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Business

The sell-off in Tesla is a ‘massive buying opportunity’ before the company hits a $1 trillion market valuation this year, Wedbush says

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Investors looking for “a massive buying opportunity” should look at Tesla, the Wedbush analyst Dan Ives said in a note on Monday.

Shares of Tesla are off 33% from its all-time high. A surge in interest rates over the past month has sparked a rotation out of high-growth tech stocks and into cyclical stocks poised to benefit from an economic reopening.

Ives said three factors had also hurt Tesla shares in recent weeks: valuation concerns, increased global competition in the electric-vehicle space, and a shortage in chips and China demand “causing softness out of the gates so far in 2021.”

But now “is not the time to panic,” Ives said, as the recent weakness in EV stocks will be short as companies digest their gains.

“The sell-off we have seen in EV land creates a massive buying opportunity in our opinion to own Chinese EV players as well as the leader of the pack Tesla heading into this golden age of EVs,” Ives said.

The fundamentals remain strong for the space, as tax incentives and the Biden administration’s green-energy agenda should help spur significant demand for EVs over the coming months, the note said.

Ives expects EV sales to represent 20% of all auto sales globally by 2030, a significant increase from 3% today.

Ultimately, Ives sees significant upside for Tesla; he expects the company to hit a $1 trillion market valuation before the end of the year. With a market capitalization of $574 billion on Monday, Tesla would have to surge 75% to hit a $1 trillion valuation, assuming its outstanding shares remained constant.

“In the EV party, its 8pm, not 2am,” Ives said.

Read more: Wedbush says to buy these 16 stocks that represent its analysts’ best ideas and are set to outperform in the next 6 to 12 months

Markets Insider

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Business

Cathie Wood says the underlying bull market is strengthening and she’s finding great buying opportunities in the sell-off

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Cathy Wood

Crystal Mercedes | CNBC

Ark Investment Management founder and CEO Cathie Wood said she is not worried about the recent drop in her funds and that the bull market is simply broadening out to include more strategies like value.

The hot handed investor added that over time her disruptive strategy will pay off, and she’s capitalizing on the sell-off.

“Right now the market is broadening out and we think in an underlying sense the bull market is strengthening and that will play to our benefit over the longer term,” Wood said on CNBC’s “Closing Bell” on Monday.

Wood manages five ETFs focused around “disruptive innovation” that have raked in more than $15 billion of investor money this year alone. Ark’s flagship fund — Ark Innovation — returned nearly 150% in 2020 as the pandemic accelerated innovation trends and now has more than $17 billion in net assets. However, ARKK is down about 8% this year amid recent weakness in technology stocks, pressured by rising interest rates.

“We are getting great opportunities” in the sell-off to buy the pure play names in the funds, said Wood. “When we get opportunities like this to invest in pure plays instead of more mature plays…we will move back into pure plays.””

We are becoming more and more optimistic about our portfolios in this sell-off,” she added.

Wood took the recent tech weakness as an opportunity to buy the dip in some of her ETF’s top holdings. Wood has made big purchases of Tesla, Teladoc, Zoom Video and Palantir, according to the firm’s disclosures. Ark Innovation also scooped up shares of Square, Roku, Zillow and Shopify recently.

Wood said Ark Invest is struck that the market never priced in 0.5%, 1%, or 1.5% yield on the U.S. 10-year Treasury.

“We do think the speed of the increase in interest rates is scaring people. It became very comfortable in a low interest rate environment: nothing much changing, the Fed has our back and so forth,” said Wood.

Wood added that this type of pullback happened to Ark during the fourth quarter of 2016, when President Donald Trump was elected and promised to lower tax rates. During that period, Ark’s strategies went negative.

“The bull market was broadening out to incorporate value or more cyclical sectors and I thought that was going to be very good news for our strategies longer run. The worst thing that could have happened to us what another tech and telecom bubble where the market narrowed so that only a few groups won,” said Wood.

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Business

Build a cash position for the next stock sell-off

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CNBC’s Jim Cramer said the jobs report from the Labor Department Friday satisfied markets, at least for the interim.

