Dow Jones Futures: Market Rally flashes very bearish signal; 5 shares to see

Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures. The stock market rose sharply on Tuesday, with the Nasdaq and S&P 500 breaking below a key level.

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Economic reports revived recession and fears of inflation. A report by Intel (INTC) chip price reductions due to PC weakness, hit Intel stock and rival Advanced micro devices (AMD), as well as PC manufacturers and Microsoft (MSFT).

Meanwhile, Exxon Mobile (XOM), Vertex Pharmaceuticals (VRTX), Enphase Energy (ENPH), Google parent Alphabet (GOOGL) and Tesla (TSLA) are five stocks to look at, but for different reasons.

XOM shares rose modestly, flirting with buy signals during the day after the diversified energy giant outperformed most oil and gas companies. The VRTX stock fell below a buy point. The ENPH stock fell in a handle when solar energy stocks were dampened. Google and Tesla shares fell sharply below recent buying points.

Google stock is on IBD Long-Term Leaders. Vertex and Enphase stocks are at IBD 50 and IBD Big Cap 20. Exxon is Tuesday’s IBD Stock Of The Day.

The video embedded in this article highlights Exxon Mobile, Google and VRTX shares.

Dow Jones Futures today

Dow Jones futures rose 0.1% at fair value. S&P 500 futures rose 0.1% and Nasdaq 100 futures rose 0.1%.

The 10-year government interest rate fell 4 basis points to 3.17%.

Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.

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

Stock market rally

The stock market rise opened higher, amplified by China cutting quarantine times for incoming travelers. But the major indices soon faded, led by Nasdaq.

The Dow Jones Industrial Average fell 1.6 percent in Tuesday’s trading session. The S&P 500 index fell 2%, with the ENPH stock among the worst performing. The Nasdaq composite sold 3 percent of. Small-cap Russell 2000 withdrew 1.85%.

Two financial reports came on the market at 10 ET. In June, the consumer confidence index fell to its lowest point since February 2021, while the consumer confidence index reached a low of nine years. An inflation expectations measure reached a record high back in 1987. Meanwhile, the Richmond Fed’s output index was much weaker than expected, the latest negative regional factory report ahead of the ISM’s US output index on Friday.

Intel reportedly cuts Alder Lake processor prices with PC makers’ orders much weaker than expected. Intel shares fell 2.2 percent. Archrival AMD’s stock sold 6.2%, its lowest closing time in a year and just above the June 17 intraday low. Dell technologies (DELL) and HP Inc. (HPQ) both lost 2.6%. Windows maker Microsoft fell 3.2 percent.

The US crude oil price rose 2% to $ 111.76 a barrel. OPEC + will hold its last meeting from Wednesday

The 10-year government interest rate rose 1 basis point to 3.21%.

ETFs

Among the best ETFs, Innovator IBD 50 ETF (FFTY) fell 2%, while Innovator IBD Breakout Opportunities ETF (BOUT) gave up 2.1%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 3.7%, with Microsoft stock tops. VanEck Vectors Semiconductor ETF (SMH) retreated 2.5%, with Intel and AMD stocking key components.

The SPDR S&P Metals & Mining ETF (XME) and the Global X US Infrastructure Development ETF (PAVE) both fell 1.7%. The US Global Jets ETF (JETS) posted strong opening gains and fell 0.8%. SPDR S&P Homebuilders ETF (XHB) lost 2.1%. Energy Select SPDR ETF (XLE) rose 2.7%, with the XOM stock a major component. Financial Select SPDR ETF (XLF) falls 1%. Health Care Select Sector SPDR Fund (XLV) with the VRTX stock one component, withdrew 1.7%.

ARK Innovation ETF (ARKK) reflected more speculative history stocks, falling 5.9% and ARK Genomics ETF (ARKG) 5%. The TSLA share is still a top holding across Ark Invest ETFs.

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Stocks to see

Exxon Mobil shares rose as high as 93.24 intraday, moving above the 50-day and 21-day lines while breaking a steep downward trend. It offered an aggressive entrance. The XOM stock reduced its rise to close at 2.8% to 91.50, but remained above the 50-day limit. Exxon shares held up better than many oil and gas companies trying to recover from their 200-day lines. Nevertheless, investors may ideally see the XOM stock move sideways for a while and form a new base before trying to enter.

Vertex shares fell 3.9% to 276.17, below an early entry of 279.23 after breaking the record 293.17 on Friday. The VRTX stock may still be good, with Tuesday’s retreat coming at a lower volume, and after a series of major gains through last week. But it is worth looking at. The relative strength of VRTX stocks is still close to highs.

The Enphase share fell 7.5% to 190.65, and again found support around its 21-day moving average. ENPH stock is still within a deep handle within a double bottom base. The official buy point is 217.33, although investors can use a move above Monday’s high of 210.10 as an early entry. But ENPH stocks and other solar energy games are volatile, a trait that is tougher to deal with in the current market climate.

China EV Giant in buying zone when it seizes Tesla’s crown

The Tesla stock fell 5% to 697.99 below its 21-day moving average. On Monday, the TSLA stock turned slightly lower after meeting resistance on its 10-week line. Unlike most megacap stocks, the Tesla stock remained above its lowest levels at the end of May in June. Late this week, perhaps Saturday, Tesla will release second-quarter delivery figures that should show a significant decline compared to Q1, reflecting a closure of the Shanghai plant and slow recovery.

Tesla has cut hundreds of employees from the autopilot team as part of extensive layoffs at the electric car giant, Bloomberg reported. CEO Elon Musk, who fears a recession is likely, has repeatedly promised full self-driving “this year” for almost a decade. Tesla’s Full Self-Driving, which costs $ 12,000, is a level 2 driver assistance system, far from a level 5 self-driving system.

Google shares fell 3.3% to 2,240.15, back below the 50-day moving average after clearing that key level on Friday. The GOOGL stock also avoided falling below its lowest May in the June market.

Market Rally Analysis

The major indices started with decent gains on Tuesday, but declined rapidly. The Dow Jones, S&P 500 and Nasdaq composites all fell back below their 21-day moving average.

The Nasdaq and S&P 500 fell below the lowest levels on Friday’s follow-up day. It is a very bearish signal. Research shows that there is a 90% chance that the rally will eventually fail when this happens. The rally is not officially over until the indices undermine their recent lowest levels.

The Dow Jones index did not close during the lowest days that followed, but it is not far off.

There were many ugly reversals on Tuesday and stocks fell back or below key levels.

Many megacaps, not just Tesla shares and Google, have met resistance around the 50-day or 10-week lines, including MSFT shares, apple (AAPL) and Amazon.com (AMZN). The XLV and ARKK ETFs did the same.

Leading stocks did not have a good day, with broad weakness. Pharma shares retreated, despite being names for defense growth. The health insurance companies did not lose much ground, but gave up some bullish opening gains.

Oil and gas stocks can be revived, but after jumping from low levels late last week, many may need time to repair. The XOM share looks better, but even energy names can struggle if the broad market sells out.

Time market with IBD’s ETF market strategy

What to do now

With market rallies rapidly facing selling pressure, investors should not add exposure, which should already be easy. Instead, they may want to retire some new positions. Many, like VRTX stocks, are probably under water with Nasdaq under the FTD low and the S&P 500 almost there.

Like driving in foggy conditions, it is difficult to know what lies ahead of the stock market, but the risk is high.

Continue working with watch lists. Stay engaged and ready to act.

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

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

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