Apple, ARK Stocks Lead Risk-On Rally; 5 Earnings Movers Near Buy Points

Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures, amid another busy night of earnings. The stock market rally rose strongly on Wednesday, with tech titans charging higher.

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Apple stock, Amazon.com (AMZN), Microsoft (MSFT), Facebook parent Meta Platforms (META), Tesla (TSLA) and Google parent Alphabet (GOOGL) were among the leaders. Apple (AAPL) offers an aggressive buy point while Microsoft and Google stock, if you squint, are approaching possible entries.

Highly valued former growth leaders had a strong session as well, with risk-on investing back in vogue.

Key Earnings

Fortinet (FTNT), Albemarle (ALB), McKesson (MCK), ELF Beauty (ELF) and Axcelis Technologies (ACLS) were notable earnings reports after the close. All closed Wednesday near buy points. But while McKesson, Axcelis, ELF and ALB stock rose, FTNT stock plunged.

Luxury EV maker Lucid Group (LCID) also reported quarterly results. LCID stock dived on weak revenue and production guidance.

Early Thursday, Eli Lilly (LLY), Lantheus (LNTH), former software leader Datadog (DDOG), Quanta Services (PWR), New Fortress Energy (NFE), Cheniere Energy (LNG) and China e-commerce firm Alibaba (BABA) report.

LLY stock fell 2% on Wednesday, below its 50-day line and testing an old buy point. PWR dipped 0.9%, trading just below a buy point after breaking out last Friday. LNG stock edged down 0.3% Wednesday, consolidating just below a traditional buy point after already clearing a trendline entry last week. DDOG stock, up 5.7%, is nearing short-term highs, but is a long way from its late 2021 peak. NFE stock dipped 0.7%, moving close to a cup-base buy point. LNTH stock dipped 0.3% to 75.89, in range from a 73.88 buy point.

BABA stock rose 3.35% but remains below its 50-day and 200-day lines.

Eli Lilly, Lantheus, Quanta Services and Cheniere Energy are all on IBD Leaderboard. NFE stock is on the Leaderboard watchlist. Microsoft, Google and FTNT stock are on IBD Long-Term Leaders. New Fortress Energy and ACLS stock are on the IBD 50. PWR stock is on the IBD Big Cap 20.

Dow Jones Futures Today

Dow Jones futures rose less than 0.1% vs. fair value. S&P 500 futures were flat. Nasdaq 100 futures tilted lower.

The 10-year Treasury yield fell 3 basis points to 2.72%.

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 rebounded strongly Wednesday, led by techs after Tuesday’s Dow-led retreat.

The Dow Jones Industrial Average rose 1.3% in Wednesday’s stock market trading. The S&P 500 index climbed 1.6%. The Nasdaq composite popped 2.6%. The small-cap Russell 2000 gained 1.4%.

The 10-year Treasury yield edged up 1 basis point to 2.75%, but was well off its intraday high 2.85%.

U.S. crude oil fell 4% to $90.66 a barrel, below where it closed on Feb. 23, just before Russia’s Ukraine invasion. OPEC+ agreed to up September production quotas by a slim 100,000 barrels per day, with actual output gains likely to be negligible. But demand concerns continue to pressure oil prices, with U.S. crude and gasoline inventories unexpectedly rising in the latest week.

Megacap Stock Action

Apple stock popped 3.8% to 166.13, a three-month high. Shares moved above their 200-day line on Friday following earnings, then pulled back modestly to start this week. Investors could use Wednesday’s move as an aggressive entry, though volume was below average. AAPL stock is still a long way from the peak and the 183.04 buy point, but its relative strength line is already at a new high.

MSFT stock rose 2.8% and Google 2.6%. META stock jumped 5.4% but is still below its long-sliding 50-day line. AMZN stock gained 4%, moving toward its 200-day line.

Tesla stock climbed 2.3%, its sixth straight advance and closing above its 200-day line.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) edged up 0.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 0.4%, with energy names weighing on the funds. The iShares Expanded Tech-Software Sector ETF (IGV) popped 3.2%. MSFT stock is a major IGV holding, with Fortinet and DDOG stock also components. The VanEck Vectors Semiconductor ETF (SMH) advanced 2.4%.

