Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures.
The stock market rallied on Tuesday, with the Dow rallying, the Nasdaq falling and the S&P 500 somewhere in between.
Tesla (TSLA), Modern (mRNA), Nvidia (NVDA) and Enphase Energy (ENPH) were notable losers, with apple (AAPL) sets new bear market low.
On the positive side, the Dow Jones giant larva (CAT), Deere (FROM), WE HAD (WE HAD), Freeport-McMoRan (FCX) and Schlumberger (SLB) are industrial, metal, mining and energy plays in or near points of purchase. Underlying commodity prices rose solidly on Tuesday, helped by China continuing to roll back Covid restrictions.
Dow Jones Futures today
Dow Jones futures were flat versus fair value. S&P 500 futures were little changed. Nasdaq 100 futures fell 0.1%, and TSLA stock extended overnight losses.
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 rally
The stock rally had a mixed session, with industrials and metals holding steady or rising as growth struggled.
The Dow Jones Industrial Average rose 0.1 percent in Tuesday’s trading. The S&P 500 index fell 0.4%, with Tesla shares the worst performer of the day, followed by Moderna and Nvidia. The Nasdaq composite fell 1.4 percent. The small-cap Russell 2000 gave up 0.7%.
Apple shares fell 1.4% to 130.03. Intraday, AAPL hit 128.76, undercutting the bear market low.
Tesla shares plunged 11.4% to 109.01, their worst one-day loss in 11 months, amid a factory shutdown in Shanghai, weak sales data in China and other news. TSLA stock has now crashed 44% this month to its lowest levels since August 2020. Volume has been very high all month, signaling institutional selling.
TSLA shares fell nearly 2% in extended trading.
Nvidia shares fell 7.1% to 141.21, breaking below its 50-day line. NVDA stock has fallen 19% from its Dec. 13 intraday high of 187.90.
MRNA shares fell 9.5% to 180.17, falling below a 188.75 cup-with-handle buy point, according to MarketSmith analysis. Moderna broke out of this base on December 13 on bullish cancer vaccine trial data, rising 20% that day and hitting 217.25 the following session. But the MRNA share has had an increase of 15% and more.
ENPH shares fell 6.6% to 274.54, now well below the 50-day mark after breaking below that level on Friday.
U.S. crude fell 3 cents to $79.53 a barrel after topping $80 on Tuesday morning.
The 10-year Treasury yield jumped 11 basis points to 3.86% after rising 27 basis points last week.
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Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) fell 0.5%, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) climbed 0.7%. The iShares Expanded Tech-Software Sector ETF ( IGV ) retreated 0.6%. The VanEck Vectors Semiconductor ETF ( SMH ) fell 1.8%. NVDA stock is a large SMH holding.
The SPDR S&P Metals & Mining ETF ( XME ) rose 0.8%. FCX stock and ATI are XME components. The Industrial Select Sector SPDR Fund ETF ( XLI ) rose 0.3%, with Caterpillar and DE stocks both top 10 holdings.
The US Global Jets ETF (JETS) was down 1.3%. SPDR S&P Homebuilders (XHB) fell 0.3%. The Energy Select SPDR ETF (XLE) rose 1.1%, with SLB stock a key component. The Financial Select SPDR ETF (XLF) was just below break-even. The Health Care Select Sector SPDR Fund ( XLV ) yielded 0.3%.
Reflecting stocks with more speculative stories, the ARK Innovation ETF ( ARKK ) fell 4.15%, hitting a new five-year low. ARK Genomics ( ARKG ) fell 3.8%, nearing June bear market lows. Tesla stock remains a large holding across Ark Invest’s ETFs.
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Caterpillar shares rose 1.4% to 243.14, clearing a 239.95 buy point from a flat base right next to a deep cup. Breakouts have struggled over the past year, but the 6% deep base mitigates the risk somewhat. The relative strength line is at its best level in nearly 10 years.
Deere shares were down 0.2% at 436.15, still near the 21-day line with the 10-week line catching up. The DE share has traded close after a strong rise. It is likely to have a shallow flat base at the end of the week with a buy point of 448.50. A move above the Dec. 21 high of 444.51 would offer an early entry into Deere stock. The RS line for the DE stock is at a record high.
ATI shares fell 3.8% to 31.45, rebounding from the 10-week line and hitting a trendline entry. The official buy point is 31.84 from a handle. The RS line for ATI is at a three-year high.
Freeport-McMoRan shares rose just over 2% to 38.88, bouncing off the 21-day and 10-week lines. It provides an early entry from a long, deep cup-with-handle base with a buy point of 41.26. FCX stock has yet to extend from its 50-day line, which just crossed the 200-day
Schlumberger shares climbed 1% to 53.50, working on a 56.14 buy point from a short base. SLB shares have broken a trendline entry and are still close to their 21-day and 50-day lines.
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Market rally analysis
The stock rally showed split, divergent action in Tuesday’s session.
The Dow Jones again found support at its 50-day line, but hit resistance at its 21-day line.
The S&P 500 lost slightly more ground compared to a rising 50-day line.
The Invesco S&P 500 Equal Weight ETF ( RSP ) rose fractionally, briefly topping its 50-day line, with the effect of Tesla, Nvidia, Moderna and Enphase less.
The Nasdaq index skidded on Tuesday, approaching Thursday’s lowest level during the day. The composite flirted with a bear market that closed lower.
In addition to industrials, metals, mining and energy plays such as Caterpillar, Schlumberger and FCX, many medical plays perform well. Housing stocks, from builders to materials to retailers, are also showing strength, along with some retailers. Chinese internet is on the rise again as the economy opens up.
But growth stocks and tech generally look terrible.
An uptrend under pressure that is also a divergent market rise amid enormous macroeconomic uncertainty is unstable and very risky. And that is before individual equity risk.
It’s possible that real-economy names pull up technologies in a stock market rally in 2023, especially if the Federal Reserve and economic headwinds ease. Or technology and growth stocks can pull the broad market back towards bearish bottoms. Or the major indexes can whipsaw sideways with significant sector rotation over a longer stretch.
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What to do now
The stock market recovery is still pending. Parts of the market are doing well, as the uptrend shows increasing divergence.
A nimble investor can try to buy, for example, CAT shares, ATI or Schlumberger. But the exposure should be light, and any new positions should be small. Investors can also play the sector or theme via ETFs such as XME, XLE, OIH or XLI.
There is nothing wrong with not taking new positions, or even being completely in cash.
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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