Dow Jones futures open Monday night, along with S&P 500 futures and Nasdaq futures, after the long Christmas weekend. Tesla Shanghai halted production as China competes Nine (NIO) unveiled new models.
The stock market recovery had another difficult week, but bounced back from Thursday’s lowest level. The major indexes were mixed last week, but many leading stocks came under further pressure. The market rally looks shaky, but isn’t over yet.
It is not a good time to buy stocks, especially growth names. But investors should always look for potential growth leaders for the next sustained market rally. Shift4Payments (FOUR), Celsius (CELH), Imp (PI), Enphase Energy (ENPH) and Box (BOX) is holding up relatively well in the current weak market. FIRE shares and Box are consolidating near recent highs, while Impinj, Celsius and ENPH shares are trading around the 50-day or 10-week lines. No one is actionable right now, and everyone can buckle if the market continues to weaken. But keep an eye on them.
ENPH stock is on the IBD Leaderboard, with PI stock on the Leaderboard watchlist. Enphase, Shift4Payments, Box and CELH stocks are on the IBD 50. ENPH stocks are also on the IBD Big Cap 20. Shift4Payments was Friday’s IBD Stock Of The Day.
But growth megacaps had a tough outing, in particular apple (AAPL), Nvidia (NVDA) and Tesla (TSLA).
Nine Day 2022
Finally rival Tesla China Nine (NIO) will hold its Nio Day 2022 on Saturday. It unveiled the EC7 coupe SUV, a likely high-end Tesla Model Y competitor. EC7 deliveries will start in May 2023. Nio also unveiled a facelifted ES8 SUV, now on the NT 2.0 platform as its all-new models. Deliveries start in June.
Nio also announced next-generation battery swapping stations and charging options.
Nio production is ramping up with strong demand for its newer ET5 sedan and ES7 crossover SUV. But easing of Covid rules could trigger a massive wave of infections, and Nio and other Chinese electric car makers could face production or supply chain hiccups again. EV giant BID (BYDDF) said this week that Covid cases among workers are reducing production by 2,000-3,000 vehicles per day.
Nio shares fell 5.4% last week, back below the 50-day mark. The shares are well below the 200-day mark.
Tesla Shanghai production halted
Tesla Shanghai halted production on December 24, with workers due to return on January 1, 2023. A year-end production shutdown had been widely reported in recent weeks, but denied by the EV giant. Shanghai had already slowed output earlier in the month, with inventories building quickly despite a price cut in late October and significant year-end incentives.
Last week, Tesla shares plunged 18% to 123.15 after plunging 16.1% the previous week. These are the worst weekly losses since the Covid crash in March 2020. TSLA stock is at a 27-month low, down 70% from its peak in November 2021.
Dow Jones Futures today
With Christmas falling on Sunday, US stock and bond markets will be closed on Monday, along with many stock exchanges around the world.
Dow Jones futures open at 6 PM ET on Monday, along with S&P 500 futures and Nasdaq 100 futures.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
Share gains fell solidly during the week, but ended the week’s worst levels.
The Dow Jones Industrial Average rose 0.9% in last week’s trading. The S&P 500 index fell 0.2 percent. The Nasdaq composite fell 1.9 percent. The small-cap Russell 2000 ended just above break-even.
Apple shares fell 2% to 131.86 in the past week. It is testing its June bear market low of 129.04, sliding to 129.64 on Friday morning.
Nvidia shares fell 8.2% to 152.06, following a nasty reversal back below the 200-day mark last week amid a broad chip selloff. NVDA stock found support at the 50-day line on Friday.
The 10-year government yield rose 27 basis points to 3.75%. The inverse relationship between government interest rates and share prices has faded in recent weeks.
U.S. crude oil futures rose 6.9% to $79.56 a barrel on the week, touching a brief period of $80 on Friday.
Tesla is gearing up for a very interesting 2023
Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) was down 0.3% last week, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) was up 0.7%. The iShares Expanded Tech-Software Sector ETF ( IGV ) fell 1.8%. The VanEck Vectors Semiconductor ETF ( SMH ) fell 4.7%, with NVDA stock a big SMH entry.
The SPDR S&P Metals & Mining ETF (XME) rose 1.6% last week. The Global X US Infrastructure Development ETF ( PAVE ) rose 0.75%. The US Global Jets ETF (JETS) fell 1.3%. The SPDR S&P Homebuilders ETF ( XHB ) fell 1.25%. The Energy Select SPDR ETF (XLE) jumped 3.2% and the Financial Select SPDR ETF (XLF) rose 0.8%. The Health Care Select Sector SPDR Fund ( XLV ) rose 0.4%.
