Dow Jones Futures: Technology Leads Stock Market Back; Investors see end to Fed rate hikes

Dow Jones futures were slightly higher overnight, along with S&P 500 futures and Nasdaq futures. The stock market closed mixed on Tuesday, but the technology led to a sharp improvement, even though fears of a recession hit government interest rates and commodity prices.

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The Dow Jones closed lower, but well off low, while the S&P 500 gained a small gain. Nasdaq made strong progress, with aggressive growth names such as Roblox (RBLX) and Datadog (DDOG) rebounding over its 50-day lines. apple (AAPL), Amazon.com (AMZN) and Google parent Alphabet (GOOGL) regained an important short-term level.

Meanwhile, the price of crude oil plunged below $ 100 a barrel. Futures on petrol, copper and wheat fell sharply, prolonging significant losses in recent weeks.

The Treasury yield curve reversed between the two- and 10-year notes, a remarkable recession signal. The markets continue to see aggressive tightening from the Federal Reserve at the next two meetings, but also expect interest rate increases to end this year.

Dollar tree (DLTR), Halozyme Therapeutics (HALO) and PRVA stock showed bullish action on Tuesday. Meanwhile, Northrop Grumman (NOC) and UnitedHealth (UNH) fell, but found key support.

The NOC stock and UnitedHealth are on the IBD Leaderboard. The DLTR stock is on SwingTrader. Google stock is on IBD Long-Term Leaders. The UNH share is at IBD 50. Privia Health (PRVA) was Tuesday’s IBD Stock Of The Day.

The video embedded in this article looked at Tuesday’s interesting market action and analyzed Dollar Tree, Halozyme Therapeutics and DDOG stocks.

Dow Jones Futures today

Dow Jones futures were reduced to fair value. The S&P 500 futures lost a fraction and the Nasdaq 100 futures changed little.

US crude oil futures rose 1%, back above $ 100 a barrel.

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

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Stock market rally

The stock market rally sold out on Tuesday morning, but picked up again and ended mixed, at session heights.

The Dow Jones Industrial Average fell 0.4% on Tuesday. The S&P 500 index rose 0.2 percent. The Nasdaq composition rose 1.75 percent. Small-cap Russell 2000 jumped 0.8%.

Apple shares, a Dow Jones, S&P 500 and Nasdaq giant, rose 1.9%, above the 21-day moving average. Google shares fell 4.2% and Amazon 3.6%, also taking back the 21-day line and approaching its long-sliding 50-day lines. All three megacap technologies are far from capable of action.

The fear of a recession is uneasy in the financial markets, especially commodities and bonds.

The US crude oil price plunged 8.2% to $ 99.50 a barrel after retreating significantly from the peaks in early June. Gasoline futures plunged 9%, continuing a rapid decline. Prices at the pump have fallen for 20 days in a row, a trend that should continue.

Copper futures fell more than 4%, prolonging long sales. Yield dates are falling sharply.

The 10-year government interest rate plunged 16 basis points to 2.81%. The two-year interest rate fell by 2 basis points to 2.82%, which means that the yield curve is now slightly inverted. The one-year government interest rate rose 4 basis points to 2.76%.

Ed Yardeni of Yardeni Research has raised the odds of a recession, albeit shallow and short-lived, to 55% from 45%.

The latest set of leading economic indicators suggests weaker coincident indicators to come. As a result, we increase the odds of a shallow, short-term recession in the US economy to 55% (from 45%). This makes a recession now our base scenario from which we derive earnings and stock market forecasts. …

Despite increasing recession risk – and the prospect of significantly lower inflation in the coming months – the Fed is still expected to raise interest rates by 75 basis points at the end of July meeting and 50 basis points at the September meetings. However, the markets only see gains of a quarter of a point in the last two Fed meetings of the year, and now see no movement in February 2023.

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ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.15%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 1 cent higher. iShares Expanded Tech-Software Sector ETF (IGV) rose 2.6%. VanEck Vectors Semiconductor ETF (SMH) rose 0.6%.

