Stock Market Rally With S&P 500 Hitting New Highs With Tesla Rivaling Nio.

Stock Market Rally With S&P 500 Hitting New Highs With Tesla Rivaling Nio.

Dow Jones futures rose Thursday morning, alongside S&P 500 futures and especially Nasdaq futures. Micron Technology (MU) and Tesla rivals Nio (NIO) and Xpeng (XPEV) were making news, but the correcting stock market rally is in focus.


The stock market rally increased force as the White House revealed the $2.25 trillion Biden stimulus plan, with the S&P 500 hitting a new high among several new breakouts. The Nasdaq and small caps led the way, but both needed to take another big step. Thursday’s premarket action was positive.


Micron Technology (MU) announced after the close. Micron earnings exceeded views with direction also strong. MU stock rose steadily early Thursday, flashing a buy signal. Micron stock climbed 1.9% to 88.21, rebounding from its 50-day and 10-week lines while also mending its 21-day line.


CarMax (KMX) earnings are due early Thursday. KMX stock is holding at the top of a buy zone and just below a three-week-tight entry.


Biden Infrastructure Plan

After Wednesday’s close, President Joe Biden revealed his infrastructure and tax plan, pitching the plan as a “once-in-a-generation” opportunity. The White House already outlined key points before the open. The Biden infrastructure plan involved extensive funding for bridges, roads and water projects, as well as money for increasing broadband access and domestic chip production. A corporate tax hike to 28% from the current 21% would pay for the package long term.


Later on, Biden plans further spending increases funded by taxes on high earners and capital gains.


Tesla, EV Stocks

Tesla (TSLA) is expected to announce delivery figures in early April, perhaps as soon as Thursday. China EV rivals Nio and Xpeng reported overnight, with Li Auto (LI) also on tap.


Tesla rose early Thursday, with bigger gains for Nio stock, Xpeng and Li Auto. All four big 2020 winners are trying to rebound from sharp losses.


Tesla stock rallied Wednesday on President Biden’s infrastructure plan, with proposals to restore and expand EV credits and ramp up EV charging infrastructure. Nio stock, Xpeng and Li Auto also climbed, though the Biden infrastructure plan would have no impact on their sales.


Breakouts, New Buys

Chip gear makers Entegris (ENTG), MKS Instruments (MKSI) and Apple (AAPL) iPhone chipmaker Skyworks (SWKS), cleared buy points Wednesday, with several other semiconductor names near entries. Cleveland-Cliffs (CLF) and Generac (GNRC) also broke out or flashed buy signals.


Dow Jones Futures Today

Dow Jones futures climbed 0.2% vs. fair value. S&P 500 futures advanced 0.4%. Nasdaq 100 futures jumped 1%.


Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.


Coronavirus News

Coronavirus cases worldwide reached 129.58 million. Covid-19 deaths topped 2.83 million.


Coronavirus cases in the U.S. have hit 31.16 million, with deaths above 565,000.


Stock Rally

The stock market rally continued to build strength. Investors embraced the long-awaited infrastructure plan, focusing on the economy- and sector-boosting spending while discounting the potential corporate tax hikes for now. But big techs led the way, with Apple stock, Microsoft (MSFT), Facebook (FB) and Netflix (NFLX) all up around 2%, along with many chip names.


The Dow Jones Industrial Average faded to close down 0.3% in Wednesday’s stock market trading, trading in a narrow range all day near record highs. The S&P 500 index climbed 0.4%. The Nasdaq composite advanced 1.5% after topping 2% intraday. The small-cap Russell 2000 climbed 1.1%.


Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 1.13%. The iShares Expanded Tech-Software Sector ETF (IGV) popped 2.3%. The VanEck Vectors Semiconductor ETF (SMH) rallied 2.9%%, with Micron stock and Skyworks components.


SPDR S&P Metals & Mining ETF (XME) advanced 1.55% and Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.2%. U.S. Global Jets ETF (JETS) sank 0.7%.


Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) soared 5.1% and ARK Genomics ETF (ARKG) 4.8%. Tesla stock is the top holding across ARK Investments’ ETFs.


Stocks Breaking Out

Cleveland-Cliffs gave bullish guidance for 2021 and 2022, sending CLF stock soaring out of a base to its best level in nearly six years. The steelmaker’s shares spiked 17% to 20.11. That is extended from buy points of 18.87 or 18.06. But investors could size a CLF stock position using a close below Wednesday’s intraday low of 18.27 as a sell signal. Several other steel stocks have broken out in the past several weeks, including U.S. Steel (X) on Tuesday.


Generac stock rose 3% to 327.45, clearing a downtrend after finding support at the 10-week line. GNRC also isn’t that far above its 10-week. This is a chance to buy or add shares in the generator maker. GNRC stock could start to build the right side of a base.


