificial intelligence: Elon Musk tweeted Tuesday that he will be working on an "anti-woke" AI chatbot. Tesla will likely promote artificial intelligence heavily, as companies rush to play up anything remotely tied to AI.
Master Plan 3: Elon Musk has hinted he'll release his third "Master Plan," laying out his Tesla vision for the coming years. His second Master Plan, released in 2016, is still largely a to-do list.
Tesla also will likely discuss its expanding energy storage business. There's also some speculation that the EV giant will announce a TSLA stock buyback.
Tesla Stock
Tesla stock fell 0.9% to 205.71 on Tuesday, after jumping 5.5% Monday. Shares arguably have a cup-with-handle pattern going back to early November (or a too-low handle in a base starting in September). That would suggest a 217.75 buy point. But investors should probably wait for TSLA stock to clear its 200-day line, currently just above 221.
Shares rose a fraction in Wednesday's premarket.
Tesla stock has doubled from its bear-market low 0f 101.81 on Jan. 6. Much of that reflects Tesla investor day buzz. So how much of that good news is priced in?
China EV Makers
Early Wednesday, Nio reported weaker-than-expected Q4 earnings. Nio also said it delivered 12,157 EVs in February, up 43% from January. Li Auto, which topped Q4 views early Monday, delivered 16,620 vehicles, up nearly 10% vs. January, with March deliveries implied at 20,239-23,239. XPeng sold 6,010 vehicles in Feb, up 15% from January.
Nio stock fell solidly in premarket trade, while Li Auto popped and XPeng edged higher.
China EV and battery giant BYD sold 193,655 EVs, up 28% vs. Jan. and 119% vs. a year earlier. But that's still below the late 2022 peak. Exports hit a new high of 15,002. BYD stock is not yet trading.
Market Rally Analysis
The stock market rally had a relatively quiet Tuesday, once again fading into the close.
The S&P 500 fell a fraction below its 50-day line after just reclaiming that level on Monday. The 200-day line isn't far below.
The Nasdaq composite reversed slightly lower as well, trading above its 200-day and below its falling 21-day.
The Dow Jones, which has been a laggard in recent months, slid to a two-month low and the worst close since early November.
The Russell 2000, which is looking better than the big-cap indexes, hit resistance at the 21-day moving line for a second straight session.
Some leading stocks flashed buy signals Tuesday, including Booking Holdings, Applied Materials, Deckers Outdoor and Meta Platforms.
But the market rally remains under pressure.
The S&P 500 and Nasdaq need to hold their current levels and retake the 21-day lines along with the Russell 2000. The early-February highs would be further resistance. But the 10-year Treasury yield and U.S. dollar are also hovering below key levels. If yields and the greenback move higher, stocks will likely struggle.
The market could be in a holding pattern until investors get a fresh batch of Fed-critical economic data. The February jobs report isn't until March 10, with the February CPI inflation report the following week.
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What To Do Now
The stock market rally is trading within a very narrow range. The major indexes faded from intraday highs for a second straight session.
With the S&P 500 and Nasdaq below their 21-day lines and at risk of breaking more key levels, this is a time to be patient with a large cash position. Don't get excited about a strong open.
But if the market rally shows renewed strength, investors will want to be ready with their watchlists.
Arista Networks, Alteryx and United Airlines are examples of stocks that are setting up, close to official buy points or early entries. So is Tesla stock.
Also, don't neglect stocks that are showing relative strength, even if they don't have a clear-cut buy point yet.
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