Dow Jones futures were little changed late Monday, along with S&P 500 futures and Nasdaq futures. The stock market rally had a mixed session, but many leaders acted well. BIIB stock skyrocketed after the FDA approved Biogen’s controversial Alzheimer’s drug.
Marvell Technology (MRVL) headlined key earnings late Monday, with MRVL stock flirting with a breakout overnight. Academy Sports & Outdoor (ASO) reports before Tuesday’s open. ASO stock rose to a record high Monday, extended from any buy point.
Early Tuesday, investors should get China EV sales for May, including the first reading on Tesla sales in that critical market. That comes amid signs of weakening Tesla (TSLA) demand in China, as well as the company scrapping the planned Model S Plaid Plus.
Biogen Alzheimer’s Drug Approved
The Food and Drug Administration approved the Biogen (BIIB) Alzheimer’s treatment, aducanumab, on Monday. Aducanumab, now known as Aduhelm, is the first Alzheimer’s drug to gain approval in nearly two decades. There’s still a great deal of controversy over whether the Biogen Alzheimer’s drug is effective at slowing cognitive decline. The FDA gave aducanumab accelerated approval, meaning it’s requiring further testing and can reverse its decision at any time.
After being halted for a few hours, Biogen stock exploded 38% to 395.85. Intraday, shares cleared a six-year consolidation, setting a new high of 468.18. BIIB stock has had some big swings over the years, including several moves on Alzheimer’s drug news.
Biogen stock was easily the top performer on the S&P 500 index, followed by Eli Lilly (LLY). LLY stock shot up 10%, hitting a new high and breaking out of a four-month consolidation. Eli Lilly has a rival Alzheimer’s drug in the works.
LLY Stock Headlines New Buys
Pool supplies retailer Leslie’s Poolmart (LESL) also broke out Monday, but with a caveat. LESL stock fell solidly overnight on a share offering.
DocuSign, InMode and Leslie’s boast multiple quarters of accelerating earnings growth. Star Bulk earnings are a little lumpier, but are expected to skyrocket 2,476% in 2021.
Marvell earnings modestly beat Q1 views, with the chipmaker guiding slightly higher for Q2. MRVL stock rose 5% to 50.50 in extended trade, signaling a breakout. Marvell stock has a 49.31 handle on a consolidation going back to late January. However, the RS line for MRVL stock is well off highs. Shares dipped 0.9% to 48.27 on Monday.
Dow Jones Futures Today
Dow Jones futures were flat vs. fair value. S&P 500 futures tilted higher and Nasdaq 100 futures rose 0.1%.
Coronavirus cases worldwide reached 174.29 million. Covid-19 deaths topped 3.74 million.
Coronavirus cases in the U.S. have hit 34.22 million, with deaths above 612,000.
Stock Market Rally
The Dow Jones Industrial Average fell 0.4% in Monday’s stock market trading. The S&P 500 index dipped 0.1%, even with Biogen and LLY stock soaring. The Nasdaq composite climbed 0.5%, with BIIB stock a Nasdaq 100 component. The small-cap Russell 2000 popped 1.3%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.9%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 1.05%. The iShares Expanded Tech-Software Sector ETF (IGV) advanced 0.8%. The VanEck Vectors Semiconductor ETF (SMH) dipped 0.5%. MRVL stock is an SMH component.
SPDR S&P Metals & Mining ETF (XME) slipped 0.9% and Global X U.S. Infrastructure Development ETF (PAVE) 0.7%. U.S. Global Jets ETF (JETS) nudged up 0.1%. SPDR S&P Homebuilders ETF (XHB) edged down 0.1%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) jumped 2.9% and ARK Genomics ETF (ARKG) 3.6%. ARKK and ARKG remain below their 50-day and 200-day moving averages, though ARKG tested those key levels intraday. Tesla is the No. 1 holding across ARK Invest’s ETFs.
Stocks Entering Buy Zones
DOCU stock advanced 3.3% to 240.97, clearing a double-bottom base with a 236.21 buy point. On Friday, DocuSign stock surged 20%, vaulting in massive volume above its 50-day and 200-day lines.
InMode stock popped just over 5% to 89.46, clearing a V-shape cup-with-handle base buy point of 87.10.
SBLK stock leapt 8.3% to 20.45, rebounding from its 10-week line, offering a new buying opportunity.
Yeti stock jumped 5.8% to 92.62, rebounding from its 10-week line and clearing a three-weeks-tight pattern with a 91.65 buy point. The relative strength line is at a new high, reflecting Yeti stock’s outperformance vs. the S&P 500 index.
Here’s a not-so-bonus breakout: LESL jumped 5% to 31.25, clearing a 30.95 buy point from a cup-with-handle buy point. But the pool supplies retailer announced a planned offering of 24.5 million shares on behalf of existing holders. Leslie’s stock fell 6% in overnight trading.
Tesla China Sales
The China Passenger Car Association will release May auto sales data early Tuesday Eastern time. That’ll include overall electric-vehicle sales as well as wholesale sales for Tesla.
Tesla’s April China sales excluding exports plunged two-thirds vs. March.
Tesla vehicle orders nearly halved in May, according to a report last week. That comes after weeks of complaints from Chinese consumers about Tesla vehicle safety and the company’s perceived arrogance in response. State media have heavily reported on these issues.
However, Tesla deliveries for May reflect orders from prior months. The real impact from Tesla’s public relations woes might not be clear until this summer.
Meanwhile, CEO Elon Musk tweeted Sunday that he was canceling the Tesla Model S Plaid Plus, saying the upcoming Plaid was good enough. However, the Plaid Plus carried a much-higher price tag with Tesla touting an expected range of more than 500 miles vs. about 400 miles for the Plaid.
The Plaid Plus was slated to use new 4680 battery cells, which Musk says will be cheaper and extend range significantly. But Tesla has admitted that mass producing the 4680 battery likely won’t take place until well into 2022.
If so, that could affect the Cybertruck and Semi, both of which are supposed to get the 4680 batteries. Elon Musk has also said the Model Y made at the upcoming Austin and Berlin plants will also carry the 4680 battery.
Tesla stock rose 1% to 605.13 on Monday after falling to 582.88 intraday. TSLA stock closed almost exactly on its 200-day line. The RS line for Tesla stock is just above a six-month high.
Nio stock rose 4.15% on Monday. Xpeng stock climbed 3.4% and Li Auto 4.1%. All three have regained at least their 50-day lines in the past couple of weeks, but remain far below record highs. A key question is whether Nio, Xpeng and Li Auto can take advantage of Tesla’s China woes.
Market Rally Analysis
The stock market rally on Friday returned to “uptrend resumes” after several days as “uptrend under pressure.” On Monday, the major indexes were mixed but the overall trends were positive. The Dow Jones and S&P 500 nudged lower, still just below all-time highs. The Nasdaq composite moved past last week’s short-term highs. The Russell 2000 rallied to its best close since March 17. When the small-cap index is rising, leading and growth stocks tend to fare well.
Tech, medical and shipping leaders fared well, as DOCU stock, InMode and SBLK stock showed. Energy stocks paused after a powerful move last week. Mining stocks dipped but pared losses with copper prices.
What To Do Now
The stock market rally is in a confirmed uptrend. Leading stocks are breaking or flashing buy signals. This is a time to be gradually increasing exposure, gradually entering the pool rather than running cannonball into the deep end. Right now a number of tech stocks are cropping up, but several other sectors are showing strength, with Leslie’s and SBLK stock illustrating that. But, it’s unclear if the sector rotation that has complicated investing for the past several months will give way to a broad, steady uptrend.
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