Dow futures fell early Wednesday, along with those for the S&P 500 and Nasdaq futures. Tesla shares fell as the EV giant offered another price stimulus in China.
The stock market rally saw another weak session with apple (AAPL) And the Exxon Mobil (xom) broke below key levels on Tuesday during that Amazon.com (AMZN) And the Tesla (TSLA) is moving towards the bottoms of the bear market.
The S&P 500 and other major indices were testing or lowering key levels, paring last Wednesday’s big gains after Fed Chairman Jerome Powell’s speech.
This stock market rally has several big gains in one day followed by pullbacks. This made it difficult for stocks flashing buy signals to make headway. It’s not the time to add exposure, but investors should be looking to build up the stock.
UAL stock is on IBD Leaderboard, while the stock URI is in the leaderboard watchlist. United Airlines, Charles Schwab and United Nations stocks are in defect 50. United Rentals was the World Bank’s stock on Tuesday.
Database software maker MongoDB (mdb) rose early on Wednesday on a sudden profit. MDB stock has fallen over the past year.
Manufacturer of driver assistance systems Mobileye (MBLY) beat opinions in its first report since going public in late October. MBLY stock has had its ups and downs.
Initial deal breaker (OLLI) fell after the locked-down retailer lost profits and sales.
Dow jones futures today
Dow futures fell 0.3% against fair value. S&P 500 futures were down 0.6% and Nasdaq 100 futures were down 1%.
The 10-year Treasury yield advanced 4 basis points, to 3.55%.
Crude oil futures rose. Natural gas prices increased by 3%. The US has agreed to send more LNG to the UK
China has scrapped some Covid rules, as expected, but trade data came in weaker than expected. Hong Kong’s Hang Seng fell 3.2%.
Stock market rise
The stock market rally quickly eased after Tuesday’s open and continued to trend lower during the day before trimming losses slightly near the close.
The Dow Jones Industrial Average fell 1% on Tuesday Stock market trading. The S&P 500 lost 1.4%. The Nasdaq Composite fell 2%. Small cap Russell 2000 fell 1.5%
US crude oil prices fell 3.5 percent to $74.25 a barrel.
The 10-year Treasury yield fell 9 basis points to 3.51%, back near its lowest level since Sept. 20.
The stock market’s inverse relationship with Treasury yields may collapse. The increasingly lower 10-year Treasury yield may reflect rising recessionary risks against declining inflation pressures. The yield curve, which continues to invert further, indicates recession fears.
Apple stock, a member of the Dow Jones, S&P 500 and Nasdaq composite, fell 2.5% to 142.91, retreating from its 50-day line. XOM stock fell 2.8%, and it is also below the 50-day line and also under a buy point. Exxon shares are struggling with falling oil, gasoline and natural gas prices.
Amazon stock fell 3% to 88.25, closing as low as November 9 at 85.87.
Tesla shares fell 1.4 percent to 179.82, off their lowest levels for the day, but after falling 6.4 percent on Monday. TSLA is moving towards 52-week lows but still has some way to go before it drops to the 166.19 mark.
Tesla is now offering a 6,000 yuan ($860) discount on stock cars in China, in addition to the existing 4,000 yuan insurance subsidy. Along with other incentives, Tesla China offers incentives of more than 20,000 yuan, before government subsidies of 11,088 yuan.
Meanwhile, there are more signs that Tesla will reuse radar in its vehicles. Elon Musk has taken the radar off new Tesla EVs in 2021, during the chip crisis, saying only vision would be better for self-driving. Almost all other self-driving players use a variety of sensors.
TSLA stock fell 3% early Wednesday.
Exchange Traded Funds
SPDR S&P Metals & Mining ETFs (XME(Increased 0.25% and Global Infrastructure Development Fund (ETF) in the USA)cradle) decreased by 0.3%. US Global Gates Foundation ETF (Planes) held on high. SPDR S&P Homebuilders ETF (XHB) fell 1.4%. Energy Defined Fund SPDR ETF (xle(down 2.6% and the Financial Select SPDR ETF)XLF) 0.9%. SPDR Health Care Sector Selection Fund (XLV) decreased by 0.8%.
Stocks near buy points
United Rentals rose 0.5% to 347.29, just above the 21-day line. URI stock has a 368.04 Buy handle of consolidation dating back to November 2021. A break down of the handle could offer an early entry. Several heavy equipment plays, incl monastery (DE), Larva (cat) And the Titan machines (TITN), also looks strong.
UN stock rose 0.8% to 539.32. The Dow Jones giant has 558.20 buying points from A Flat base Next to a cup with a handle.
Market rally analysis
The stock market rally continues the frustrating trend of jumping four steps forward, and then doing so again over the next few days.
Major indices have fallen strongly for two straight sessions, erasing or undermining the big gains in Federal Reserve Chairman Jerome Powell’s speech last Wednesday.
The S&P 500, which again fell below the 200-day line on Monday, extended its losses on Tuesday to trim the 21-day line. The Russell 2000 Index, which fell below the 200-day and 21-day lines, fell to its lowest close since November 9, with the 50-day line back in play.
The S&P MidCap 400 closed below the 21-day line for the first time since October 20 and fell to test the 200-day mark.
The Dow Jones, which led the market rally, fell below the 21-day line for the first time since October 14, but it is well above the 200-day mark.
The lagging Nasdaq has lowered the 21-day line and is again approaching the 50-day line, just above the 11,000 level.
All of these indexes closed at their worst levels since Oct. 9, ahead of the Oct. 10 gap in the October CPI inflation report.
Last Wednesday’s big gains in the market were baffling at the time, because Fed Chair Powell said nothing different or pessimistic. Major indexes held firm on Friday, with Treasury yields finally closing lower, despite a hot jobs report that was even more baffling.
But the artistic picture is familiar.
Since the stock market rally began on October 13, major indices have made several big gains in one day – such as October 28 and November 30. But then it quickly backtracked, wiping out most, all, or most of that big gain.
So, with major indices reaching higher peaks and blue chip buy signals, the market’s impulsiveness begins to fade again.
What are you doing now
So far, the market rally has eventually rebounded each time, recording higher highs along the way. But that doesn’t mean it will happen this time. More importantly, this does not mean that your stocks will rebound.
Until the S&P 500 moves decisively above the 200-day line, investors should be wary of adding exposure. Both the Nasdaq and Russell 2000 falling below their 50-day lines, and the S&P 500 testing its October highs, would be signals to reduce exposure further.
Also note that the November CPI inflation report will be released on December 13th, with the Fed’s year-end interest rate hike and Powell’s press conference the next day. These large events can provide a catalyst for a market breakout up or down.
So investors must be ready to act. This means having watchlists ready, but it also means staying agile and flexible.
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