Dow Jones futures rose overnight, along with S&P 500 futures and Nasdaq futures. Another weak session was experienced with the stock market rally apple (AAPL) and Exxon Mobil (XOM), however, falls below key levels Amazon.com (AMZN) and Tesla (TSLA) is starting to move toward bear market lows.
The S&P 500 and other major indexes, which have been testing or breaking below key levels, posted big gains last Wednesday after Fed Chair Jerome Powell’s speech.
This stock market rally resulted in several large one-day gains and pullbacks. This made it difficult for stocks to move forward, flashing buy signals. It’s not a good time to add exposure, but investors should be looking for stocks to build.
United Leases (URI), UnitedHealth Group (UNH) and United Airlines (UAL) all trade near the points of purchase.
The UAL stock is on the IBD Leaderboard, and the URI stock is on the Leaderboard watch list. United Airlines, Charles Schwab and UNH stocks are in the IBD 50. United Rentals was the top IBD stock on Tuesday.
Dow Jones Futures today
Dow Jones futures were 0.1% above fair value. S&P 500 futures rose 0.15%, while Nasdaq 100 futures rose 0.2%.
The 10-year Treasury yield rose 3 basis points to 3.54%.
Remember that an overnight move in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD’s experts as they analyze the stocks that made the most of the stock rally on IBD Live
Stock market rally
After Tuesday’s open, the stock market rallied quickly and continued to trend lower for the day before paring losses slightly near the close.
The Dow Jones Industrial Average fell 1% in stock trading on Tuesday. The S&P 500 index lost 1.4%. The Nasdaq composite lost 2%. The small-cap Russell 2000 retreated 1.5%
Shares of Apple, a member of the Dow Jones, S&P 500 and Nasdaq composite, fell 2.5% to 142.91, falling below a 50-day line. XOM shares are down 2.8%, below the 50-day line and below a buy point. Exxon shares have struggled as oil, gasoline and natural gas prices have fallen.
Amazon shares fell 3% to 88.25, having hit 85.87 on Nov. 9. Tesla shares fell 1.4% to 179.82, hitting an intraday low, but after falling 6.4% on Monday. TSLA is heading towards its 52-week low, but it still has some distance to go before it falls to the 166.19 mark.
The price of crude oil in the United States fell by 3.5% to $74.25 per barrel.
The 10-year Treasury yield fell 9 basis points to 3.51%, nearing its lowest level since Sept. 20.
The inverse relationship between the stock market and treasury yields may be disrupted. A lower 10-year Treasury yield could reflect rising recession risks and waning inflationary pressures. A further inverted yield curve also indicates recessionary concerns.
Among major tech ETFs, the iShares Expanded Tech-Software Sector ETF ( IGV ) lost 1.7%. VanEck Vectors Semiconductor ETF ( SMH ) fell 2.2%.
The SPDR S&P Metals & Mining ETF ( XME ) fell 0.25%, while the Global X US Infrastructure Development ETF ( PAVE ) fell 0.3%. US Global Jets ETF (JETS) held high. The SPDR S&P Homebuilders ETF ( XHB ) fell 1.4%. The Energy Select SPDR ETF (XLE) was down 2.6% and the Financial Select SPDR ETF (XLF) was down 0.9%. The Healthcare Select Sector SPDR Fund ( XLV ) fell 0.8%.
Reflecting more speculative story stocks, the ARK Innovation ETF ( ARKK ) fell 4% and the ARK Genomics ETF ( ARKG ) fell 3%. Tesla stock is a major holding in Ark Invest’s ETFs.
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Stocks Close to Buy Points
Shares of United Rentals rose 0.5% to 347.29, just above their 21-day line. URI stock has a 368.04 handle buy point from the ongoing consolidation through November 2021. Breaking the downtrend of support may suggest an early entry. Including several heavy machinery games Deere (DE), Caterpillar (CAT) and Titan Machines (TITN), also seem strong.
UNH shares rose 0.8% to 539.32. The Dow Jones giant has a 558.20 buy point from a flat base near a cup-with-handle consolidation.
UAL shares rose 2% to 45.92, just above a cup-handle buy point of 45.67, according to MarketSmith analysis. Some other airline and travel stocks look strong.
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Market rally analysis
A frustrating trend continues in the stock market rally, taking four steps forward and then pulling it back over the next few days.
Major indexes fell solidly for two straight sessions, erasing or paring big gains on Fed Chairman Jerome Powell’s speech last Wednesday.
The S&P 500 index, which fell below the 200-day line on Monday, extended its losses on Tuesday to lower the 21-day line. The Russell 2000, which fell below the 200-day and 21-day lines, fell to its lowest level since Nov. 9 as the 50-day line retook.
The S&P MidCap 400 closed below its 21-day line for the first time since Oct. 20 and pulled back to test its 200-day.
Leading the market’s rally, the Dow Jones dipped below its 21-day line for the first time since Oct. 14, but is well above its 200-day mark.
Lagging Nasdaq broke its 21-day line and re-entered the 50-day line, rising just above the 11,000 level.
All of these indexes closed at their worst levels since Oct. 9, just ahead of the Oct. 10 gap in the October CPI inflation report.
Big market gains last Wednesday were confused then, as Fed chief Powell didn’t say anything particularly different or dovish. While the hot jobs report was even more confusing, major indexes rose on Friday, with Treasury yields closing lower as a result.
But the technical picture is familiar.
Since the stock market rally began on October 13, the major indexes have had several big one-day gains – for example, on October 28 and November 30. But then they soon backtracked, deleting most, all, or more of them. all this great profit.
Hence, when the major indices reach higher levels and the leading stocks give buy signals, the market rally begins to taper off again.
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What to do now
So far, the market rally has finally rebounded each time, reaching higher levels along the way. But that doesn’t mean it will happen this time. More importantly, it doesn’t mean your stocks will go up again.
Until the S&P 500 moves decisively above the 200-day line, investors should be wary of adding risk. The Nasdaq and Russell 2000 breaking below their 50-day levels and the S&P 500 testing October highs would be signs for further downside risk.
Also note that the November CPI inflation report comes out on December 13th, with the Fed rate hike at the end of the year and the Powell press conference the next day. These big events can provide the catalyst for a market rally higher or lower.
So, investors should be ready for action. This means having watch lists ready, but also staying busy and flexible.
Read The Big Picture daily to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.
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