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Stock markets rally in the past Polish rocket attack on inflation data, Warren Buffett Buy; Nvidia loom


Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures. The stock market’s strong rally on Tuesday morning fizzled out, quickly turning mixed after a Russian missile is believed to have hit Poland.




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Target (TGT) Wednesday morning earnings headlines, while the chip giant Nvidia (NVDA) made a big appearance on Wednesday night.

Stock markets rallied on Tuesday morning after another normal inflation report. Walmart (WMT) income is also helped. Warren Buffett’s Berkshire Hathaway also revealed that it has taken a major new position in the business Taiwan Semiconductor (TSM).

The main indexes reduced their gains somewhat, but then quickly switched to the opposite of the Russian missile news. But the Dow rallied to turn positive again.

Polish missile attack?

In the mid-afternoon, stocks wobbled as it was reported that Russian missiles had hit Przewodow, a Polish village just across the border with Ukraine. The rockets are said to have killed two people. It is possible that the Russian missile strayed from its target in Ukraine, or that the Ukrainian military shot down the missile and landed in Poland. Moscow launched major attacks on Ukrainian cities on Tuesday.

Russia has denied any responsibility.

Deliberately hitting Poland would be extremely dangerous. All NATO members are committed to protecting all other members from attack. NATO ambassadors will meet on Wednesday morning to consult on Article 4, not the more aggressive Article 5 defense clause. But a much broader conventional war would increase the risk of nuclear weapons, posing an existential threat to the world and, of course, the stock market.

Polish missile attack news aside, the market rally may pause after a strong rally and the S&P 500 is approaching key resistance.

Still, MercadoLibre (MELI) and Pure storage (PSTG) erase buy points on Tuesday, although PSTG stock fell officially for the second straight session.

Retail income

Target, by Lowe (SHORT) and Company TJX (TJX) reported earnings early Wednesday, along with October retail sales. That follows the Dow Jones giant Walmart and Home Depot (HD) earnings at the beginning of Tuesday. WMT stock rose 6.5% on strong earnings, guidance and massive buybacks, breaking out of a buy with a handle. HD stock is up 1.6%, trying to rally.

TGT stock was up 3.6% on Tuesday, but hit resistance at the 200-day line, close to a base buy bottom. Lowe’s advanced 2.15%, operating on a bottom treatment basis. TJX stock up 2.9%, still in 10-month range cup with handle basis.

Nvidia reported on Wednesday night. Nvidia stock rose 2.3% on Tuesday, adding to its massive gains over the past month that boosted the chip sector. Strong earnings and guidance from Nvidia, as well as from the chip equipment giant Application materials (amateurs) on Thursday night, which will be critical to the broader market and industry recovery.

The video embedded in this article discussed Tuesday’s market rally and analyzed MELI, Pure Storage, and Albemarle (ALB).

MercadoLibre Securities participated IBD Rankings and it’s Tuesday IBD shares of the day. ALB stock is on the Leaderboard watchlist. MercadoLibre and PSTG stocks are on SwingTrader. Pure storage is on IBD 50.

Dow Jones Futures Today

Dow Jones futures are down 0.2% from fair value. S&P 500 futures lost 0.2% and Nasdaq 100 futures fell 0.1%.

On Tuesday night, former President Donald Trump is expected to announce he will run for re-election to the White House in 2024.

October retail sales are due at 8:30 a.m. ET. Economists expect the Commerce Department to report a 1% increase, or just 0.2% excluding autos and gas.

Remember that action overnight in future index and other places that don’t necessarily translate into actual transactions the next time stock market meeting.


Join IBD experts as they analyze stocks that could act in the stock market rally on IBD Live


Rally stock market

The stock market rebounded strongly as the producer price index was lower than expected, with core PPI unchanged from September. Walmart earnings also helped. TSM stock spiked 10.5% on Tuesday night’s news that Warren Buffett had bought shares. Buffett’s Berkshire also takes on new positions as well as new shares in the company Louisiana-Pacific (LPX) and Jefferies (JEF).

But the major indexes pared gains, with the Dow briefly turning negative following reports of Russian missiles hitting Poland.

