Dow Jones futures rose modestly late Wednesday, along with S&P 500 futures and Nasdaq futures. A bipartisan group of senators said Wednesday night they’ve reached the outlines of a infrastructure spending deal with the White House.
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The stock market rally had a quietly bullish day, with the Nasdaq holding at record highs while leaders and growth stocks had solid sessions.
Snapchat parent Snap (SNAP) ran higher, breaking past resistance into a buy zone. Tesla (TSLA) jumped Wednesday, flashing a couple of early buy signals. But investors should at least kick the tires before buying Tesla stock.
Meanwhile, FedEx (FDX) earnings are on tap Thursday. FDX stock could potentially offer a buying opportunity if it rallies on earnings. So could rival UPS (UPS), which may have a slightly better-looking chart. Expeditors International (EXPD), an airfreight logistics firm, is near a buy point.
FedEx earnings and commentary also could be important for Amazon.com (AMZN), a key customer and growing rival to FedEx. Amazon stock is closing in on a buy point.
Snap stock is on IBD Leaderboard and SwingTrader. It’s also on the IBD 50.
Infrastructure Deal?
Sen. Mitt Romney, R-Utah, and Sen. Joe Manchin, D-W Va., said Wednesday night that they and eight other senators have reached the framework of an infrastructure deal with the White House. The spending is $1.2 trillion over eight years, or $579 billion in new spending. Romney and Manchin said that the new spending is fully paid for, but didn’t provide details.
The White House said staff made progress toward an “outline” of a deal, with President Biden inviting the bipartisan group of senators for an in-person meeting Thursday.
Bitcoin Price
Bitcoin moved sideways for most of Wednesday, edging up above $34,800 in the morning before drifting to above $32,000 Wednesday night. On Tuesday, the Bitcoin price crashed to below $29,000, a 2021 low, but rebounded to about $34,000 by Tuesday night.
Bitcoin has hit resistance around $40,000-$41,000 a few times over the past month. The cryptocurrency peaked at $64,829.14 mid-April, and has trended lower since early May.
So while the rebound was encouraging, it’s far too soon to say that the price of Bitcoin has bottomed.
Dow Jones Futures Today
Dow Jones futures rose 0.35% vs. fair value. S&P 500 futures advanced 0.3% and Nasdaq 100 futures climbed 0.3%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally had a mixed session on the major indexes. The Dow Jones Industrial Average fell 0.2% in Wednesday’s stock market trading. The S&P 500 index dipped 0.1%. The Nasdaq composite edged up 0.1%. The small-cap Russell 2000 rose 0.3%.
But there were some decent gains among growth stocks and sector ETFs.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 0.6%. The iShares Expanded Tech-Software Sector ETF (IGV) closed just below break-even. The VanEck Vectors Semiconductor ETF (SMH) advanced 0.5%.
SPDR S&P Metals & Mining ETF (XME) added 1% and Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.2%. U.S. Global Jets ETF (JETS) dipped 0.2%. SPDR S&P Homebuilders ETF (XHB) fell 0.5%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) gained 2.1% and ARK Genomics ETF (ARKG) 0.9%. Tesla stock is the largest holding across ARK Invest’s ETFs.
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Snap Stock
Snap stock popped 5.4% to 66.35, breaking out into a buy zone.
On the one hand, investors could look at the chart and see a 65.76 buy point from a handle. But if you simply draw the line across the three times Snap stock hit resistance just below 66, getting above all those levels seemed like the true test, making 65.96 the more appropriate entry.
Of course, it’s a matter of 20 cents, and Snap stock is in buy range either way.
Volume rose 18% above normal, which is OK, especially because trading ramped up on the mid-afternoon breakout.
Shares rose 2% in overnight trade.
The relative strength line for Snap stock is still off highs but did hit its best levels in three months. The RS line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500 index.
Snap was Wednesday’s IBD Stock Of The Day.
Fellow social networks Facebook (FB), Twitter (TWTR) and Pinterest (PINS) also had strong sessions. FB stock hit a fresh record high while TWTR and PINS are moving up the right side of bases.