The U.S. economy added 379,000 jobs last month and the unemployment rate inched down, with stocks managing to bounce from their lows of the day and snap a tough three-day trading stretch to end the week on a high note.

Economists had forecast the job market to grow by 210,000 in February.

“An employment number that’s strong, but not too strong, was just what this crazy market needed today, although it took half the day for Wall Street to figure that out,” Cramer said after the close on “Mad Money.”

The major stock indexes all swung nearly 2% higher at the close after trading in the red during the morning. The Dow Jones Industrial Average rallied 572 points, or 1.85%, to close at 31,496.30, finishing up 1.82% after a volatile week. The S&P 500 advanced 1.95% Friday to 3,841.94, also finishing the week in positive territory.

After closing down in the red Thursday, the Nasdaq Composite bounced 1.55% to 12,920.15 on Friday. The tech-heavy index ended the week down 2.06% as growth stocks sold off.

As the U.S. continues its recovery from last year’s coronavirus-induced business lockdowns and restrictions, the February labor report likely did not do enough to push the Federal Reserve to raise interest rates to tamp down inflation as the economy grows, Cramer said.

“It was a hidden-Goldilocks report: A lot more people are getting hired, thanks to the vaccine rollout and the reopening, but not so many that the Fed will feel compelled to raise interest rates, and some are really being left behind,” he said.

Wall Street is on standby to see if the uptrend will continue or the downtrend in stocks will resume. The bond market is still in control, however, as investors continue to rotate from high-growth stocks to value and cyclical names until rising Treasury yields stabilize, Cramer added.

Longer-term Treasuries are a bellwether for lending rates. Higher rates make cyclical stocks more attractive, leading investors to reduce their appetite for riskier assets.

“I’m betting the bond bullies will be back, so get ready by using rallies like this one to lighten up, as we did for my charitable trust at the end of the day, and certainly lighten up on the high-flying dreamer stocks and the SPACs,” he said. “That way you’ll have some cash to deploy for the real companies the next time we get hammered like we did yesterday afternoon.”

Cramer gave his game plan for the week ahead. Earnings-per-share projections are based on FactSet estimates:

Monday: Stitch Fix

Stitch Fix

  • Q2 2021 earnings release: after market; conference call: 5 p.m.
  • Projected losses per share: 22 cents
  • Projected revenue: $512 million

“A great quarter won’t produce the kind of explosive reaction we got last time,” Cramer said. “Still, I’m betting the numbers are better than expected because this is a great business.”

Tuesday: Dick’s Sporting Goods

Dick’s Sporting Goods

  • Q4 2020 earnings release: before market; conference call: 10 a.m.
  • Projected EPS: $2.30
  • Projected revenue: $3.07 billion

“I expect Dick’s to deliver a very strong number, one that could send the stock flying,” he said.

Wednesday: Campbell Soup, Oracle

Campbell Soup

  • Q2 2021 earnings release: before market; conference call: 8:00 a.m.
  • Projected EPS: 83 cents
  • Projected revenue: $2.3 billion

“So far, these pantry stocks they’ve failed to impress,” Cramer said. “I can’t go against the prevailing wisdom here, although I think this company’s won over enough of the stay-at-homers with its snack offerings that you won’t be that disappointed, and you get that 3.2% yield.”

Oracle

  • Q3 2021 earnings release: after market; conference call: 5 p.m.
  • Projected EPS: $1.11
  • Projected revenue: $10.05 billion

“This is exactly the kind of lower-risk tech stock that people suddenly like … [as opposed to] the high-flyers,” he said. “Those are still getting torn to pieces, so I was ready to recommend Oracle [tonight], but I got beat to the punch. A big brokerage house pushed it today, sent the stock up 6%, stole my thunder.”

Thursday: JD.com, Ulta Beauty

JD.com

  • Q4 earnings release: before market; conference call: 7 a.m.

