Dow Jones futures tilted lower late Tuesday, along with S&P 500 futures and Nasdaq futures. The stock market rally tested some short-term support Tuesday, rebounding for modest gains.
Paycom Software (PAYC) reported better-than-expected earnings after the close. PAYC stock jumped, signaling a move over a key resistance area.
General Motors (GM) and Toyota Motor (TM) earnings are due before the open. Several other automakers, from Ford Motor (F) to Tesla (TSLA), have reported strong profits as chip woes crimp sales but also boost pricing power. GM stock is hovering below its 50-day line in a consolidation. TM stock broke out Tuesday heading into earnings.
The video embedded in this article takes a look at ZoomInfo stock, Steel Dynamics and the SPDR S&P Homebuilders ETF (XHB).
Dow Jones Futures Today
Dow Jones futures fell 0.15% vs. fair value. S&P 500 futures dipped 0.2%. Nasdaq 100 futures lost 0.1%.
Stock Market Rally
The stock market rally had a middling start on Tuesday, but recovered for modest-to-solid gains, closing near session highs.
The Dow Jones Industrial Average rose 0.8% in Tuesday’s stock market trading. So did the S&P 500 index. The Nasdaq composite climbed 0.55%. The small-cap Russell 2000 edged up 0.4%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 1.65%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 1.2%. The iShares Expanded Tech-Software Sector ETF (IGV) rallied to close just above break-even. The VanEck Vectors Semiconductor ETF (SMH) advanced 0.9%.
SPDR S&P Metals & Mining ETF (XME) climbed 1.6% and Global X U.S. Infrastructure Development ETF (PAVE) picked up 1.7%. U.S. Global Jets ETF (JETS) edged up 0.2%. SPDR S&P Homebuilders ETF (XHB) rallied 1.65%. The Energy Select SPDR ETF (XLE) gained 1.7%, even as crude oil prices fell slightly following Monday’s sharp losses. The Financial Select SPDR ETF (XLF) rose 1.1%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 0.7% and ARK Genomics ETF (ARKG) edged up 0.4%. Tesla is the No. 1 holding across ARK Invest ETFs. SQ stock also is a top ARK holding, though Cathie Wood has been trimming the funds’ Square stake more recently.
Paycom earnings jumped 56% as revenue rose 33%, both the best gains in years, as rebounding employment spurs demand for the human resources software maker. The company also raised guidance. PAYC stock rose 6% overnight. That would signal a gap above 404.87, which could serve as either an early entry or a double-bottom base buy point. PAYC stock closed up 5 cents at 399.99.
Steel Dynamics Stock
STLD stock broke out last week, clearing a 63.28 buy point from a double-bottom base on Thursday. Shares then drifted lower, just dipping below the buy point on Monday. On Tuesday, Steel Dynamics stock came close to testing its 50-day line intraday but then rebounded for a 2.8% gain to 64.65. It was a good day for steel stocks generally.
After surging nearly 10% over three sessions in above-average volume, clearing first a trend line entry and later a 700.10 aggressive buy point, Tesla stock pulled back slightly Tuesday intraday. Shares dipped to 701.01 before recovering to end the day up 7 cents at 709.74.
SQ stock sank to 261.75 intraday, briefly undercutting a 267.87 handle buy point before rebounding to close at 269.49, down 1.1%. The test wasn’t a surprise after Square stock spiked 10% on its $29 billion AfterPay acquisition and blowout earnings.
ZI stock shot up to 63.66 soon after Tuesday’s open after ZoomInfo earnings and guidance easily beat views late Monday. That cleared a consolidation with at least an alternate buy point of 60.38 But shares quickly pulled back, closing up just 3.1% to 56.50. Technically, ZI stock is in range from a 55.34 entry, but the chart action doesn’t look good.
After the close, ZoomInfo proposed an offering of 20 million shares on behalf of existing shareholders. ZI stock edged lower overnight.
Market Rally Analysis
The Dow Jones, S&P 500 and Nasdaq found support at their 21-day exponential moving averages and rose modestly. All are near record highs. The tech titans and big-cap software names are taking a breather, which is probably healthy.
On the flip side, the Russell 2000 is still below its 50-day line. Despite Tuesday’s slim gain, the small-cap index closed below its 21-day line for a third straight session. It’s a good proxy for market breadth, which is a little better than a few weeks ago but not by much.
Leading stocks were mixed. But some “losers” such as SQ stock showed positive chart action. Meanwhile a number of growth and steel stocks like Steel Dynamics did well. Energy stocks rebounded despite crude prices falling again, though many of the hot shale producers are still below their 50-day lines.
Of course, just because a market index or leading stock like Tesla finds support one day doesn’t mean it’s guaranteed to hold support tomorrow, next week or beyond. Every day is a test.
Buying new stocks remains a challenge in this market rally. While breakouts and early entries have worked better overall in the past few weeks, ZI stock is a vivid reminder that strong initial action may not hold up by the close or the next day.
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