Dow Jones futures fell slightly Wednesday morning, along with S&P 500 futures and Nasdaq futures. FedEx tumbled overnight on weak earnings and guidance.
The stock market rally continues to trend higher, with the S&P 500 close to hitting all-time highs and the Nasdaq topping the 15,000 level. Small caps led Tuesday's broad advance, as market breadth impresses.
The Nasdaq and many leading stocks are extended. Investors should cautious about adding to exposure here, and might want to consider taking partial profits.
Nvidia, Microsoft, Super Micro Computer and MongoDB are AI plays that are pausing bullishly in or near buy areas.
Nvidia and MSFT stock are on IBD Leaderboard. NVDA stock is on SwingTrader. Microsoft stock is on IBD Long-Term Leaders. Nvidia, Super Micro and MDB stock are on the IBD 50.
The video embedded in the article discussed Tuesday's market action and analyzed Weatherford, Saia and SMCI stock.
Dow Jones Futures Today
Dow Jones futures dipped 0.15% vs. fair value. S&P 500 futures sank 0.2%. Nasdaq 100 futures declined 0.25%.
The 10-year Treasury yield fell a few basis points to 3.88%.
Crude oil prices rose more than 1%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
FedEx Earnings
FDX stock plunged in overnight action as FedEx earnings missed fiscal Q2 views and shipping giant guided lower, citing weaker demand across the board. Shares edged down 0.7% at 280 in Tuesday's regular session. FedEx stock was extended from a 261.92 handle buy point. But now it's set to round-trip that breakout.
FedEx archrival UPS fell modestly in extended action as well.
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Stock Market Rally
The stock market rally continues its post-Thanksgiving run.
The Dow Jones Industrial Average rose 0.7% in Tuesday's stock market trading. The S&P 500 index climbed 0.6%. The Nasdaq composite advanced 0.7%.
The Nasdaq moved above 15,000 for the first time since January 2022. The composite still has some distance to its late 2021 peak, though the Nasdaq 100 is in new-high ground. The S&P 500 is getting very close to its January 2022 all-time high of 4,818.62. The Dow Jones is already at record highs.
The small-cap Russell 2000 jumped 1.9%, hitting a fresh 2023 high.
The Nasdaq composite is now 8.5% above its 50-day line, with the S&P 500 is 7.3% above its 50-day. Both are getting extended from that key level. The indexes can get more extended, but that increases the odds of a pullback, and that the pullback will be more significant. Various sentiment indicators also reflect high bullish sentiment.
Meanwhile, many leading stocks are well above buy zones.
U.S. crude oil prices rose 1.3% to $73.44 a barrel, continuing to rebound amid Red Sea shipping concerns.
The 10-year Treasury yield fell 3 basis points to 3.92%, continuing to hold at the lowest levels since July.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF advanced 0.6%, with MSFT stock a major component. The VanEck Vectors Semiconductor ETF rose 0.5%. Nvidia stock is the No. 1 holding in SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF jumped 4.1% and ARK Genomics ETF surged 6.8%.
SPDR S&P Metals & Mining ETF shot up 3.1% and the Global X U.S. Infrastructure Development ETF 1.2%. SPDR S&P Homebuilders ETF stepped up 1.4%. The Energy Select SPDR ETF gained 1.2% and the Health Care Select Sector SPDR Fund advanced 0.7%.
The Industrial Select Sector SPDR Fund added 0.8%. The Financial Select SPDR ETF rose 0.75%.
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Nvidia Stock
Nvidia stock fell 0.9% to 496.04, finishing near session highs and holding in range from a double-bottom base. The buy point is 476.09. NVDA stock is on track to have a flat base after Friday with a 505.48 buy point.
Nvidia is the AI company and AI stock of 2023. But it hasn't been leading for the past few months. Is the torch being passed or is it poised for another big move in 2024?
Microsoft stock edged up 0.2% to 373.26 on Tuesday. Shares continue to hold above a 366.78 cup-base buy point and finding support above a trendline. On a weekly chart, MSFT stock now has a four-weeks tight, with an official buy point of 384.30. Investors could buy the Dow tech titan here or at the tight entry. A move above 377.64 would clear some short-term resistance.
MongoDB Stock
MDB stock dipped 0.7% to 409.78 on Tuesday. Shares are just below a still-valid 412.67 buy point from a cup-with-handle buy point. MongoDB stock suffered an ugly post-earnings sell-off earlier this month, but has rebounded from the 10-week line. In the short run, a move above the Dec. 14 high of 425.51 might offer an entry. Alternatively, investors might wait to see if MongoDB stock calms down and forges a new consolidation.
Super Micro Stock
SMCI stock fell 1.9% to 315.94 on Tuesday, off intraday lows. That was inside day to Monday's 7.4% jump and snapped a near-23% advance over five sessions. Super Micro stock is still above a 306.52 early entry, though it's now slightly below a 317.50 entry.
Super Micro has a somewhat unsightly four-month consolidation, but the AI server play looks better on a weekly chart. Ideally, SMCI stock would forge a handle around current levels.
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What To Do Now
The stock market rally continues to do well. Another pause or pullback wouldn't be a surprise, but the overall picture remains positive.
In the short run, investors can consider incremental buys, profit taking or some mix of the two. But largely standing pat with current exposure levels continues to be a sound strategy.
Work on your watchlists. If you're not finding many stocks that are actionable, that's an important signal.
Also start working on a 2023 review of your trades. Perhaps focus on your best and worst trades of the year to what you did right and where you could improve. Did you follow your rules? Do you need to tweak some of your rules?
Also look at some of 2023's big winners that you passed on to see how you can get on board next year's leaders.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.
