Tesla Leads the Bulls to a Bounce Back Win
Reaction to major earnings reports next week is key to whether the market can gain momentum into the election.
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The market bounced back on Thursday, with a strong earnings report from Tesla TSLA leading the charge. The gain in Tesla helped the Magnificent Seven (MAGS) break out of a trading range that had been in place for more than a month.
Gains for the indexes were relatively minor, with the S&P 500 SPY and Russell 2000 IWM gaining around 0.25% while the DJIA lost 0.3%. Breadth was 5,200 gainers to 4,100 losers, and there were 200 new 12-month highs to 150 new 12-month lows.
There were some nice pockets of momentum action, with stocks such as Viking Therapeutics VKTX, ServiceNow NOW, and United Parcel Service UPS showing good gains. The list of stocks moving up 10% or more was quite lengthy.
The most significant aspect of the action was that there was no fade following the gap-up open in Tesla. The strength was not sold, and buyers were looking for entries. It wasn’t that strong of a day overall, but it was a good close and helped boost bullish sentiment.
Whether the market can gain momentum from here will depend on the reaction to the major earnings reports next week. After that, the big risk will be an presidential election without a clear winner on election night. I suspect that there will be nervousness about that as we move closer to election day.
For now, the bulls are still in control and did a good job of recovering from very ugly action on Wednesday. We now have some good stock-picking, so stay focused on the charts and don’t get too caught up in macro matters.
Have a good evening. I’ll see you Friday.
At the time of publication, Rev Shark was long VKTX.
