Dow futures fell overnight, along with S&P 500 futures and Nasdaq futures. nvidia (NVDA) AMD shares fell overnight after the chip giants said the US government has imposed export restrictions on some chip sales to China. On Thursday morning, China EV startups like Nio will release their August sales.
The stock market rally made a brief and weak attempt on Wednesday, with major indexes hitting resistance at the 50-day moving average before reversing lower.
Nvidia stock plunges on China border
Nvidia shares fell nearly 7% in overnight trading. The chip giant said in a filing from the Securities and Exchange Commission that the government has imposed new licensing requirements on sales of data center chips to China and Russia, citing concerns about “military end use.” Nvidia, which does not currently sell products to Russia, said the restrictions could affect $400 million in sales.
The US government is placing increasing restrictions on China’s advanced chip technology.
Nvidia competitor Advanced Micro Devices (AMD) A similar notice from the US regarding the sale of various GPUs in China with AI. AMD stock is down 4% in late trading. Taiwan’s semiconductor industry (TSM), which makes Nvidia’s chips, fell 2%.
pure storage (PSTG) major overnight earnings. PSTG stock jumped on better-than-expected earnings as well as revenue guidance. Shares fell 1.8% to 28.97 on Wednesday, to close above the 200-day line. PSTG stock may test a buy point of 31.62 from the base of a cup with a handle.
China sales EV
Early Thursday, the start of Chinese electric cars New (NIO), Lee Otto (LI) and XPeng Motors (XPEV) will report delivery data for August. Giant EV and battery BYD (BYDDF) is likely to report on Friday or Saturday. Nio, along with shares of Li Auto, Xpeng, BYD and Tesla (TSLA) is now struggling.
As the market rally weakens, investors should be wary of new purchases and work to reduce exposure. But they should look for potential leaders for their watch lists.
Energy Enphase (ENPH), Bindudu (PDD) and NBIX stock are consolidating well, with relative strength lines at 2022 highs.
Enphase Energy and PSTG stocks are on the IBD 50 list. ENPH stock is also on the IBD Big Cap 20. Neurobiological Sciences (NBIX) IBD stock was on Wednesday.
Dow jones futures contracts today
Dow futures were down 0.2% against fair value. S&P 500 futures are down 0.55% and Nasdaq 100 futures are down 0.95%, with AMD and Nvidia stocks weighing on S&P 500 and Nasdaq futures.
Remember that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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stock market rise
The stock market rally tried to live up to its name at Wednesday’s opening, but the major indexes fell quickly, closing at session lows.
The Dow Jones Industrial Average lost 0.9% in stock market trading on Wednesday. The S&P 500 fell 0.8%. The Nasdaq Composite Index fell 0.6%. Small-scale Russell 2000 also fell 0.6%.
The price of US crude oil fell 2.3 percent to $ 89.55 a barrel.
The 10-year Treasury yield rose 2 basis points to 3.13%.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) is down 0.4%. The ETF (IGV) and VanEck Vectors Semiconductor ETF (SMH) in the iShares Expanded Tech-Software Sector ETF both fell 0.7%. Nvidia and AMD stocks are SMH’s major holdings.
The SPDR S&P Metals & Mining ETF (XME) was down 0.8%. SPDR S&P Homebuilders ETF (XHB) is down 1.2%. The Energy Select SPDR ETF (XLE) lost 0.9%. The SPDR Fund (XLV) for Selected Healthcare decreased 0.6%.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) rose 0.1% while the ARK Genomics ETF (ARKG) rose 1.3%. Tesla shares are principal ownership via Ark Invest’s ETFs. Cathie Wood’s Ark also owns some shares of Nio and BYD.
Top 5 Chinese stocks to watch right now
stock to watch
Enphase stock rose 0.2% to 286.44 on Wednesday, and has been consolidating for the past few weeks, holding support at the 21-day moving average. It comes after shares surged in Enphase earnings in late July. The blue RS line in the provided charts is holding at record highs. This reflects ENPH’s outperformance against the S&P 500.
PDD stock jumped 7.2% Wednesday to 71.30, to clear 68.81 underlying buying points, according to MarketSmith analysis. It comes after a 15% surge in Pinduoduo’s earnings on Monday, as stocks briefly liquidated the buying point that day. Pinduoduo’s RS line is at consolidation tops, just at the best levels since last November. While PDD stock is in buy territory, it is 28% above the 50-day line.
