Stock gains gain strength: chip stocks are bullish


Stock futures add to the early gains on Wednesday – with chip stocks poised to rise, Netflix rising with gains and some IPOs making big early moves


Nasdaq 100 futures pushed the advance early on Wednesday, up 0.7%. Dow Jones futures rose to 0.2% above fair value. S & P 500 futures strengthened to a gain of 0.4%.

Intel (INTC) headed the Dow, while IBM (IBM) fell to the bottom of the index in earnings results. Qualcomm (QCOM) led the Nasdaq 100. Qualcomm, Textron (TXT) and railroad CSX (CSX) rose higher among the shares of the S & P 500.

Stocks of chips were energized as Qualcomm continued to increase ratings ratings and Wall Street's price targets after Tuesday's agreement with Apple (AAPL). Intel rose higher after reporting the results on Tuesday. O The iShares PHLX Semiconductor ETF (SOXX) rose 1.7% at the beginning of the action.

Netflix (NFLX), a share in the IBD ranking, rose 2.6% after surpassing analysts' targets. Also in the Leader Board, Autohome (ATHM) configured for a possible early escape. Mexican Steakhouse Chipotle (CMG), also a Leaderboard name, fell into an analyst downgrade.

IPOs Jumia Technologies (JMIA) and Tuffin Software (TUFN) were increasing in premarket trading. Stockpiles of marijuana were in motion, with Canopy growth (CGC) and Aurora Cannabis (CBA), each with more than 2%, after making strong moves on Tuesday.

News of earnings: Netflix, United, CSX near points of purchase

Morgan Stanley (MS) rose 1.8% after first-quarter profit fell less than expected and revenue rose 5%, surpassing analysts' targets. Morgan Stanley shares rose 31% since the end of December, up from a 13-month consolidation.

Netflix gained 2.6 percent to just under 371.59 points of purchase on a cup-with-handle basis. The entertainment streaming leader reported revenue and profit for the first quarter of 2016, ahead of analysts' estimates. The company's guidance for second quarter subscriber growth fell short of views. Subscribers increased to 9.6 million in the first quarter, up from consensus forecasts to 9.4 million.

United airlines (UAL) rose more than 3%. The company reported 135% gains in the first quarter, well above analysts and its biggest gain in four years. Revenue rose 6%, below expectations. United's shares are struggling to regain support in a double-bottomed pattern, showing a buying point of 91.03, according to a MarketSmith analysis.

The CSX railroad carried a pre-market advance of 4.6%. A gain of 31% stronger than expected and a 5% revenue increase in line with expectations pushed the railroad to four quarters of constant earnings. The stock ended on Tuesday at a range of buying, above a cup base purchase point at 76.34. The chase zone extends to 80.15.

Aurora rises, Autohome Eyes Breakout

The China-based Autohome rose 3.4 percent, enough to suggest it would outpace its trade opening point. The auto buying and selling service closed Tuesday's session 3.1% below a purchase point of 11.70 on a cup-with-handle basis. Keep an eye on the trading volume of the stock. You would like to see the trade at least 40% above normal to confirm a break. Not all pre-market movements are transferred to the regular trade.

Aurora Cannabis fell 2.9% before Wednesday's opening. The company announced an acquisition on Tuesday. The shares ended the session below a purchase point of 10.42 on a cup base with handle.

Surprises of China's economic growth

China's markets ended mixed despite a series of positive economic news. China's economy grew 6.4 percent in the first quarter, down from a growth of 6.8 percent a year ago, but better than the 6.3 percent rise expected by economists. Industrial production grew 8.5% year-on-year in March, well above expectations for a 5.9% increase and the strongest performance since July 2014. March retail sales rose 8.7% also exceeding expectations.

The Shanghai Composite advanced 0.3%, adding to the high of Tuesday. Hong Kong's Hang Seng index fell a fraction. In Japan, the Nikkei 225 of Tokyo had an increase of 0.3%. Inventories rose in India, with the Sensex Index of the Bombay Stock Exchange up 1%.

Among Asian-focused ETFs, Direxion Daily CSI 300 China Bull 2X Shares (CHAU) gained 1.6% in the premarket trading session. O Direxion Daily The MSCI India Bull 3x (INDL) remained unchanged.

Markets in the UK and Europe remained mixed in the afternoon trade. The Frankfurt DAX and the CAC-40 in Paris rose 0.4% each. London's FTSE 100 stood at 0.1%.

IPO Watch: Jumia Spikes; Zoom, Pinterest on the deck

The wave of up-front initial public offerings is set to continue, with Pinterest and Zoom preparing to launch IPOs on Thursday. Germany's Jumia Technologies jumped 13 percent before Wednesday's opening. The online retailer for African countries ended Tuesday 147% above Friday's IPO price.

Israel-based Tuffin Software posted a 10 percent pre-market gain toward its fifth day of trading. Shares of the security software developer ended on Tuesday 52% above Thursday's IPO price.

Other recent IPOs, including Lyft (LYFT) and Tencent Music Entertainment (TME) rose or fell less than 0.5% in Wednesday's pre-market share. Tradeweb Markets (TW) fell by 1.7%.

Oil prices on inventories News

Oil prices rose sharply early in the trading session, ahead of weekly data released by the Energy Information Administration at 10:30 p.m. West Texas Intermediate added 0.6% for trading at $ 64.46 a barrel. Europe's Brent index rose 0.7% to $ 72.21. The American Petroleum Institute reported on Tuesday that US weekly stocks fell more than 3 million barrels, against expectations of an increase of almost 2 million barrels.

Benchmarks Aim for the 4th monthly advance

Nasdaq rose 3.5% in April, leaving 1.7% above the August record. Dow Jones industrialists rose 2 percent in April. The index rose to 1.9% from its October high on Tuesday. The S & P 500 gained 2.6 percent since the beginning of the month, moving up to 1.1 percent from its September record on Tuesday.

All four major market indices are working on their fourth consecutive monthly gain. As the indexes approach their previous highs, the current bullish stock market rally has accumulated a total of nine days of distribution against the S & P 500 and Nasdaq. Find out what the distribution days are and how they can affect the current bullish trend reading the big picture.

See the General Market Indicators chart here.

Follow Alan R. Elliott on Twitter @IBD_Aelliott.

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