The Dow Jones Industrial Average rose 0.2% on Tuesday stock market trading, even if WMT and Home Depot stock support it. The S&P 500 index rose 0.5%. The Nasdaq Composite Index rose 1.45%. The Russell 2000 small-cap index rose 1.5%.

The yield on the 10-year Treasury note fell 7 basis points to 3.8%. The US dollar also fell.

U.S. crude oil prices rose 1.2% to $86.92 a barrel after surging more than 3% shortly after news of the Russian missile. Natural gas futures rose 1.7%.

ETF

Among the best ETFsIBD 50 Innovator ETF (FFTY) increased by 1.4%. iShares Expanded Tech-Soft Sector Sector ETF (IGV) increased by 2.3%. VanEck Vectors Semiconductor ETF (SMH) spiked 3.15%, with Taiwan Semi and Nvidia stockpiling huge components, along with AMAT.

SPDR S&P Metals & Mining ETF (XME) increased by 0.85%. SPDR S&P Homebuilders ETF (XHB) rose 2.1%, with HD and Lowe’s both holding substantial shares. Energy Select SPDR ETF (XLE) is up just over 1% and the Financial Select SPDR ETF (XLF) increased by 0.2%. SPDR Foundation for healthcare sector (XLV) decreased by 0.1%.

Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) rose 2.7% and the ARK Genomics ETF (ARKG) just above breakeven.


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Stocks near the buy point

MELI stock rose 6.4% to 1,020.68, erasing a cup-with-handle buy point of 1,018.10. MercadoLibre volume is below normal, but the recent consolidation has seen some gains on above-average volume. The Latin American e-commerce giant has strong earnings growth.

PSTG shares rose 1.6% to 31.56. On the day, Pure Storage hit 32.47, surpassing the 32.07 cup-with-handle buy point for the second straight session but did not close above that point, according to MarketSmith. PSTG stock ended up having an early entry point of 32.57.

The data storage company also experienced strong earnings growth.

Analysis of market recovery

The stock market rally started off strong on Tuesday, buoyed by the PPI inflation report. But the major indexes pulled back from intraday highs, then turned mixed on reports of the Polish missile attack.

Perhaps the inflation/Fed story has changed. But that doesn’t mean the major indexes can’t hit resistance, especially after a recent strong rally. And, as Tuesday’s action showed, there is always the possibility of geopolitics or other wild cards to reverse the market trend.

The Dow Jones and Russell 2000 have both surpassed their 200-day moving averages. The S&P 500 is approaching the 200-day line, where it hit stiff resistance on Aug. 16.

Nasdaq is moving from the 50-day line to the 200-day line, but there is still a long way to go.

Notably, the Invesco S&P 500 Equal Weight ETF (RSP) lies just above its 200-day line. Direxion Nasdaq-100 Equal Weighted Index ETF (QQQE) is approaching that long-term critical level.

The tech giants are recovering with the market, but certainly not leading. Many giants bottomed out in a bear market just last week. The only exception is Nvidia stock, which has rallied sharply over the past month. But even the chip giant is still working towards its 200-day frontier.

However, a lot of areas are showing strength.

Solar manufacturers, networks, e-contractors and some health product companies are doing well. So are some selected chips, with others trying to set up. A wide range of housing-related stocks are looking interesting, from builders to suppliers to housing retailers.

Other retailers look good, including WMT stock, Wholesale of BJ (BJ) and Ulta Beauty (ULTA). BJ’s report on Thursday.

Trucking companies are going up, as investors bet the worst is over, or at least priced in, for shipping stocks.

Biotech and health insurers have paused or withdrawn but are generally in good shape. Energy stocks are also doing well, although many look to expand.


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What to do now

The major indexes are looking strong, many stocks are showing buy and setup signals. Inflation data may have reached a tipping point, increasing the likelihood that the Fed’s rate hikes will slow and – perhaps – end the tightening in the not too distant future.

Therefore, investors should take advantage of the current market rally. But they want to be cautious about how much they add in the short term, given the possibility of a market drop or resistance.

Don’t chase expansion stocks. Be wary of buying stocks that extend significantly above their 50-day moving averages, even if they are in the official buy zone. Don’t be too focused. A portfolio focused on lithium shares such as Albemarle will be burned on Tuesday.

But work on those watchlists, stay engaged, and get ready for action.

Read Big picture every day to stay in sync with market trends and top stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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