Cramer said JD.com is “one of the few Chinese stocks I like because it’s another ‘Amazon of China’ thing. It’s like Alibaba, which you know I like, but it’s got faster growth, though.”

Ulta Beauty

  • Q4 earnings release: after market; conference call: 5 p.m.
  • Projected EPS: $2.32
  • Projected revenue: $2.07 billion

“It’s about to experience a sales explosion when the country reopens. Ulta pivoted to e-commerce when the pandemic hit … but now that we’re getting vaccinated, their brick and mortar business can make a comeback,” he said. “Plus, they’re rolling out a new Target collection. I’d be a buyer ahead of that quarter.”

Disclosure: Cramer’s charitable rust owns shares of Amazon.

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Business

Dow futures fall 200 points after a steep sell-off on Wall Street amid surging bond yields

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Stock futures fell in overnight trading Thursday following a tech-led rout on Wall Street amid a surge in bond yields.

Futures on the Dow Jones Industrial Average dipped 200 points, while S&P 500 futures slid 0.8%. The Nasdaq 100 futures fell 1%.

All eyes will be on February jobs report, which is set to be released Friday morning. Economists expect to see that 210,000 payrolls were added in February, compared to just 49,000 in January, according to Dow Jones.

The move in futures followed a sharp sell-off triggered by Federal Reserve Chair Jerome Powell’s remarks on rising bond yields. He said the recent runup caught his attention but he didn’t give any indication of how the central bank would rein it in. Some investors had expected the Fed chair to signal his willingness to adjust the Fed’s asset purchase program.

The economic reopening could “create some upward pressure on prices,” Powell said in a Wall Street Journal webinar Thursday. Even if the economy sees “transitory increases in inflation … I expect that we will be patient,” he added.

“The market’s translation of ‘patient’ is that patient doesn’t mean ‘never,’ and that Powell is indicating that easy money will at a certain point come to an end,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial. “So while the verbiage isn’t too far away from the Fed’s previous stance, it’s enough to move a jittery market south.”

The 10-year Treasury yield jumped back above 1.5% following Powell’s comments. The benchmark rate had stabilized earlier this week after a spike to 1.6% last week amid higher inflation expectations.

Tech stocks led the market decline as growth-oriented companies tend to be more vulnerable to higher interest rates. The Nasdaq Composite dropped 2.1% Thursday, bringing its losses this week to 3.6%. The tech-heavy benchmark also turned negative for the year and fell into correction territory, or down 10% from a recent high, on an intraday basis.

The S&P 500 and the Dow both fell more than 1% Thursday, headed for a losing week. Energy outperformed with a 2.5% gain in the previous session amid a jump in oil prices.

“Rates soared once again, which opened the door for more selling of technology stocks,” said Ryan Detrick, chief market strategist at LPL Financial. “The bright side is the economy continues to improve and leadership from financials and energy is something that suggests this isn’t a sell everything moment.”

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Business

Asia stocks rise after Wall Street tech sell-off

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Shares across the Asia-Pacific region rose after a rough day on Wall Street, where US technology stocks tumbled in the face of rising inflation expectations.

Hong Kong’s Hang Seng index jumped 2.1 per cent on Tuesday, boosted by a 3.6 per cent gain for HSBC after the Asia-focused lender reported it would resume dividend payments. Australia’s S&P/ASX 200 added 0.8 per cent.

In cryptocurrencies, bitcoin continued its descent from recent all-time highs.

China’s CSI 300 index of Shanghai- and Shenzhen-listed stocks clawed back 0.1 per cent one day after the benchmark suffered its biggest one-day drop in more than six months. The sell-off was prompted by concerns that the country’s rapid economic recovery from the Covid-19 pandemic could bring on the removal of policy support for asset prices.

Meanwhile, South Korea’s tech-focused Kospi index edged up 0.4 per cent. Markets in Japan were closed for a national holiday.

In US trading on Monday, the S&P 500 shed 0.8 per cent while the tech-focused Nasdaq Composite tumbled 2.5 per cent. Shares of Facebook, Amazon, Apple, Netflix and Google parent Alphabet all fell in what some investors suggested was the beginning of an overdue correction.