SPDR S&P Metals & Mining ETF (XME) fell 0.4% and the Global X U.S. Infrastructure Development ETF (PAVE) climbed 0.7%. U.S. Global Jets ETF (JETS) ascended 3%. SPDR S&P Homebuilders ETF (XHB) rose 0.6%. The Energy Select SPDR ETF (XLE) slumped 2.9% and the Financial Select SPDR ETF (XLF) climbed 1.5%. The Health Care Select Sector SPDR Fund (XLV) advanced 0.9%, with LLY stock a holding.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) jumped 6.1% to a three-month high. ARK Genomics ETF (ARKG) leapt 4.7%, matching a three-month high intraday. TSLA stock is a major holding across Ark Invest’s ETFs.

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Key Earnings

McKesson earnings topped views with the drug distributor guiding higher on EPS. MCK stock rose slightly in overnight trade. Shares fell 2.4% to 327.10 on Wednesday, after dropping below the 340.04 flat-base buy point on Tuesday, according to MarketSmith analysis.

Fortinet earnings slightly beat Q2 views while revenue and Q3 guidance were roughly in line. FTNT stock plunged in extended action, signaling a move below the 200-day and 50-day lines. Shares rose 4.2% to 62.88 on Wednesday, closing above the 200-day, a big stumbling block in recent months. Fortinet stock has a 74.45 buy point, but a strong move above the recent July 12 high of 63.56 could have offered an early entry or a place to start a Long-Term Leader position.

Albemarle earnings exceeded forecasts while the lithium play also guided higher yet again. ALB stock climbed solidly overnight. Shares fell 1.8% to 239.54 on Wednesday, as rival Livent (LTHM) reversed sharply lower despite seemingly strong earnings. ALB stock has a 273.78 buy point from a deep cup-with-handle base.

ELF Beauty earnings easily beat fiscal Q1 views while sales growth accelerated. The budget cosmetics maker also guided higher for the full fiscal 2023. ELF stock rose modestly in extended trade. Shares dipped 0.6% on Wednesday to 33.87, in range from a 33.54 cup-with-handle buy point.

Axcelis earnings easily beat while 50% sales growth slightly beat. The chip play guided up on Q3 revenue. ACLS stock was modestly higher overnight. Shares rose 3.8% to 72.70 on Wednesday. Axcelis stock is working toward an 83.83 cup-base buy point, well extended from possible early entries.

Lucid earnings were mixed, with a smaller-than-expected loss but revenue well below views. Lucid slashed its full-year production target yet again. While the Lucid Air sedan, a rival to the Tesla Model S, has won critical acclaim, production and supply-chain issues have plagued the EV startup, much like Rivian (RIVN). LCID stock tumbled in extended action. Shares rose 4% to 20.56 on Wednesday, far below the November peak of 57.75.

Market Rally Analysis

The stock market rally had strong gains Wednesday after retreating modestly Tuesday.

The Nasdaq is now clearly above its early June highs, with Nasdaq volume running much higher than Tuesday. Apple, Meta, Google and ARK-type stocks ran up.

The S&P 500, Dow Jones and Russell 2000 are still below their early June peaks, though the S&P 500 and Russell are getting close.

Market breadth is improving while leadership is expanding.

Red-hot solar stocks had a rough session. SolarEdge (SEDG) crashed, wiping out big recent gains. But group leader Enphase Energy (ENPH) was barely phased.

Oil stocks pulled back with lower crude prices, but this could be a chance to build handles on cup bases.

Speculative growth names were among Wednesday’s big winners, reflecting the risk-on trading shift. The vast majority still needs a lot of work to be actionable. While bottom fishing has been working overall since mid-June, previous efforts to guess the bottom in volatile names didn’t do so well.

At this point, a lot of beaten-down stocks have rallied quite a bit, while still facing a lot of overhead resistance.

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What To Do Now

The stock market rally continues to make progress. It’s a time to be invested, but with modest exposure. The market rally could yet falter, with Fed rate hikes and the economy still big uncertainties. Investors should avoid being too concentrated in a particular industry and may want to continue taking partial early profits. Sector rotations and stock shakeouts are still common.

Work on those watchlists. Many stocks, including Apple, Tesla and FTNT, are reclaiming some key long-term averages and may be flashing early entries or at least signaling that investors should be paying attention again.

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

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

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