ARK Innovation ETF ( ARKK ), reflecting more speculative stock stocks, fell 6.9%, hitting a new five-year low on Thursday. The ARK Genomics ETF ( ARKG ) was down 5.6% last week. Tesla stock remains a top holding across Ark Invest’s ETFs.
Top five Chinese stocks to watch now
Growth rates to watch
Shift4Payments shares rose 4.1% to 54.06 last week. FIRE stocks have seen wild swings, but have tightened in the past couple of weeks near seven-month highs. The relative strength line is at its highest level in eight months, reflecting Shift4’s outperformance compared to the S&P 500 index. Still, FOUR shares do not have a clear buy point right now.
Shift4 earnings and sales growth accelerated last quarter, and the company significantly expanded its target markets.
CELH shares fell 1.85% to 106.79 last week, consolidating just below the 21-day line and nearing the 10-week line. Celsius shares topped a buy point at 118.29 cups earlier this month before retreating. But it is letting the 10-week line catch up, while the RS line has held close to highs. A strong pullback from the 10-week line and above the 21-day line would also break a short downtrend, offering an early entry for CELH stock.
Celsius has booming sales growth and should see strong earnings in 2023, but the energy drink maker has a caffeinated valuation.
Impinj shares rose 4 cents to 111.87, with Friday’s 2.9% decline bringing it down to the 50-day and 10-week lines for the first time since a sharp earnings gap breakout on Oct. 27. The PI stock has pulled back modestly for four straight weeks from record highs, but the RS line has barely budged. A bullish bounce off the 50-day line would offer an early buy point.
Impinj revenues have risen in 2022, with robust gains next year.
Enphase shares fell 3.1% to 293.95 last week, below the 50-day line. A purchase point of 316.97 from a cup with handle purchase point is no longer valid. The always volatile ENPH share could be a few weeks into a new consolidation. A bullish move off the 50-day line—perhaps retaking the old buy point—could offer an aggressive entry.
Enphase earnings and revenue growth are increasing rapidly, with solid growth seen in 2023 and beyond with solar incentives in place for years to come.
Box stock traded tight over the past couple of weeks, falling 0.7% to 31.01. The cloud-based data storage company is on the edge of a buy zone from a buy point at 29.57 cups with handle, according to MarketSmith analysis, following a Dec. 12 breakout. The latest break can be seen as a handle to an eight-month consolidation. The buy point is 31.10, but investors may look for an early entry. Ideally, the 21-day line would catch up and the 50-day line would narrow the gap with Box stock.
Box office revenue growth has accelerated in the last two quarters.
Market rally analysis
The share price rise is still under severe pressure. The major indices were mixed for the week, not recovering from last week’s big, ugly out week.
The Dow rose modestly for the week after testing its 50-day line several times.
The S&P 500 fell modestly, but that masked some big swings during the week. The benchmark index just regained its 50-day moving average on Wednesday. On Thursday, the S&P 500 and other major indexes fell to their worst levels in weeks, but closed lower.
On Friday, the S&P 500 rose slightly, but below its 50-day line. The Invesco S&P 500 Equal Weight ETF (RSP), with less emphasis on tech titans like Apple, rallied on Friday to reclaim its 50-day high.
The Nasdaq was the big laggard, with Tesla stock and Nvidia among the notable laggards. But there was broad weakness for growth stocks, especially among chip names after weak results and guidance from the memory chip maker Micron technology (MU).
The S&P 500 needs to regain the 50-day line, but that would only be a first step.
It is unclear whether the market will rebound, fall toward bearish bottoms, or move sideways in a choppy fashion over an extended period. The latter may be more likely until there is some clarity about when and where the Fed will stop raising interest rates, and whether the economy will slide into a clear recession.
While growth stocks like Enphase and Celsius are worth watching, many medical stocks and other defensive growth plays are holding up. Metals and mining, industry, housing and some energy plays are doing relatively well.
Time the market with IBD’s ETF market strategy
What to do now
The stock market feinted higher and lower during the week, and the technical picture did not change dramatically. Except for the Dow Jones, the major indexes are below the major moving averages. Leading stocks have been difficult to hold at best.
Investors should have minimal exposure and be cautious about adding new positions. Don’t get excited by a strong open or even a bullish session or two.
Keep your watchlists fresh. Many stocks from a variety of sectors are in the process of setting up or setting up to set up. Some names show strong relative strength but do not have a clear buy point. It’s ok right now.
In the meantime, take some time to review your trades over the past year, including your big winners and losers, and the trades you didn’t make but wish you had. Did you follow your rules, and were your rules good?
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock exchange updates and more.
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