To The Moon

On Wednesday (10 July), we saw the stock market giving a solid performance enabling the major indices gaining more than 1.0%. The S&P 500 closed +1.02% above the 5,600 level for the first time.

However, the trade on Wednesday garnered below-average volume due to hesitation ahead of the Thursday (11 July) June Consumer Price Index release tomorrow and the start of earnings season on Friday (12 July)

Fed Chair Testimony Ended With No Surprise

With the conclusion of Fed Chair’s two-day semiannual testimony on monetary policy with an appearance before the House Financial Services Committee. No surprise was given like Tuesday (09 July)’s remarks to the Senate.

This is one key economic data we need to look out : Thursday June Consumer Price Index (CPI) at 8:30 am Eastern Time.

S&P 500 Mega Cap, Semicon, Bank Stocks Boost Market Broadly

Wednesday upside moves involves many names, the equal-weighted S&P 500 provided a 0.8% gain, and all 11 S&P 500 sectors closed higher.

The heavily-weighted information technology sector (+1.63%) led the pack, while the financial sector (+0.42%) covered the lower of the pack.

Strength in the Mega Cap and Semiconductor sectors boosted the broader market. The PHLX Semiconductor Index (SOX) logged a 2.4% gain, and the Vanguard Mega Cap Growth ETF (MGK) jumped 1.0%.

Significant performance from $NVIDIA Corp(NVDA)$ with 2.7%, $Apple(AAPL)$ with 1.8%, Microsoft (MSFT) giving 1.5% and Alphabet (GOOGL) also managed a 1.2%.

Ahead of the earnings results from some big banks on Friday (12 July), we saw bank stocks outperformed the broader market. The SPDR S&P Bank ETF (KBE) gained 2.0%, and the SPDR Regional Banking ETF (KRE) closed with a 2.2% gain.

$Citigroup(C)$ managed a +0.7%) while JPMorgan Chase (JPM) only managed a +0.1%, both closed higher, while Wells Fargo (WFC) is down by -0.3% logged a slim decline.

10 Year Note Yield Declined

10 year note yield dropped two basis points to 4.28%, and the 2 year note yield settled unchanged from yesterday at 4.63%. This price action was partially in response to a strong $39 billion 10-yr note reopening.

Stocks To Watch

$Tesla Motors(TSLA)$ recent rally appears to be driven by more than just market buzz. The surge began after Tesla revealed it deployed 9.4 gigawatt hours of energy storage products in Q2, more than doubling its Q1 figures.

This deployment is enough to power 10,000 homes in the U.S. for a year, significantly impacting quarterly revenue and profit. Morgan Stanley now projects Tesla's energy business to reach 100GWh in storage deployments by 2028, three years earlier than previously forecasted. The firm also raised its valuation of Tesla Energy to $50 per share, citing accelerating global demand for energy storage amid rising generative AI needs.

I have written a previous article that Tesla rally is different from that of a meme stock.

Nikola Corporation (NKLA) announced it had regained compliance with Nasdaq's listing rules after its stock maintained a closing bid of $1.00 or greater from June 25, 2024, to July 10, 2024. This comes as a relief for the company, which has faced multiple challenges in maintaining its listing status.

Apple (AAPL) suppliers, including $Taiwan Semiconductor Manufacturing(TSM)$ saw gains as Apple aims to boost iPhone shipments this year. TSMC, which produces chips for various Apple products, saw its shares rise by 3%. Micron Technology (MU), which supplies memory chips for Apple, jumped 4%. Other suppliers like Skyworks Solutions (SWKS), Qualcomm (QCOM), and Qorvo (QRVO) also experienced gains.

From the technical, we are going to see more upside coming from TSM, though it has been trading on the downside before Wednesday (10 July), I was trading this stock, and it is trying to clear $189, but failed to do it from Monday (08 July) this week.

But now we are seeing clearer signal from MACD with a bullish crossover and KDJ also give us a positive signal with upside movement and J value moving higher.

Semiconductor stocks were buoyed by the AI spending boom. AMD (AMD) shares rose over 3% after announcing a $665M deal to acquire European AI lab Silo AI. Taiwan Semiconductor (TSM) also saw a 2.7% rise after reporting June revenue figures that exceeded estimates, driven by AI-related demand.

AMD is also another beneficial from the AI spending boom, if we looked closely, there is a correlation from TSM with AMD. AMD has been trading rather flat beginning of this week, but it does have a nice upside movement yesterday (10 July).

Similar to TSM, we are seeing clearer signal from MACD and KDJ, I have traded both stocks yesterday (10 July), so I believe there are still strength in these two stocks.

Illumina (ILMN) saw its stock rise as Citi upgraded it to buy, citing potential core margin upside post-GRAIL divestiture. The bank also upgraded Quest Diagnostics (DGX) and Agilent (A), while downgrading Avantor (AVTR) to neutral, reflecting shifting market dynamics and valuation opportunities.

Summary

Stock market might turn cautious today (11 July), trading volume might be low, but stock price could still be on the high side. But if CPI came in higher, then we could see some of the financial stocks suffered.

Some of the mega cap and semiconductor stocks could be defensive area we can go into.

Appreciate if you could share your thoughts in the comment section whether you think market would still give us a rally from mega cap and semiconductor stocks.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.