The SPDR S&P Metals & Mining ETF (XME) fell 4.9% and the Global X US Infrastructure Development ETF (PAVE) fell 1.1%. US Global Jets ETF (JETS) rose 0.2%. SPDR S&P Homebuilders ETF (XHB) rose 2.5%. Energy Select SPDR ETF (XLE) fell 4% and Financial Select SPDR ETF (XLF) fell 0.3%. Health Care Select Sector SPDR Fund (XLV) fell 0.6%, with the UNH share a large stake.

ARK Innovation ETF (ARKK) reflects more speculative history shares, rising 9.1%, above the 50-day limit. The ARK Genomics ETF (ARKG), which closed just over its 50-day high on Friday, rose 8.2% to a two-month high. Ark Invest owns some RBLX shares in its ETFs.

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Stocks to see

Dollar Tree shares rose 5.5% to 164.84 above average, recovering from the 50-day line and breaking a trend line from the top of the end of April, giving an early entry. The DLTR stock has a cup-with-handle base with an official buy point of 166.45. The relative strength limit is already at a new high, reflecting the better performance of the Dollar Trees compared to the S&P 500 index. Arch-rival Dollar General (DG) is the purchase series from its own cup-with-handle base.

The Privia Health stock opened lower, then retreated from the 21-day line to move higher. The PRVA share fell 7.4% to 31.04 in large volume, reaching a short period of 33.88 in 11 months. The self-written Uber of doctors’ offices has now been slightly expanded from a purchase point of 29.07 cups. But investors can treat the recent break above the buy point as a high handle with a buy point of 30.25. The high handle can be seen as a normal handle for a longer consolidation back to November last year.

Halozyme shares rose 4.2% to 46.33, retreating from the 50-day line and breaking a short but very steep downtrend. It can offer an early entry into the HALO stock, which has a flat base with a buy point of 48.68 on a weekly MarketSmith chart. The flat base can be seen as a handle in a base dating back to February 2021. The RS line for Halozyme storage is at a new high.

Meanwhile, the Northrop share fell 4.5% to 464.36, although it returned from below the 50-day intraday line. Nevertheless, the NOC stock wiped out almost last week’s rise of 4.9% which triggered buy signals.

UnitedHealth shares fell 2.35% to 505.24, but closed in the upper half of the range when it found support on the 50-day line. Even though it is below 507.35 double-bottom buying point, the UNH share is not flashing any sell signals yet. UnitedHealth can work with a handle now.

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Market Rally Analysis

The major indices fell sharply just after Tuesday’s opening, but recovered to varying degrees.

The Dow Jones closed lower, but well outside the worst levels. The S&P 500 turned positive shortly before the closing bell. Nasdaq roared back for solid gains, with Apple shares rising while DDOG shares, Roblox and Ark shares rose sharply, with falling government interest rates likely a major driver.

Datadog jumped 7.25% to above its 50-day line. Roblox shares rose 14% in heavy volume to their best level since the end of April. But these stocks have good peaks.

A stock market rise is still in effect, even though it has been under pressure in the last week.

Apple, Google and Amazon shares took back their 21-day lines on Tuesday. All the major indices are still below it, although Nasdaq is close. The 50-day line, the peaks in early June and many other points of resistance are above the short-term level.

Beyond the risk of another leg down in the bear market in 2022, apparently good stocks will flash buy signals, and then quickly reverse lower.

Northrop and UNH shares fall into that camp, although they may not be finished. It was absolutely no good day for defense manufacturers and health insurance companies.

Despite the health insurance companies’ tough everyday life, medicines are still the leading sector.

Ideally, the stock market would move sideways for a longer period of time. It would allow more stocks to set up bases, while investors would have more clarity about the Federal Reserve and the economy. But the market is going to do what it is supposed to do.

What to do now

Tuesday’s stock market action was relatively positive, given the recession fears raging in bond and commodity pits. But the market upturn is under pressure. There are few good stocks to buy or put up, and actionable stocks are subject to sudden reversals.

Investors who buy, for example, a biotech, should keep their position small and be ready to make quick profits and keep any losses small.

When a sustained market upswing takes hold, investors will have many opportunities to increase their exposure and let the winners run. For now, the focus should be on preparing for the next beef market.

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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These discounts are close to purchase points as the risk of recession increases