Dow Jones futures were little changed Thursday morning, along with S&P 500 futures and Nasdaq futures, signaling slim gains to finish off an amazing 2020.
The stock market rally had a quietly strong Wednesday, even though the major indexes closed with slim gains. There were several breakouts, while EV stocks such as Nio (Nio) and Tesla (Tesla) powered higher, and small caps and growth names outperformed overall. Meanwhile, Bitcoin surged yet again to a fresh high.
Tesla and Nio stock continued to climb early Thursday, both boosted by analyst comments.
In Wednesday’s session,Â Visa (V) broke out of a base, with archrival Mastercard (MA) tripping some buy signals. Taiwan Semiconductor (TSM), copper miner Freeport McMoRan (FCX) and China e-commerce play Vipshop (VIPS) cleared three-weeks-tight patterns, on a good day for chipmakers, cyclical stocks and Chinese internet plays, respectively. Walt Disney (DIS) popped out of a short consolidation.
Meanwhile, Nio stock is still in buy range from a 10-week line rebound and other bullish signals. While 2020 IPOs Li Auto (LI) and Xpeng Motors (XPEV) face big tests, BYD Co. (BYDDF) is setting up in a short consolidation as Tesla stock rallied to a record high. All may get a sales boost from Shanghai extending a license plate policy that encourages EV sales.
Finally, tech giants lagged somewhat after big gains Monday. Apple stock and Microsoft (MSFT) pulled back. But that could be a positive pause if they form handles.
Tesla, Apple, Microsoft and TSM stock are on IBD Leaderboard. FCX stock is on SwingTrader. Microsoft and Mastercard stock are on IBD Long-Term Leaders, while Visa stock essentially is a Long-Term Leader. Taiwan Semi and VIPS stocks are on the IBD 50. Tesla stock and FCX are on the IBD Big Cap 20.
Microsoft stock, Apple, Visa and Disney are all Dow Jones components.
Dow Jones Futures Today
Dow Jones futures fell about 0.1% vs. fair value. S&P 500 futures edged lower. Nasdaq 100 futures climbed 0.1%.
Bitcoin price ran above $29,000 overnight, but has pulled back Thursday morning to $28,000.
The official China manufacturing indexes dipped 0.2 point in December to 51.9, still indicating modest growth.
At 8:30 a.m. ET, the Labor Department will release weekly jobless claims figures.
Coronavirus cases worldwide reached 83.20 million. Covid-19 deaths topped 1.81 million.
Coronavirus cases in the U.S. have hit 20.21 million, with deaths above 350,000.
The U.K. approved the AstraZeneca coronavirus vaccine on Wednesday. The AstraZeneca (AZN) and Oxford vaccine is faster and easier to make than the Pfizer/BioNTech (BNTX) and Moderna vaccines, as well as being easier to store. So it’ll be a major player in vaccinations, especially in developing nations.
Stock Market Rally
The stock market rally had slim gains for the major indexes, but small caps and growth names did well.
The Dow Jones Industrial Average rose 0.2% in Wednesday’s stock market trading. The S&P 500 index edged up 0.1%. The Nasdaq composite advanced 0.15%. The Russell 2000, which lost 1.85% on Tuesday, rebounded for a 1.05% gain.
Bitcoin price shot up as high as $29,000 during Wednesday’s stock market trading hours, clearing the early Sunday peak above $28,000. Bitcoin and other cryptocurrencies have been soaring, especially in the last couple of months. Grayscale Bitcoin Trust (GBTC), one way for stock investors to play Bitcoin, leapt 9.6% to a new closing high Wednesday.
Apple stock dipped 0.85% to 133.72. On Tuesday, the iPhone maker hit a record 138.79 high, clearing a 138.08 buy point, before reversing modestly lower. A high handle at these levels could be useful, shaking out weak holders with Apple stock up 12.3% so far in December.
Microsoft stock retreated 1.1% to 221.68 after reversing slightly lower Tuesday. A handle at these levels, near another resistance area, would provide a lower official buy point for MSFT stock.
Growth names generally did well, especially chip names. Software and red-hot IPOs were mixed.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.5%, while the Innovator IBD Breakout Opportunities ETF (BOUT) jumped 2.3%. The iShares Expanded Tech-Software Sector ETF (IGV) was essentially flat, down 4 cents. Microsoft stock is a major IGV holding. The VanEck Vectors Semiconductor ETF (SMH) gained 1.85%, with TSM stock a top component.
TSM Stock Headlines Chips
Taiwan Semiconductor stock rose 3.2% to 108.90, clearing a 107.94 buy point from a three-weeks-tight. Investors could have started a position in TSM stock on Dec. 24. The relative strength line for TSM stock is at a record high, reflecting its outperformance vs. the S&P 500 index.