Futures for the S&P 500 rose 0.5 per cent on Tuesday during Asian trading, while those for London’s FTSE 100 added 0.3 per cent.

A sell-off of US government bonds gathered pace on Monday on fears that returns would be eroded by a return of inflation. The 10-year US Treasury yield rose 0.03 percentage points to 1.37 per cent. Bond yields move inversely to prices.

Trading in US treasuries will not resume until European markets reopen, given the public holiday in Japan.

Investors are also looking ahead to Federal Reserve chair Jay Powell’s testimony to Congressional committees on Wednesday for any hints on whether rising inflation could push the US central bank to curtail its ultra-loose monetary policy.

Traders will get another clue on whether inflation concerns are justified on Friday, when the US commerce department releases its personal consumption expenditures price index for January.

“The reality today is that inflation is a risk — core government bond yields are rising as markets reprice for better future growth,” said Kerry Craig, a global market strategist at JPMorgan Asset Management. “But some inflation may not be a bad thing, and the recovery has a long way to go before it becomes a problem.”

Bitcoin fell 9.6 per cent to $49,872 for a single coin on Tuesday after it touched a record high of $58,500 the previous day. The cryptocurrency is still up more than 70 per cent this year.

Oil prices continued to rise with Brent crude, the global benchmark, up 1.8 per cent to $66.43 a barrel. US marker West Texas Intermediate rose 1.6 per cent to $62.71 a barrel.

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Business

Dow Jones Futures: Federal Reserve, Tesla ‘Confidence’ Stem Growth Sell-Off; Twilio, Tilray Lead Earnings Movers

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Dow Jones futures were little changed late Wednesday, along with S&P 500 futures and Nasdaq futures. The stock market rally had a mixed session Wednesday, with the Dow Jones hitting record highs while many growth names struggling. The Bitcoin price surged above $52,000.




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Federal Reserve officials didn’t expect to start scaling back their huge asset-buying program for “some time,” newly released minutes from the January Fed meeting showed. Meanwhile, Tesla (TSLA) rebounded from key support as ARK Funds’ Cathie Wood said she’s been buying more Tesla stock as “our confidence in Tesla has grown.” But Apple (AAPL) undercut key levels.

Meanwhile, communications software maker Twilio (TWLO),  Canadian pot producer Tilray (TLRY), edge networking leader Fastly (FSLY), Chinese search giant Baidu (BIDU), genomics tools maker 10X Genomics (TXG), fertilizer specialist Mosaic (MOS), lithium miner Albemarle (ALB) and chip design software maker Synopsys (SNPS) were key earnings overnight.

Twilio stock and Tilray were big winners overnight, while Mosaic and Baidu stock rose modestly. ALB stock, Fastly and Synopsys fell slightly while TXG stock was not active.

Generally these stocks are not close to buy points, either being too extended or well off highs. Mosaic stock, which cleared a short consolidation on Tuesday.

Apple stock and Tesla are on IBD Leaderboard.

IBD Stock Of The Day Breaks Out Amid Soaring Energy Prices

Dow Jones Futures Today

Dow Jones futures were even with fair value. S&P 500 futures and Nasdaq 100 futures were little changed.

The Bitcoin price surged above $52,000 on Wednesday, a day after topping $50,000 for the first time. Bitcoin remained above $52,000 in evening trade. Cathie Wood, who has been buying Bitcoin-related plays, said the cryptocurrency could hit $200,000 if more corporations join Tesla in buying Bitcoin.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live.

Coronavirus News

Coronavirus cases worldwide reached 110.39 million. Covid-19 deaths topped 2.43 million.

Coronavirus cases in the U.S. have hit 28.44 million, with deaths above 502,000.

Fed Signals No Bond Taper For ‘Some Time’

Strong retail sales and other economic data early Wednesday appeared to undercut growth stocks around the open. A stronger economy is good news, all things being equal. However, the strong reports ease pressure to pass a huge new stimulus, though a big package is still likely. Also, the 10-year Treasury yield has been surging in recent weeks, moving slightly higher on Wednesday.

