Stock futures gained strength heading into Tuesday's open, with techs leading as bond markets rose and the Dow industrials and Russell 2000 each aimed for a third straight advance. IBD 50 stock ASML Holdings paced rebounding chip stocks. Bitcoin moved higher, helping to boost Leaderboard stock PayPal Holdings. And Microsoft, Salesforce.com and Apple led the techs running hot on the Dow Jones today.
XDow Jones futures climbed 0.3%, and S&P 500 futures traded 1% higher. Nasdaq 100 futures muscled up to 2.4% above fair value on today's stock market with Tesla (TSLA) and Baidu (BIDU) at the top of the list.
The massive $1.9 trillion federal stimulus project continued to move forward, with House lawmakers planning a final vote as early as Tuesday evening, before placing the bill before President Joe Biden for a signature. The Senate approved the bill Saturday, with the president pushing for passage before supplemental unemployment benefits expire on Sunday.
Rebounding chip stocks drove a portion of Tuesday's early action, with solar, electrical vehicle makers and China-based names trading high in premarket action. ASML Holdings (ASML) and Cree (CREE) led the Philadelphia Semiconductor Index in early trade. The VanEck Vectors Semiconductor ETF (SMH) moved up 3.3% in premarket trade, following a 5.5% tumble on Monday.
Tesla (TSLA) rebounded 4.9%, topping the S&P 500 and Nasdaq as it aims to shut down a five-day pullback.
Westlake Chemical (WLK) will be a stock to watch today, trading flat in early action following a breakout above a 90.46 buy point on Monday. Westlake was IBD's Stock of the Day on Monday.
It wasn't a good morning for earnings, with Dick's Sporting Goods (DKS) down 7%, and Thor Industries (THO) shedding 0.4% after its quarterly results. StitchFix (SFIX) suffered more serious damage, down nearly 22% after reporting mixed fiscal second-quarter results.
Dow Jones Today: Microsoft Eyes Buy Point
Tech names ruled the upside on the Dow Jones today, with Apple (AAPL), Microsoft (MSFT), Salesforce.com (CRM) and Intel (INTC) leading the charge.
A 4.2% drop on Monday left Apple stock in its first test of support at its 200-day/40-week moving average since a steep undercut of that line in March. Support here could suggest the stock is beginning to shape a possible base pattern, but the level is well short of the pullback below 112.38 that would be necessary in order to reset Apple's base count. Apple shares rose 2.2% early Tuesday.
Microsoft has been tinkering with support, as well as a buy point at 232.96. Shares were up 2.4% early Tuesday, and ended Monday about 2% below that buy point.
China, Solar Names Rally
China-based Baidu (BIDU) traded at the top of the Nasdaq, up 6.4% in early trade. The stock ended Monday 34% below its Feb. 22 record high.
Daqo New Energy (DQ), also based in China, jumped 6.2% after its fourth-quarter report, running at the head of rebounding solar issues. Canadian Solar (CSIQ) bolted 6% higher. Enphase Energy (ENPH) and Sunworks (SUNW) leapt more than 5% each. First Solar (FSLR) and SolarEdge Technologies (SEDG) gained more than 3% apiece.
IBD 50 stock Generac Holdings (GNRC) jumped 4%, implying an early rebound from its 50-day/10-week line.
EV Makers Report February China Sales
Electric vehicle makers also jumped into broad early gains, with February EV sales reports from the China Passenger Car Association possibly boosting early results. A total of 97,000 electric cars and plug-in hybrids were sold in China in February, the CPCA said. That was a 675% increase over year-ago levels, but down nearly 38% from January — due largely to the country's week-long Lunar New Year celebration.
Tesla delivered 18,300 vehicles in China in February, up 15.5% from January. Tesla stock is down 37% from its Jan. 25 high. Among China-based EV makers, Expeng (XPEV) rallied 6.4%, Li Auto (LI) scrambled 5% higher, and Nio (NIO) ran up 5.5%.
Bonds Bounce, Yields Ease
Bonds bounced early Tuesday, sending the 10-year yield down 5 basis points to 1.54%. Yields touched an intraday high of 1.61% on Monday. That is still below the 1.8% levels at the start of 2020, which were down from about 2.7% a year before that. But the pace with which yields have climbed, up sharply from lows around 0.5% in August, have raised a caution flag over markets.
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Small Cap, Blue Chip Rebound
Small caps traded high amid Tuesday's early gains, with Russell 2000 futures up 1.5%. Shares of genetic test provider Invitae (NVTA) rallied more than 11% in early trade, after ARK Investment Management's Cathie Wood mentioned the company as a molecular testing leader in a CNBC interview late Monday.
GameStop (GME) rallied 15%, steering for a fifth-straight daily advance as the stock continues its three-week rebound.
The Russell 2000 rose 2.1% on Friday, posting a sharp rebound alongside the Nasdaq, Dow industrials and S&P 500 on Friday. Unlike the Nasdaq and S&P 500, the Dow and the Russell were also rebounding from 10-week/50-day support, as institutions held on to their bets in the small and blue chip ends of the market, while tech and growth stocks cut below support.
Bitcoin, PayPal Climb
Bitcoin trended higher, moving back above $54,000, according to CoinDesk. The cryptocurrency had climbed to a record high above $58,000 on Sunday.
Among Bitcoin-related stocks, Marathon Patent Group (MARA) rebounded 13.5%, while MicroStrategy (MSTR) traded more than 5% higher. The Amplify Transformational Data Sharing ETF (BLOK) added 7.1%.
IBD Leaderboard stock PayPal Holdings (PYPL) strengthened its early gain to 5.7%, looking to end a five-day decline. PayPal stock has been influenced by Bitcoin price swings since October, when the company launched a cryptocurrency trading service that deals in Bitcoin.
PayPal trimmed a 48% gain from an October breakout to less than 10%. In the process, it broke sharply below support at its 10-week moving average last week. Both are sell signals. The stock now needs to form a proper base.
Applied Materials, Micron Find Support
Among rebounding chip stocks, most leaders are in the early process of forming base patterns. IBD 50 stock Applied Materials (AMAT) rose 3.6%. Micron Technology (MU) climbed 3.5%, implying a possible rebound from support. The current "market in correction" status suggests investors should wait for a status change before making new buys or adding to positions.
Lam Research (LRCX), up 3.3%, is shaping what could be an ascending base pattern with a 603.70 buy point.
Dow Jones Today Stocks To Watch: Caterpillar, UnitedHealth
Caterpillar (CAT) gained 0.8%, working on the sixth week of its advance since a February rebound from 10-week support. Goldman Sachs (GS) is also in the sixth week of a February rebound, just off its March 3 high and holding support at its 21-day moving average.
JPMorgan (JPM) is just beyond buy range after clearing a handle buy point at 142.85.
UnitedHealth Group (UNH) gained 0.6% as it climbs the right side of an eight-week cup base with a 367.59 buy point.
Specialty chemicals maker Dow (DOW) gained 0.6%, rising in a buy range after retaking a 58.28 buy point on Feb. 19.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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