Entegris stock climbed 2.8% to 111.80, clearing a 110.47 double-bottom buy point, according to MarketSmith analysis. MKSI stock rose 2.1% to 185.42, above a 184.79 buy point from a handle in a double-bottom base.


Chip-gear giants Applied Materials (AMAT) and ASML (ASML) have already broken out, while Lam Research (LRCX) and KLA Corp. (KLAC) are setting up. The Biden infrastructure plan provides incentives for domestic chip production. That follows the recent Intel (INTC) plan to spend $20 billion on two new chip plants in Arizona. And the upbeat Micron earnings report and guidance could be good news for memory-focused chip-gear makers.


Finally, Skyworks stock climbed 2.8% to 183.48. It’s still working on a 195.92 buy point. SWKS cleared a downtrend as it rebounded bullishly from its 10-week line. Intraday, SWKS stock also hit 185.12, briefly topping a 184.44 resistance point. Fellow Apple chipmaker Qorvo (QRVO) rallied to just below a buy point.


Apple stock rose 1.9% to 122.15 but hit resistance at its 21-day line.


Tesla And Biden’s EV Incentives

The Biden infrastructure plan will include an array of incentives for electric vehicles. Notably, it should lift the cap on federal tax credits so Tesla and General Motors (GM) vehicles will be eligible again. That will be a boon for Tesla, which is currently facing Model Y competition from Ford (F) and Volkswagen (VWAGY) that can offer $7,500 EV credits. But Biden’s plan also will encourage Tesla rivals, especially longer-term. Biden proposed to subsidize charging stations, making Tesla alternatives more plausible. He also wants to electrify the federal government’s vehicle fleet. That is likely to benefit GM, Ford or Amazon-backed Rivian more than Tesla.


Keep in mind that the general outline of the infrastructure plan’s EV incentives has generally been known for weeks. The question is what will get through Congress.


Tesla Deliveries

Tesla reports quarterly production and deliveries within the first three business days of the following quarter. That would mean a Tesla report by Monday at the latest, but Thursday-Saturday is most likely.


Tesla deliveries for Q1 have been projected around 173,000, though analysts raced to lower the bar to about 162,000. Model Y sales in the U.S. and China will be among the drivers, while Model S sales will likely be slim due to an extended production shutdown as Tesla retooled for the newer Model S Plaid.


Tesla stock rallied 5.1% to 667.93, closing just above its 21-day line. Shares are still well below the March 10 short-term high as well as the 50-day line. Until TSLA stock retakes those key levels, investors should largely steer clear of this huge 2020 winner.


TSLA stock rose nearly 3% before the open.


Nio, Xpeng Deliveries

Nio, deliveries for March were 7,257, up 373% vs. a year earlier and 30% vs. February, when the Lunar New Year holidays affected sales and production. Q1 sales were 20,060. Last week, Nio said it would halt production for five days starting March 29, citing chip shortages. It also trimmed its Q1 delivery target, suggesting March weakness.


Nio stock jumped 6% early Thursday, continuing to rebound from just above its 200-day line but still in a steep downtrend. Nio stock rose 3.8% on Wednesday.


Xpeng deliveries came in 5,102, up 384% vs a year earlier and 130% vs. February. Q1 sales were 13,340. XPEV stock popped 5% before the open, after running 8% on Wednesday.


Li Auto is likely to release March deliveries in the next few days. Li Auto climbed 3.5% early Thursday after Wednesday’s 8.3% gain.


Market Rally Analysis

The Nasdaq composite rose back above its 21-day moving average, breaking a downtrend that started with the Feb. 16 peak. The 1.5% price gain was coupled with volume higher than Tuesday. Given that the Nasdaq has effectively been in a correction while the rest of the market has been in an uptrend, Wednesday’s action could be seen as a Nasdaq follow-through day.


But just looking at the Nasdaq chart, Wednesday’s action doesn’t especially stand out. And the higher volume may have come in as the Nasdaq backed off intraday high. Also, the composite remains below its 50-day line and its mid-March short-term highs.


The Russell 2000 climbed back above its 50-day line, just closing above that key level. Intraday it got above its 21-day line before backing off.


The S&P 500 index hit a record high while the Dow Jones ended just below an all-time best.


Best of all, leading stocks shone. Several more breakouts from a variety of groups joined the stock market rally, while others set up or extended runs.


A Good First Step

The Nasdaq and small caps took a good step toward moving from a split stock market rally to a broad uptrend. But it was only a step. The Russell 2000 needs to convincingly retake its 50-day line. The Nasdaq has to reclaim its 50-day and its March highs.


The good news is that futures suggest the Russell 2000 will move well above its 50-day line while the Nasdaq will at least move toward that key level.


The recent crop of breakouts and buy signals, such Cleveland-Cliffs and Micron stock, needs to hold up and extend gains.

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