To The Moon

On Wednesday (11 Dec), we saw stocks surged which was led by a rally in shares of major technology companies that pushed NASDAQ above 20,000 points for the first time.

NASDAQ rose 1.77% to finish Wednesday's session at 20,035, while the S&P 500 added 0.82% to close just shy of a new high. The Russell 2000 gained 0.6% while DJIA closed 0.22% lower after giving back earlier gains.

U.S. stocks were coming off of two straight days of losses as the market took a breather from a post-election rally that has sent major indexes to a series of record highs.

The market showed broad positive breadth, with mega-cap stocks significantly impacting the S&P 500 and Nasdaq Composite.

CPI Came In Line With Expectations Though Inflation Might Remain Sticky

The U.S. stock market got an early boost Wednesday after the Consumer Price Index report showed that 12-month inflation was 2.7% in November, up from 2.6% the month before but in line with economists' expectations. The reading, while indicating that inflation remains sticky, reinforced expectations that the Federal Reserve will likely cut its benchmark fed funds rate at its policy meeting a week from today.

Other economic data included the Weekly MBA Mortgage Applications Index at 5.4%, up from 2.8%. The November CPI was 0.3%, matching consensus and prior figures. Core CPI also matched consensus at 0.3%. The shelter index showed a 0.3% increase, with minimal increases in owners' equivalent rent and rent indices.

The Weekly EIA crude oil inventories showed a draw of 1.43 million barrels, following a prior draw of 5.07 million barrels. The November Treasury Budget revealed a deficit of $366.8 billion, up from $314.0 billion in the same period last year. The deficit was driven by significant outlays exceeding receipts, particularly in net interest payments.

Probability Of 25 Basis Point Cut Increase

The probability of a 25 basis point rate cut by the Fed during next week FOMC have increased, with the CME FedWatch tool indicating a 98.6% probability, up from 88.9% the previous day and 78.1% last week.

S&P 500 Communication Services, Consumer Discretionary and Technology Above 1.5% Gains

Large-cap technology stocks were mostly higher on Wednesday, we saw $Alphabet(GOOGL)$ up by 5.52% to led the communication services sector with 3.08% gain, consumer discretionary sector was also up by 2.02% helped by Tesla (TSLA) 5.93% gains. Amazon (AMZN) also contributed to the gain in the consumer discretionary sector.

The technology sector was help by major tech names like AI chipmaker $NVIDIA Corp(NVDA)$ which gained 3.14%, while Microsoft (MSFT) and Meta (META) also finished solidly higher. Apple (AAPL) hit an all-time high Wednesday but ended the session 0.5% lower.

So the strategy to hold onto these high quality and sustainable stocks does help.

Note Yield Moderated After Initial Decline After CPI Release

Treasury yields initially fell after the CPI release but later moderated. The 2-year yield settled at 4.16%, and the 10-year yield at 4.27%.

Stocks To Watch

$Tesla Motors(TSLA)$ closed at a new all-time high of $424.77, surpassing its previous record from November 2021. Despite the bullish sentiment linked to potential regulatory support for autonomous vehicles, Wall Street remains cautious with an average price target of $259.66. Analysts have been bearish, with recent ratings mostly suggesting 'Sell' or 'Strong Sell'.

If we looked at the technicals, I actually feel bullish for TSLA, as we can see from the chart below, TSLA is trading comfortably above the short-term and long-term MA, and we can see that TSLA formed a bullish MACD crossover last Friday (06 Dec), so that is an indication that TSLA is building an upside movement.

MTF is also giving confirmation signal that it is in a strong upward trend. So I foresee that TSLA would be making another new highs in weeks to come.

Apple (AAPL) is collaborating with Broadcom (AVGO) to create its first in-house server chip designed for AI, known as Baltra. The chip, expected to enter mass production by 2026, will be manufactured by Taiwan Semiconductor (TSM). This development saw Broadcom shares rise by 6.5%, while Apple's fell slightly. Nvidia (NVDA), a key player in the AI market, also saw a 3.5% increase.

Adobe (ADBE) reported strong Q4 results, with EPS beating estimates and revenue increasing by 11.1% year-over-year. However, its guidance for fiscal 2025 disappointed investors, leading to a 6.5% drop in its stock price. The company anticipates a $200 million revenue shortfall due to forex headwinds and a shift towards subscriptions.

Broadcom (AVGO) led semiconductor stocks higher, recovering from a previous decline with a 6.6% gain. News of its collaboration with Apple on AI chips contributed to the rise. Nvidia (NVDA) and AMD (AMD) also saw gains as they invested in startup Ayar Labs. $Taiwan Semiconductor Manufacturing(TSM)$ rose 1.4% amidst these developments.

As AVGO is reporting its earnings after the market close today, you may refer to my article on the earnings. Broadcom (AVGO) Revenue From VMWare In Focus As Run Rate From VMware Looks Positive

Another stock we can look at is TSM, though we are seeing that TSM is trading near the short-term MA and with a bearish downside movement from MACD, but MTF is showing increased upward trend signal though no confirmation.

I believe this might be a good time to look at TSM if you are looking to acquire some semiconductor names.

Chewy (CHWY) announced a public offering of $500 million in shares, with an additional $75 million option for underwriters. The company will also repurchase $50 million of its stock from the selling shareholder, separate from its existing repurchase program.

Aerospace and defense stocks like Lockheed Martin (LMT) and Northrop Grumman (NOC) face potential risks from federal budget cuts under the Trump administration. J.P. Morgan analysts have adjusted their valuation estimates, citing possible reductions in defense spending.

Summary

I believe the positive momentum from yesterday rally might continue today, though we would see some of the AI software stocks suffer because of Adobe lacklustre earnings after hours on 11 Dec.

The technology stocks should still have strength to push NASDAQ higher. I am looking for more consumer discretionary stocks like LULU to make new highs.

Appreciate if you could share your thoughts in the comment section whether you think tech stocks would powered NASDAQ to yet another new highs.

@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.