However, the Federal Reserve isn’t in any hurry to take the punchbowl away. While some Fed officials may have concerns about asset prices, Fed chief Jerome Powell and the central bank are focused on reviving economic growth and employment. The Fed meeting minutes released Wednesday afternoon made it clear that policymakers will keep pour cheap money into financial markets and the economy.

Stock Market Rally Wednesday

The stock market rally started off poorly, at least for growth stocks, getting worse as the morning went on. But ARK Funds CEO Cathie Wood talked up Tesla stock. At 2 p.m. ET, the Fed meeting minutes were released.

The Dow Jones Industrial Average rose 0.3% in Wednesday’s stock market trading as industrials, financials and fertilizer makers and other real economy stocks fared well. The S&P 500 index closed just below fair value. The Nasdaq composite fell 0.6%, near session highs after tumbling 1.7% intraday.

Tesla Stock A Buy?

Tesla stock fell as low as 762.08 intraday, nearly touching its 50-day line and undercutting the 10-week average. But shares rallied to close up 0.2% to 798.15. Cathie Wood said she’s still buying up shares of the EV maker. Wood again expressed “confidence” in Tesla’s potential for ride-hailing and self-driving. Wood has been a long-time booster of Tesla’s self-driving efforts, even as autonomous experts step up criticism and more rivals test actual self-driving vehicles.

This is TSLA stock’s first 50-day/10-week test since its November breakout, so it could be a buying signaling. However, Tesla stock remains below its 21-day exponential moving average, an area of resistance in recent days.

Apple Stock

Apple stock did not fare as well, falling 1.8% to 130.84, closing below its 50-day and 10-week lines. Shares are falling further and further from a 138.89 cup-with-handle buy point. The relative strength line for Apple stock continues to fade. Apple stock is not flashing a huge sell signal yet — it’s just 1.2% below its 10-week line — unless you’re down 7%-8% on your purchase price.

Growth stocks had a rough outing, with richly valued software names and speculative stocks taking hits, even though they pared losses.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) sank 1.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 2%.  The iShares Expanded Tech-Software Sector ETF (IGV) retreated 1%. The VanEck Vectors Semiconductor ETF (SMH) sank 1.9%.

The ARK Innovation ETF (ARKK) lost 2.1% and ARK Genomic Revolution (ARKG) 1.8%.

Key Earnings

Twilio earnings beat views while revenue guidance was strong. Twilio stock leapt 11% overnight, signaling a record high. TWLO stock sank 2.3% on Wednesday to 411.65.

Tilray reported a smaller-than-expected loss, including a slim EBITDA profit, while sales narrowly beat. Tilray stock popped 9% in extended trade. But that’s not a big move for this marijuana stock. TLRY stock tumbled 9% to 31.51 on Wednesday, far below its Feb. 10 peak of 67.

Fastly earnings narrowly beat quarterly views but its guidance ranged from in line to slightly below consensus. FSLY stock retreated 4% in overnight trade. Fastly stock sank 2.7% to 94.85 on Wednesday, a fifth straight decline. Shares have been in a wide-and-loose consolidation that looks more suspect in the current stage of the stock market rally.

Baidu earnings easily topped forecasts but sales missed. Baidu stock rose 2% in extended trade. BIDU stock fell 5.4% on Wednesday, snapping an 11-day winning streak to a record high.

10X Genomics reported a huge loss but sales rose 49%, topping views. 10X stock was not yet active overnight. TXG stock sank 2.5% on Wednesday after reversing lower from a record high on Tuesday.

Mosaic earnings easily beat the consensus. MOS stock climbed 2% in extended action. Mosaic stock dipped 0.7% on Wednesday after clearing a short consolidation on Tuesday.

Synopsys earnings beat fiscal Q1 views. SNPS stock dipped 1% overnight. Synopsys slid 2.4% on Wednesday after reversing lower from a record high Tuesday. SNPS stock is extended from a 246.79 flat-base buy point, according to MarketSmith analysis.