Tesla Stock
Tesla stock jumped 5.3% to 656.57, reclaiming its 50-day line for the first time since early May. Shares had been finding support around a slowly rising 200-day line. TSLA also hit or edged past a downward-sloping trend line. Volume was slightly above normal, the first time that’s happened in a month. Tesla is flashing an aggressive entry for the first time since April.
Still, there are reasons to be cautious.
The RS line for TSLA stock is at its best level since early May but hasn’t risen that much from its 2021 lows set earlier this month. Now, perhaps this is when Tesla takes off and really begins to power higher, outpacing the S&P 500 index consistently.
To be fair, Tesla stock was the best S&P 500 performer on Wednesday. And shares rose about 1% in extended trading.
Meanwhile, Tesla stock in recent weeks has lagged China EV rivals as Nio (NIO), Xpeng Motors (XPEV) and Li Auto (LI) have rebounded considerably after melting down. Several traditional automakers, notably Ford (F), have been looking strong.
More broadly, Tesla stock hasn’t been rallying as strongly as other big 2020 winners such as CrowdStrike (CRWD) or even Palantir (PLTR).
Finally, Tesla deliveries for the second quarter loom late next week. Much like an earnings report, Tesla sales could provide a catalyst for big gains or losses. Buying TSLA stock doesn’t offer a lot of time to build a cushion heading into deliveries.
If you do want to buy Tesla stock, you might start with a small position, adding to shares at a 780.89 early entry.
One alternative is to buy an ETF such as ARKK, which has been trending better than Tesla in recent weeks. ARKK provides exposure to a number of highly valued growth names, including Tesla stock of course, while minimizing stock-specific risks.
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FedEx Earnings On Tap
FedEx earnings are due late Thursday. Analysts expect FedEx earnings to jump 98% to $5.01 a share, which would snap a three-quarter string of stronger gains. Revenue should climb 24% to $21.52 billion, which would be the fourth straight quarter of accelerating growth.
FedEx stock dipped 0.1% to 297.37 on Wednesday, just below its 50-day and 10-week lines. Shares technically are in buy range from a 294.86 cup-with-handle buy point initially cleared in late April, but the 50-day/10-week line seems more relevant now. A bullish post-earnings rebound could offer a buying opportunity for FDX stock.
FDX Rivals Near Buys
UPS stock slipped 0.7% on Wednesday to 204.02, a hair above its 50-day line as it works on a flat base with a 219.69 buy point. UPS stock gapped up April 27 on strong earnings, and kept running for a time before consolidating above the prior base. The RS line for UPS stock looks a little stronger than FedEx’s.
EXPD stock edged down 0.5% to 125.13. After a strong advance, shares formed a three weeks tight in late May to early June, with a buy point of 126.67. Last week, EXPD stock fell 4% to its 10-week line. Shares have rebounded this week, also reclaiming the 21-day exponential moving average. Investors could buy EXPD stock off that rebound, then add to the position if it clears the three weeks tight. The RS line is right at highs.
Amazon stock was just below break-even Wednesday, closing at 3,503.82. AMZN stock is approaching a 3,554.10 cup base buy point, according to MarketSmith. But the e-commerce and cloud-computing giant has been consolidating since at least September. The RS line is at cup-base highs at least.
Amazon is still a FedEx customer, though they’ve pared back ties substantially over the past year. Amazon has shifted some business to UPS, while increasingly handling deliveries on its own.
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Market Rally Analysis
The stock market rally was quiet Wednesday. The major indexes were narrowly mixed with the Nasdaq inching higher after hitting a record high on Tuesday. Meanwhile, leading stocks and growth names generally showed positive action.
That’s not a bad combination, especially for active investors. There’s nothing wrong with a few tame market days, especially if your portfolio has solid gains. Flat overall market action would let stocks form handles or tight patterns after recent runs. It also could provide an opportunity for former leaders such as Tesla stock to perk up their RS lines.
Aside from FedEx and Nike (NKE) earnings Thursday night, there aren’t many big reports on tap until late next week. Those include the June jobs report, an OPEC+ meeting and Tesla deliveries.
The past several days have offered a number of buying opportunities, providing a chance to step up exposure to reorient portfolios after last week’s wild swings. As stocks set up, keep adding to your watchlists.
But until proven otherwise, be on watch for another wave of sector rotation or another spell of weak overall action.
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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