Among other chip names acting well, Monolithic Power (MPWR) is consolidating right at record highs and a buy point. AMD (AMD), Applied Materials (AMAT), Lam Research (LRCX) and Entegris (ENTG) are finding support or rebounding from their 21-day exponential moving averages. All five are on the IBD 50, like TSM stock.
Visa Stock Breaks Out
Visa stock rose 1.9% to 218.36, clearing a 217.75 buy point from a flat base that could also be viewed as a handle to a consolidation going back to early September. Investors could have started a position in Visa stock on Monday, as it broke a short trend line.
Mastercard stock climbed 2.6% to 355.55. The official buy point is 367.35, though 357.10 could be viewed as a handle entry. MA stock already moved above some early entries, including 348.09.
For both Visa and Mastercard stock, the relative strength lines have been lagging while the Relative Strength Ratings are lackluster at best. Investors buying these stocks are betting on an economic and travel rebound in 2021, boosting transactions, including lucrative cross-border payments.
Visa was Wednesday’s IBD Stock Of The Day.
FCX stock jumped 7.2% to 26.53 on Wednesday, vaulting above a 25.53 three-weeks-tight buy point, according to MarketSmith analysis. That follows a powerful run after bottoming at 4.82 on March 18. The copper and gold miner is benefiting from stronger demand and prices as the global economic outlook improves.
Technically, FCX stock is just within the 5% chase zone, which runs to 25.80. But investors should try to buy as close as possible to a buy point in a three-weeks tight. Freeport is looking a little extended.
Among related stocks, Caterpillar (CAT) rose 1.9% to 180.04, rebounding from its 10-week line as the Dow giant moves within its own tight pattern.
VIPS stock jumped 6.4% to 27.76, clearing a monthlong consolidation just above a prior base. That pause included a three-weeks-tight. VIPS stock, like FCX, might be a little extended now.
Vipshop, as a smaller Chinese e-commerce play, may be less affected by regulators cracking down on giants such as Alibaba (BABA).
BABA stock rose 0.9%, continuing a rebound from a big sell-off. JD.com (JD) popped 3.9%, actionable as it clears short-term resistance and continues a move above its 10-week line. Pinduoduo (PDD) ran up 7.8% to a fresh high, looking extended. So do Baidu (BIDU) and Bilibili (BILI), which shot up 13% and 14%, respectively, on Wednesday.
Disney stock rose 2.2% to 181.17, clearing a short consolidation that was almost a three-weeks-tight. This is a possible area for DIS stock investors to add a few shares, but probably not to start a new position.
The recent consolidation follows a Nov. 9 gap-up on the initial bullish Pfizer coronavirus news, followed by further big DIS stock gains.
Nio Stock, China EV Stocks
Nio stock jumped 4.85% to 48.38. After again testing its 10-week moving average on Tuesday and nearly touching down on its 50-day line for the first time in months, Nio stock is now 8.5% above its 10-week line, still actionable. It’s also broken above a downward-sloping trend line, offering another early entry. In another week, Nio stock could have a new base with a 57.30 buy point.
As for rival China EV startups, XPEV stock rose 1.8% and Li Auto 1.4%. The former is just above its 50-day line but below its 10-week. Li stock is slightly below both, though well off weekly lows.
BYD Group, a more-established EV maker and big battery producer, rose 2.2% to 25.71. BYD stock, which is listed in Hong Kong and trades over the counter in the U.S., has formed a handle in a short consolidation, offering a 26.30 buy point.
Finally, Tesla stock rallied 4.3% to 694.78, its fifth straight gain and hitting a record 696.60 intraday. TSLA stock is now roughly flat since entering the S&P 500 index before the Dec. 21 open at 695.
Bank of America raised its Nio stock price target to 59 from 54.70, citing the Jan. 9 Nio Day event and other factors. Masterlink Securities initiated Tesla stock with a buy rating and 750 price target.
Nio rose 1% early Thursday, while Xpeng and Li Auto stock climbed 2%. Tesla advanced more than 1% to top 700 for the first time.
Shanghai Surprise for China EV Sales
Shanghai on Wednesday extended a policy offering free license plates for new energy vehicles from year-end to the end of February. NEV vehicles include electric cars, hybrids and fuel-cell vehicles. Obtaining license plates in major Chinese cities can be very expensive, and limited. The Shanghai NEV license plate policy fueled huge November sales gains for Tesla, Nio, Xpeng, Li Auto and BYD Group, with expectations for more of the same in December.
After February, the EV sales picture could be more complicated, with the risk of overall supply exceeding demand. Tesla presumably will be ramping up made-in-China Model Y output, while Volkswagen should be doing the same for the rival ID.4. Nio, Li Auto, Xpeng, BYD and other legacy automakers and startups also will be have higher EV production.
In the short run, Nio, Xpeng, Li Auto and BYD should release December production and deliveries data by the end of next week. Tesla will release global production and deliveries figures for the fourth quarter by late next week.
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