Albemarle earnings topped forecasts. ALB stock fell 2% in extended trade. Albemarle stock fell 2.9% on Wednesday, undercutting its 50-day line after reversing lower Tuesday to below its 21-day line. Investors could buy an ALB stock rebound from the 50-day line, but should probably wait for a move above the 21-day or even Tuesday’s intraday high of 171.35.

Why This IBD Tool Simplifies The Search For Top Stocks

Stock Market Rally Analysis

Whether you want to call Wednesday’s session a pullback or rotation, the stock market rally saw movement out of leading stocks Wednesday.

Is this just another 1-day pause or the start of a one-week pullback or something more serious? The Nasdaq is now 6.2% above its 50-day moving average. That’s off recent highs but still slightly extended. The Nasdaq didn’t even close below its 10-day line. A retreat to the 21-day exponential moving average or even the 50-day line could still be seen as a relatively modest pullback, especially if the market bounced back. However, there’s always the possibility that this pullback will be deeper and longer lasting.

The Nasdaq never touched its 21-day line Wednesday, but many growth names were down more than 5% or more, adding to Tuesday’s losses.

Market Playtime Is Over

Powerful stock market rallies are great, but they can breed bad habits. Over the past 10 months, if you leveraged hard, bought the hottest names, added on pullbacks and didn’t worry about messy consolidations, then your portfolio saw huge gains.

Investors who bought the dip in the Nasdaq or Tesla stock were rewarded once again on Wednesday, at least for a few hours. Perhaps growth stocks will run right back to record highs yet again.

But if you trade like it’s a wild, unstoppable stock market rally long term, your portfolio is going to blow up.

It’s time to buckle down and adopt some proper sell rules and focus on top stocks building good-looking bases.

Remember, those top stocks and quality bases may not be in traditional growth names. If nothing else, investors should expand their horizons to cyclicals and financials.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

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

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Business

Stock futures dip after a steep sell-off on Wall Street, Apple and Tesla fall after earnings

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Stock futures tied to major U.S. equity indices were flat in overnight trading on Wednesday as the market is poised to extend a sharp sell-off amid concerns about heightened speculative trading.

Futures on the Dow Jones Industrial Average traded just 10 points lower. S&P 500 futures were little changed and Nasdaq 100 futures dipped 0.4%.

Apple turned in its largest revenue on record at $111.4 billion in its fiscal first-quarter earnings report for fiscal 2021. Sales for every product category rose by double-digit percentage points. Shares of the tech giant dipped 3%, however.

Tesla dropped more than 3% in extended trading after the electric car maker posted worse-than-expected earnings for the latest quarter. The company also said it expects annual average delivery growth of 50% going forward.

Wall Street suffered steep losses on Wednesday, with the S&P 500 and the Dow posting their worst day since October, as the speculative buying frenzy in heavily shorted stocks kept investors on edge. Some fear that hedge funds being squeezed could be forced to reduce their equity holdings to raise cash.

“Short squeezes causing implosions in some hedge funds are joining SPACs, IPOs, and bitcoin as data points supporting a market bubble thesis,” Scott Knapp, chief market strategist at CUNA Mutual Group, said in a email. “This is a time for caution for investors.”

Trading volume exploded in the previous session with 23.7 billion shares changing hands, marking the heaviest trading day since at least 2007.

Brick-and-mortar video game retailer GameStop, a target on the “wallstreetbets” Reddit chat room, soared another 134% Wednesday, pushing its January gains to a whopping 1,744%. AMC Entertainment surged over 300% Wednesday alone, experiencing its highest volume ever.

GameStop fell 23% in extended trading, while AMC Entertainment dropped 38%. Other highly shorted names that had rallied this week, including Bed Bath & Beyond and National Beverage, also fell after hours.

Facebook stock remained relatively flat in after-hours trading after the company warned that a reversal in pandemic trends could hurt its advertising business. The social media company beat on top and bottom line for the fourth quarter.

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