NBIX stock rose 1.3% to 104.63, rebounding slightly from its 21-day streak. Shares have pulled back slightly from the August 9 high of 109.26. This rally capped a major earnings breakout. NBIX stock could form a new base, but it will be actionable from breaking the trend line in the current short consolidation. The RS line is at a 52-week high.
China sales EV
Nio, Li Auto and XPeng reported August deliveries ahead of Thursday’s opening. After all three China EV startups slightly exceeded 10,000 deliveries in July, Nio and XPeng may miss that mark in August, while Li Auto may not hit 5,000.
Nio delivered 10052 electric vehicles in July. On August 28, Nio launched shipments of the ES7 SUV. The ET5 sedan follows on September 30, after the ET7 luxury sedan in March.
Nio stock rose 0.6% to 19.95 on Wednesday, hovering below the 50-day line. The stock is running at 24.53 a key buy low, which might include a break of the 200-day line.
Li Auto shipments declined in August, according to preliminary data, after reaching 10,422 in July. The Li One Hybrid SUV, the automaker’s only vehicle as of this week, has seen an abrupt fading of demand. Li Auto says the more upscale L9, another hybrid SUV, is breaking up sales. L9 deliveries began on Tuesday, with Li Auto expecting 10,000 L9 deliveries in September.
LI stock fell 0.1% to 28.77 on Wednesday, once again hitting the 200-day line resistance.
XPeng delivered 11,524 vehicles in July. Production capacity has grown but the lineup is getting old. The G9 SUV should begin deliveries in the fourth quarter, replacing the old G3.
XPeng stock rose 1.4% on Wednesday to 18.52, after hitting a 22-month low on Tuesday.
In the meantime, BYD is likely to announce August sales on Friday or Saturday. July sales of electric and plug-in hybrid vehicles rose 222% from a year earlier to 162,350. There are indications that BYD will set another record in August.
In September, BYD will begin delivering the Seal sedan, a rival Tesla Model 3 priced at $10,000 less. In the next few days, BYD will begin delivering the Atto 3 in Australia, as part of a massive international expansion that includes much of Europe.
On Monday, BYD announced first-half profit tripled from a year earlier, with sales increasing by 60%. This led to a slight rise in the stock.
But BYD stock fell 7.8% on Tuesday, followed by a 4.35% loss to 30.75 on Wednesday. Shares of the electric car and battery giant slipped below the 200-day moving average after hitting a record high of 43.61 on June 28.
catalyst? Warren Buffett Berkshire Hathaway (BRKB) said on August 30 that it sold 1.33 million H shares on August 24 in Hong Kong, less than 1% of its large stake in BYD. Berkshire still owns just under 8% of BYD, but there are concerns that it will continue to sell shares.
Tesla did not achieve sales in China, but industry data indicates that domestic sales exceeded 30,000 in August. This does not include exports to Europe and elsewhere. The most complete industry data for Tesla will come later in September.
The waiting time for the Base Model Y in China has been reduced to 1-4 weeks, according to Tesla’s website. Tesla Shanghai just got a big capacity boost, but does the demand keep up? Li Auto and Xpeng demonstrated the importance of new or upgraded electric vehicles in China, and Tesla’s two cars are no longer new.
Tesla stock fell 0.75% to 275.61 on Wednesday. Stocks are holding above the 50-day line, but are pulling back from the 200-day and 21-day moving averages.
Tesla vs. BYD: Which EV giant is the best one to buy?
Market Rise Analysis
The stock market rally doesn’t show much fighting. Major indexes rallied on Wednesday morning, but quickly hit a wall at the 50-day moving average. They pulled back, eventually closing at session lows.
The Russell 2000 and S&P 400 MidCap both fell back just over the 50-day streak, although they finished slightly below their 10-week average.
Energy play has rebounded somewhat, especially natural gas stocks, after some sharp losses on Tuesday.
The return of the Nasdaq back above the 50-day line is significant, but certainly not a completely clear signal for the bulls. On the other hand, it won’t take much of a pullback to push the tottering market rally towards a correction.
Time to Market with IBD’s ETF Market Strategy
What are you doing now
The market rally is still under pressure at the moment, but the weakness is evident. Investors should look to take profits and cut losses rather than add exposure.
Work on your watch lists. Keep looking for potential settings, but be sure to keep track of high-quality stocks with high relative strength, even if the charts haven’t matured yet. But stocks can outperform in a weak market until they suddenly falter. Relative winners can still be absolute losers.
Read the big picture every day to stay in sync with market trend, stocks and leading sectors.
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