Dow Jones futures tilted lower Wednesday morning, while S&P 500 futures and Nasdaq futures edged higher. Bitcoin rebounded after Tuesday’s tumble toward multi-month lows. The stock market rally had another quiet session Tuesday, with the major indexes holding near record highs but more top stocks flashing buy signals.
UiPath (PATH) reported better-than-expected earnings late Tuesday in its first report since its IPO, but the initial reaction for PATH stock was negative.
Clover Health (CLOV) and Wendy’s (WEN) soared as they’ve joined the “meme stock” Reddit craze. GME stock shot up with GameStop (GME) earnings due Wednesday. Bed Bath & Beyond (BBBY) and AMC Entertainment (AMC) continued higher. But RIDE stock plunged after Lordstown (RIDE) issued a going concern notice.
The S&P 500 was essentially flat Tuesday. But Generac (GNRC) and Marvell Technology (MRVL) broke out. Google parent Alphabet (GOOGL) is nudging toward a breakout and new high. Applied Materials (AMAT) retreated, but now has a handle in its consolidation as it tests its 50-day line once again.
Dow Jones Futures Today
Dow Jones futures fell less than 0.1% vs. fair value. S&P 500 futures edged higher. Nasdaq 100 futures rose 0.2%.
The 10-year Treasury yield fell two basis points to 1.51%, extending a long slide.
UiPath earnings topped views, defying forecasts for a loss. Revenue modestly beat targets. The maker of robotic process automation software guided higher on some metrics. But sales growth slowed to a still-hefty 64% in Q1 and is likely to keep slowing in Q2.
PATH stock tumbled nearly 7% before the open after diving at least 10% late Tuesday. Shares rose 2.9% to 76 on Tuesday.
PATH stock came public at 58 a share in late April, soon forming an IPO base. UiPath stock broke out past the 83.50 buy point in late May. On May 28, PATH stock hit a record 90, but then reversed sharply lower. Shares have trended down since then.
Bitcoin traded above $34,000 Wednesday, up modestly from a day earlier but still in the lower half of its range over the past several weeks. On Tuesday, the Bitcoin price sank as low as to $31,035, undercutting a late May low. Dropping below $30,000 would signal a key breakdown for Bitcoin, which has been trying to hold support but hitting resistance at around $40,000 over the past couple of weeks. Bitcoin hit a record $64,829.14 in mid-April.
Other cryptocurrencies, including Ethereum and Dogecoin also sold off Tuesday before rebounding somewhat.
U.S. law enforcement said Monday they had recovered Bitcoin currently worth $2.3 million paid by the Colonial Pipeline last month to hackers. That cyberattack spurred a shutdown of the major East Coast gasoline pipeline. Colonial said it had paid Bitcoin worth $4.4 million at the time.
A key selling point for Bitcoin is that it’s private and hard to trace, making it popular with criminals and tax evaders. But the partial recovery of the Colonial Pipeline ransom suggests law enforcement can trace Bitcoin payments to some extent. Meanwhile, the U.S. is taking steps to crack down on Bitcoin-related tax evasion, moving toward requiring cryptocurrency exchanges such as Coinbase (COIN) to report large transactions.
COIN stock fell 4.7% to 220.66, hitting a record closing low. Among other Bitcoin-related stocks, Grayscale Bitcoin Trust (GBTC) slumped 7.2% to a 2021 low.
Clover Health stock skyrocketed 86% to 22.15 on Tuesday, hitting a record 24.93 intraday as it became the latest stock discussed heavily on Reddit forum Wall Street bets. CLOV stock leapt 32% on Monday. Clover Health combines several speculative themes in one.
CLOV stock came public on Jan. 8 via a special-purpose acquisition company, or SPAC, run by venture capitalist Chamath Palihapitiya. Clover Health had tumbled after Hindenburg Research claimed the health insurer misled investors.
CLOV stock jumped Wednesday morning.
Meanwhile, Wendy’s stock popped 26% to 28.87 on Tuesday, clearing a consolidation going back to mid-October. WEN stock has recently gotten social media chatter.
GME stock rose 7.1% to 300, after running up to 344.66 intraday, a three-month high. GameStop earnings are on tap late Wednesday, with investors focused on what a revamped management team will say about its push to be a digital-focused video game retailer. Chewy (CHWY) co-founder Ryan Cohen, who has pushed for a digital strategy, will become GameStop’s chairman on Wednesday along with much-changed board of directors.
AMC stock edged up 0.1% to 55.05 on Tuesday. Shares have been quieting down since skyrocketing 95% on June 2. AMC stock fell modestly early Wednesday.
BBBY stock advanced 8.4% to 36.83.
While heavily shorted stocks are ripe for a short squeeze, it’s also a sign that the company’s underlying business and its prospects are bleak.
Lordstown stock jumped as high as 15.80 intraday as it joined the meme frenzy. But in the afternoon the EV pickup startup issued a going-concern warning as part of its annual filing.
“The Company believes that our current level of cash and cash equivalents are not sufficient to fund commercial scale production and the launch of sale of such vehicles.”
RIDE stock reversed sharply lower, closing down 16% to 11.22.
Another issue for meme stocks is how many can be hot at the same time. What happens to, say, AMC stock after a massive run and Reddit investors turn their attention to CLOV stock or the next hot thing?
Stock Market Rally Tuesday
The stock market rally had a relatively quiet session, especially on the major indexes.
The Dow Jones Industrial Average dipped 0.1% in Tuesday’s stock market trading. The S&P 500 index finished just above breakeven. The Nasdaq composite climbed 0.3%. The Russell 2000 popped 1.1%.
The 10-year Treasury yield fell 4 basis points to 1.53%, matching the lowest close in nearly three months.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.15%, while the Innovator IBD Breakout Opportunities ETF (BOUT) slumped 1.1%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.2%. The VanEck Vectors Semiconductor ETF (SMH) retreated 0.8%. AMAT stock, which retreated 2.2%, is a notable SMH component.
SPDR S&P Metals & Mining ETF (XME) gained 1.9% and Global X U.S. Infrastructure Development ETF (PAVE) advanced 0.9%. U.S. Global Jets ETF (JETS) climbed nearly 1%. SPDR S&P Homebuilders ETF (XHB) picked up 0.6%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rose 0.4% and ARK Genomics ETF (ARKG) climbed 1%. ARKK is below its 50-day and 200-day moving averages. ARKG closed right on its 200-day and just below its 50-day line.
ARK ETFs have taken big positions in COIN stock since it came public on April 14. Cathie Wood’s ARK also own PATH stock.
Coronavirus cases worldwide reached 174.80 million. Covid-19 deaths topped 3.76 million.
Coronavirus cases in the U.S. have hit 34.24 million, with deaths above 613,000.
Market Rally Analysis
The S&P 500 and Dow Jones continue to trade just below record highs, with the S&P 500 coming within 1% of its all-time high. The Russell 2000 continued its recent solid advance, pushing to 1% of record levels as well. The Nasdaq is also closing in on new highs.
Ultimately, the question for active investors is whether there are good stocks to buy. While the current rally is not a raging bull, it is a stock picker’s market. There have been good stocks to buy out of bullish bases or rebounds, and those moves have been working lately. Generac and Marvell stock are just the latest breakouts. AMAT stock and Vale could be actionable in the coming days or weeks — or not.
Investors should be taking advantage of this stock market rally. But this market requires discipline. Work hard on your watchlists to find the best-possible stocks.
Remember, even the best stock pickers will pick a lot of lemons. The key is to cut those losses short.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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