The Dow Jones Industrial Average rose slightly overnight, along with S&P 500 futures and Nasdaq futures. The stock market rallied for a strong session after inflation fell more than expected last month. The uptrend is now a “power trend”, a bullish change in price.
Global X Lithium & Battery Tech ETF (LIT) has moved above its 200-day moving average. ALB stock is the top LIT holding, along with SQM, Tesla (TSLA), China EV and battery giant BYD (BYDDF) and many Asian battery manufacturers.
Lithium stocks and LIT ETFs are ways to meet growing demand for electric vehicles without having to choose a specific EV manufacturer.
As for Tesla, the EV giant’s shares rose 3.9% to 883.07 on Wednesday. After calling Tesla stock a “buying opportunity” on August 4, CEO Elon Musk revealed that he sold $6.9 billion worth of shares on August 5, 8, and 9. Musk cites the possible Twitter (TWTR) take over for fresh sales. He said he has now completed the sale of TSLA stock.
TWTR stock rose 3.7% to 44.43, continuing its strong uptrend over the past month. Legal experts say Twitter is having a hard time forcing Musk to close the deal at $54.20 per share.
Musk also tweeted Wednesday that the Tesla Semi will be released later this year with a 500-mile range. Semi was delayed by several years. In addition, a report said BYD (BYDDF) will supply batteries to the Tesla Berlin factory, with Blade-powered Model Ys likely to hit the market this month.
BYD stock fell 0.5% after hitting a two-month low. Shares in the Chinese battery and electric vehicle giant were modestly below the 50-day gain.
Final, Walt Disney (DIS) reported better-than-expected earnings after closing, with Disney+ subscribers are also higher in views. The entertainment giant plans to increase the Disney+ subscription fee to $10.99 a month, while also introducing a lower-priced, ad-supported tier. DIS stock rose 7% overnight. Shares of Disney rose 4% to 112.43 on Wednesday, a three-month high.
Dow Jones Futures Today
Dow Jones futures are up 0.2% above fair value. DIS stock is a component of the Dow. Futures contracts on the S&P 500 and Nasdaq 100 rose 0.2%.
At 8:30 a.m. ET, the Department of Labor will issue weekly unemployment claims. Initial claims have surged over the past few months, but remain at historic lows. In addition, resume requirements have been greatly reduced, indicating that laid-off workers quickly find new jobs.
Rally stock market
The stock market rally spiked on Wednesday when July inflation report much lower than expected and closed near the session high.
The consumer price index was flat from June and rose only 0.3% excluding food and energy, both lower than expected. Key inflation fell to 8.5% from June’s 40-year high of 9.1%. Core inflation remained at 5.9% compared to a slight increase.
The market is currently in “power trend” a positive sign of a longer-term uptrend.
The Dow Jones Industrial Average rose 1.6% on Wednesday stock market trading. The S&P 500 index rose 2.1%. The Nasdaq Composite Index rose 2.9%. The small-cap Russell 2000 also gained 2.9%.
US crude oil prices rose 1.6% to $91.93 a barrel, reversing higher as data signaled a recovery in US gasoline demand. Gasoline futures prices increased by 3.7%. Natural gas futures prices rose 4.7%.
The yield on the 10-year Treasury note fell 1 basis point to 2.79%, well above the intraday low of 2.71%. Two-yield Treasuries fell 6 basis points to 3.23%. The yield curve remains inverted from 1-year yields to 10-year yields.
Markets are currently pricing in a 57.5% chance of the Fed raising rates by 50 basis points on September 21. On Tuesday, markets saw a 68% chance of that happening for the third time in a row. 75 basis points.
Among the Best ETFsThe Innovator IBD 50 ETF (FFTY) rose 3%, while the Innovator IBD Breakthrough Opportunity ETF (BOUT) increased by 1.5%. iShares Expanded Software-Technology Sector ETF (IGV) increased by 3.8%. VanEck Vectors Semiconductor ETF (SMH) increased just over 4%.
SPDR S&P Metals & Mining ETF (XME) increased by 3.55% and the US X Global Infrastructure Development Fund (SAVE) 2.5%. US Global Jets ETF (JETS) increased by 2.4%. SPDR S&P Homebuilders ETF (XHB) increased by 3.5%. SPDR Select Energy ETF (XLE) increased by 0.7% and the SPDR Selected Financial Fund ETF (XLF) increased by 2.25%. SPDR Fund for the Healthcare Sector (XLV) add 1.1%.
Reflecting a more speculative narrative on equities, the ARK Innovation ETF (ARKK) rose 7.4% and the ARK Genomics ETF (ARKG) 7.05%. Tesla stock is a large stock on Ark Invest ETFs. Cathie Wood’s Ark also owns some BYD stock.
Albemarle shares rose 6% to 259.30. ALB stock has 273.78 buy points from deep cup base with handlebased on MarketSmith Analysis. However, if you view the 31% correction as its consolidation, then ALB stock is clearing the 250.25 handle entry. Albemarle also had a lot of trading around the 248-253 area in September.
Last week, Albemarle earnings easily surpassed the view, with EPS up 288% and revenue 91%. The lithium giant also doubled its full-year EPS, the third-biggest forecast increase in about three months. Lithium prices are high and likely to stay that way, with Albemarle converting more contracts to spot prices.
SQM stock rose 3.8% to 101.12, erasing an early entry of 99.84. The handle is a bit too low at the base to be an appropriate buy point, officially still 115.86. SQM earnings are due on August 17.
Livent stock rose 6.7% to 28.20, completing an early entry at 27, modestly above the 200-day high. LTHM stock has 34.71 official buy points. Last week, Livent earnings also topped, with 825% EPS growth. Revenue grew 114%, the seventh straight quarter of acceleration.
The Global X Lithium & Battery Tech ETF jumped 2.35% to 78.79, crossing the 200-day threshold for the first time since late January. Investors can use this as an opportunity to buy a LIT ETF. , provides a broad way to play EV trends.
Market aggregation analysis
Markets rallied back up on the inflation report, leaving talk quiet – for now – that the uptrend is due to an extended pause or pullback.
The Nasdaq Composite Index rallied back to Monday’s highs, testing a trendline back to January. The S&P 500 and Dow Jones erased their highs in early June.
The next major resistance level for the major indexes is the 200-day moving average.
That is one reason why some sideways market action will be positive for the market recovery. More top stocks can create base and close, while the moving averages catch up.
In addition to Albemarle, shares of lithium and several chip, steel and metal names are forming, along with several medical device manufacturers and heavy construction companies. Several energy games are flashing buy signals, notably natural gas-focused names like Cheniere Energy (LNG).
Solar stocks and health insurers continue to do well, but will generally be extended.
What to do now
The market’s recovery to a strong trend is definitely a positive signal. The major indexes, after hitting initial resistance this week at several key levels, are returning to or above those levels.
Investors should look to increase exposure. You don’t have to make a full investment and you shouldn’t try to ramp up your purchase quickly.
Work on those watchlists. Lots of interesting stocks are forming.
Read Big picture every day to stay in sync with market trends and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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