Dow Jones Futures: Market rally continues to rise as Apple, iPhone chipmakers approach buying points; Didi prizes $ 4 billion IPO
Dow Jones futures rose slightly on Tuesday night, along with S&P 500 and Nasdaq futures, after the stock rally closed on Tuesday with tiny gains.
Apple stock has had a gloomy 2021, but is approaching a point of purchase. Meanwhile, Apple (AAPL) iPhone chip makers Qorvo (QRVO), Skyworks Solutions (SWKS) and Broadcom (AVGO) are also close to breakouts. SWKS stocks and in particular QRVO stocks surged to the right side of the bases on Tuesday, helped by hikes in analysts’ price targets. They were the top two performers on Tuesday’s S&P 500.
The initiatives of iPhone chipmakers come as the chip industry strengthens again.
Today’s IBD stock clears its early buy point as earnings rebound
Didi’s IPO sold 288 million U.S. custodian shares at $ 14 a share, in the high end of the $ 13- $ 14 range. The IPO raised just over $ 4 billion, giving the Chinese rideshare giant a market valuation of around $ 67 billion.
Didi is profitable, with sales doubling in the first quarter, helped by easy comparisons to the pandemic quarter of the first quarter of 2020 in China. It has 493 million users, operating in 16 countries.
Didi’s IPO will begin trading on the NYSE on Wednesday under the ticker DIDI.
Uber sold its Uber China business to Didi in 2016, taking a big stake in return. Uber stock fell 0.7% to 50.76 on Tuesday, just above its 50 and 200-day lines in the bottom half of a consolidation.
Dow Jones Futures Today
Dow Jones futures contracts increased 0.1% from fair value. Futures on the S&P 500 climbed 0.1%. Futures on the Nasdaq 100 rose 0.1%.
A Chinese manufacturing index stood at 50.9 in June against 51 in May. Analysts were expecting 50.8. The service gauge slipped 1.7 points to 53.5 against views for 52.7. Readings above 50 signal growth.
Keep in mind that overnight action on futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades during the next regular trading session.
Coronavirus cases around the world have reached 182.58 million. Deaths from Covid-19 have exceeded 3.95 million.
In the United States, coronavirus cases have reached 34.52 million, with more than 619,000 deaths.
New cases in the United States may just start to increase from relatively low cases, as the Delta variant spreads to areas with low vaccination rates. Covid cases are on the rise around the world, with the UK experiencing a big jump from early May.
The Delta variant is more contagious than many others. More and more people who have been vaccinated are receiving the Delta variant, although usually mild cases.
Stock market rally Tuesday
The stock rally had a muted session, with major indices rising slightly.
The Dow Jones Industrial Average closed slightly higher during Tuesday’s stock trading. The S&P 500 index also rose. The Nasdaq composite rose 0.2%.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.6%, while ETF Innovator IBD Breakout Opportunities (COMBAT) closed just below the break-even point. The iShares Expanded Tech-Software Sector ETF (IGV) increased by 0.5%.
The VanEck Vectors Semiconductor ETF (SMH) gained 0.9%. The AVGO stock is a large SMH component, with QRVO and SWKS also in the ETF chip.
SPDR S&P Metals and Mining ETF (XME) edged up 0.1% and the Global X US Infrastructure Development ETF (PAVE) fell 0.6%. US Global Jets ETFs (JETS) fell 1% as Covid fears continue to weigh on travel inventories. SPDR S&P Homebuilders ETF (XHB) climbed 0.7%. The Energy Select SPDR ETF (XLE) fell 0.5% and the Financial Select SPDR ETF (XLF) edged down 0.35%.
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Apple stock rose 1.15% to 136.33, just below a 137.17 buy point from a cup base in larger consolidation, according to MarketSmith analysis . The left side of the mug base represents a failed break from a late April mug model.
Apple stock has posted back-to-back gains of just over 1%, but volume has been well below average, which is not a good sign.
Apple stock’s relative strength line improved in June, but remains below consolidation highs, not to mention its January high or all-time high in August 2020.
Potential buyers need to consider whether or not Apple stock will be a real leader. Even among megacap techs, the iPhone maker has lagged behind.
Yet while AAPL stock has been sluggish in recent months, Apple’s earnings have not. The tech titan’s EPS jumped 119% in the last quarter on sales growth of 54%.
Apple chip makers
Qorvo stock jumped 4.45% to 195.66 in significant volume. QRVO’s stock is just below a buy point of 201.78 cups. He recovered his 50-day line last week. Qorvo’s profit growth accelerated for three consecutive quarters.
Skyworks stock jumped 4.5% to 190.95 for its third consecutive gain in above-average trading. SWKS stock has a buy point of 204.10 in one consolidation next to another consolidation.
Broadcom stock edged up 0.9% to 477.12. The chip and software giant is less exposed to Apple than Qorvo and especially Skyworks. But that’s just below a handle buy point of 478.50 in a four-month consolidation. Broadcom is posting four quarters of accelerated profit growth and five quarters of faster sales gains.
On Tuesday, Barclays raised its QRVO stock price target to 220 to 210 and its SWKS PT stock to 200 to 185. It maintained a price target of 525 for AVGO stock. Barclays overweight Qorvo and Broadcom, with Skyworks on a par.
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Market rally analysis
The stock rally had a relatively quiet session, but the Nasdaq and S&P 500 hit new highs as the Dow Jones held above its 50-day line.
A calm day is especially healthy for the Nasdaq, which is 5% above its 50-day line. The Nasdaq 100, including Apple and other large-cap members, is 5.6% above its 50-day line. When the Nasdaq is extended 6% or more from its 50-day line, it lengthens a bit. This increases the risk of a withdrawal, as well as the likelihood that such withdrawal will be greater. Of course, as the Nasdaq showed in August 2020 and earlier this year, the tech index can stretch much longer, before dropping significantly.
Only a few new buying opportunities emerged on Tuesday, but there have been dozens of breakouts, early buy signals, and aggressive entries over the past few days and weeks. A number of stocks, including Apple, have moved closer to buy points. The flatter finish of the wider market meant Tuesday’s winners got an extra boost for the RS line.
Read The Big Picture every day to stay in tune with the market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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