Dow Jones Futures rise, Tesla bounces after market break at key levels

Dow Jones futures rose modestly early Thursday, along with S&P 500 futures and Nasdaq futures. Tesla bounced solidly before the opening.

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The stock market suffered further losses on Wednesday as rising government interest rates, Apple iPhone problems and soaring Covid cases in China contributed to the selling pressure on the major indices.

The Nasdaq is near bear market lows, setting the industry’s worst in over two years. Dow Jones undermined a key level.

apple (AAPL) fell again, putting a fresh bear low. AAPL stock is in danger of falling below a value of $2 trillion. Tesla ( TSLA ), which also set another bear market low, rose modestly. But that only trimmed a steep weekly loss.

Energy stocks fell as crude oil and natural gas prices fell, with natural gas and coal producers the hardest hit.

But several energy stocks are showing resilience. Exxon Mobil (XOM), Chevron (CVX), Schlumberger (SLB), Valaris (VAL) and to some extent, First Solar (FSLR) holds up reasonably well.

But whether these shares make real progress from here depends largely on whether unstable energy prices move higher.

CALM Earnings

After the conclusion, egg producer Cal-Maine ( CALM ) reported rising earnings that slightly missed fiscal Q2 views. CALM shares fell 5% in extended trading, even with revenue up 110% and the egg producer announcing a dividend of $1.35 per share. Shares fell 2.5% to 62.19 in Wednesday’s regular session. That pulled CALM stock back within the 5% chase zone to a 60.11 buy point. But Cal-Maine could open Thursday under that entry.

Dow Jones Futures today

Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures rose 0.4% and Nasdaq 100 futures rose 0.7%, helped by TSLA stock.

The 10-year government yield fell 1 basis point to 3.88%.

Crude oil futures fell 1 percent. Natural gas edged lower.

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

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Stock market Wednesday

The stock market continued to fall, with all the major indexes down more than 1%.

The Dow Jones Industrial Average fell 1.1% in Wednesday’s trading. The S&P 500 index fell 1.2 percent. The Nasdaq composite gave up 1.35%. The small-cap Russell 2000 gave up 1.6%.

The US crude oil price fell 0.4 percent to $79.23 a barrel on Wednesday. Natural gas futures fell 5.8%.

The 10-year government yield rose 3 basis points to 3.89%. That’s up 49 basis points from the Dec. 7 low of 3.4%, with almost all of the increase since Dec. 15.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF ( IGV ) fell 1.1%. The VanEck Vectors Semiconductor ETF ( SMH ) retreated 1.3%. ARK Innovation ETF ( ARKK ), reflecting more speculative stock stocks, fell 0.5%, setting a new five-year low. The ARK Genomics ETF ( ARKG ) gave up 0.6%, just above the June bear low. Tesla stock remains a significant holding across Ark Invest’s ETFs.

The SPDR S&P Metals & Mining ETF ( XME ) fell 4% and the Global X US Infrastructure Development ETF ( PAVE ) fell 1.75%. The US Global Jets ETF (JETS) fell 2.4%. The SPDR S&P Homebuilders ETF (XHB) fell 2%. The Energy Select SPDR ETF (XLE) retreated 2.2%, with XOM and CVX shares easily the top components, and SLB shares coming in third. The Financial Select SPDR ETF ( XLF ) was down 0.35%. The Health Care Select Sector SPDR Fund (XLV) returned 0.65%.

Top five Chinese stocks to watch now

Apple stock

Apple shares fell 3.1% on Wednesday to 126.04, an 18-month low. TrendForce cut its forecasts for iPhone shipments for 2022 due to recent shutdowns at Foxconn’s Zhengzhou base. And it also trimmed its forecast for early 2023 shipments, citing Foxconn’s labor shortage.

The Dow Jones tech titan is on course for its sixth straight weekly loss and its worst monthly loss in four years. AAPL stock’s valuation closed at $2005 trillion, and threatens to fall below $2 trillion.

AAPL shares rose 1% early Thursday.

Tesla shares

Tesla rose 3.3% to 112.71 after plunging 11.4% on Tuesday, ending a seven-day losing streak. The electric car giant is still down almost 15% for the month. Late Wednesday, Morgan Stanley analyst Adam Jonas cut his TSLA stock price target to a still hefty 250, but also reduced his fourth-quarter delivery target to just 399,000 EVs.

Tesla rose more than 4% in premarket trading.

Energy stocks to watch

Exxon shares fell 1.6% to 108.38, back below the 50-day mark on the day after retaking that key level. XOM stock has a buy point at 114.76 from a flat base above an earlier consolidation. But a move above Tuesday’s high of 110.47 could offer an early entry.

Chevron stock is very similar to Exxon Mobil’s. Shares fell 1.5% to 176.98, falling below their 50-day low. CVX stock has a flat base alongside an earlier consolidation, with a buy point at 189.78, according to MarketSmith analysis. Investors can use 180.33, just above Tuesday’s high, as an early entry for CVX stock.

Schlumberger shares retreated 1.7% to 52.60, finding support near the 10-week line. SLB stock has a 16% deep consolidation above/next to a deep cup base. The official buy point is 56.14. But investors can use 54.28, just above the Dec. 5 high of 54.18, as an early entry on SLB stock.

Valaris shares fell 2.6% to 64.74, rising slightly from a test of the 10-day, 21-day and 50-day lines. The offshore contract drilling firm has a buy point of 70.27 from a 17% deep cup base over a deep cup-with-handle pattern. The buy point is 70.27. Investors can use 67.75, just above Tuesday’s high, as an early entry. It could develop into a proper buy point in a few days.

First Solar fell 2.7% to 146.17, losing further ground from its 50-day line but recovering from an intraday low of 142.35. FSLR stock needs some work, and can easily break down from this point. Ideally, other solar stocks, which have been hit even harder, will also improve. But see if First Solar can regain its 50-day and 21-day lines. There could then be a trend line, or perhaps a move above the December 21 high of 162.20, to offer an early entry. The FSLR stock may have a new base at the end of next week.

Market analysis

The stock market had another tough session on Wednesday.

The Dow Jones, which posted a gain on Tuesday, was unable to resist on Wednesday. The Dow closed below its rising 50-day moving average for the first time since October 21.

The S&P 500 continued to slip from its rising 50-day line. The benchmark index held above last Thursday’s low, but ended with its worst close since November 9. S&P 500’s best performers, Generac (GNRC) and Tesla stock, have been the S&P 500’s biggest losers in 2022. Not exactly inspiring.

The Russell 2000 fell short of Thursday’s low, hitting its worst level in two months.

The Nasdaq Composite fell to just under 135 points from its Oct. 13 bear market intraday low. The technology-heavy index ended with its weakest close since July 2020. Apple shares and a number of other growth names fell.

Until there is clarity on the Fed rate endgame and the economic outlook – including China’s Covid recovery – the stock market will be choppy at best. And the major indexes make it far worse than that right now.

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What to do now

The stock market is not working well. While some sectors are holding up better than others, it is difficult for some stocks to make much progress. Sectors and individual stocks can also quickly deteriorate.

Investors may have small positions in some promising sectors, but should steer clear of growth for now. There is nothing wrong with being in cash. Keeping your financial and mental capital intact is essential.

But work on your watchlists. Many stocks from a number of sectors are near buy points, or could be soon if the market improves. Focus on stocks with strong relative strength and holding key levels. Don’t rule out resilient names that don’t have a clear buying point yet.

If you’ve had a bad year, you’re not going to make up for it in the last two trading days of 2022 with the market struggling. Learn from your mistakes and prepare for the next sustained market rally in 2023.

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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