Dow Jones futures open Monday evening along with S&P 500 futures and Nasdaq futures after the long Christmas weekend. Tesla Shanghai halted production as China competes Nine (NINE) revealed new models.
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The stock market rally had another tough week, but took care of Thursday’s lows. The major indexes were mixed last week, but many leading stocks came under further pressure. The market rally looks shaky, but isn’t over yet.
This is not a good time to buy stocks, especially growth names. But investors should always look for potential growth leaders for the next sustained market rally. Shift4Payments (FOUR), Celsius (CELH), Imp (PI), Enphase Energy (ENPH) and Box (BOX) is holding up relatively well in the current weak market. FIRE stocks and Box are consolidating near recent highs, while Impinj, Celsius and ENPH stocks are trading around the 50-day or 10-week lines. No one is actionable right now, and all could come to a standstill if the market continues to weaken. But keep an eye on them.
ENPH storage is on IBD Leaderboard, with PI shares on the Leaderboard watchlist. Enphase, Shift4Payments, Box and CELH stock is on IBD 50. ENPH stock is also on IBD Big Cap 20. Shift4Payments was Friday Today’s IBD stock.
But growth megacaps had a tough ride, especially Apple (AAPL), Nvidia (NVDA) and Tesla (TSLA).
Nine Day 2022
Finally Tesla China rival Nine (NINE) will hold its Nio Day 2022 on Saturday. It revealed the EC7 coupe SUV, a likely high-end Tesla Model Y competitor. EC7 deliveries will start in May 2023. Nio also revealed a facelifted ES8 SUV, now on the NT 2.0 platform like its all-new models. Deliveries begin in June.
Nio also announced next-generation battery swap stations and charging options.
Nio production ramps up with strong demand for its newer ET5 sedan and ES7 crossover SUV. But easing Covid rules could trigger a massive wave of infections, and Nio and other Chinese electric car makers could face production or supply chain disruptions again. EV giant place bid (I WILL) said this week that Covid cases among workers are cutting production by 2,000-3,000 vehicles a day.
Nio shares fell 5.4% last week, back below the 50-day mark. Shares are well below the 200-day mark.
Tesla Shanghai production halted
Tesla Shanghai halted production on December 24, with workers due to return on January 1, 2023. A production halt at the end of the year had been widely reported in recent weeks, but denied by the EV giant. Shanghai had already curbed output earlier this month, with inventories growing rapidly despite a price cut in late October and significant year-end incentives.
Last week, Tesla shares fell 18% to 123.15 after falling 16.1% the previous week. These are the worst weekly losses since the Covid crash in March 2020. TSLA stock is at a 27-month low, down 70% from its November 2021 peak.
Dow Jones Futures Today
With Christmas falling on Sunday, US stock and bond markets will be closed on Monday, along with many stock exchanges around the world.
Dow Jones futures open at 6:00 PM ET on Monday along with S&P 500 futures and Nasdaq 100 futures.
Remember the action overnight Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
Stock market gains fell solidly during the week, but ended the worst levels of the week.
The Dow Jones Industrial Average rose 0.9% last week stock exchange trading. The S&P 500 index fell 0.2 per cent. The Nasdaq composite fell 1.9 per cent. The small-cap Russell 2000 finished just above break-even.
Apple shares fell 2% to 131.86 in the past week. It tests its June bear market low of 129.04 and falls to 129.64 on Friday morning.
Nvidia shares fell 8.2% to 152.06 after an ugly reversal back below the 200-day line the previous week, amid a broad chip sell-off. NVDA stock found support at the 50-day line on Friday.
The 10-year Treasury yield rose 27 basis points to 3.75%. The inverse relationship between government interest rates and stock prices has faded in recent weeks.
U.S. crude futures rose 6.9% to $79.56 a barrel. barrel during the week, briefly topping $80 on Friday.
Tesla is looking forward to a very interesting 2023
ETFs
Among them best ETFsInnovator IBD 50 ETF (FFTY) fell 0.3% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) increased by 0.7 per cent. iShares Expanded Tech-Software Sector ETF (IGV) fell 1.8 per cent. VanEck Vectors Semiconductor ETF (SMH) fell 4.7%, with NVDA stock being a large SMH holding.
SPDR S&P Metals & Mining ETF (XME) rose 1.6% last week. Global X US Infrastructure Development ETF (POPE) increased by 0.75 per cent. US Global Jets ETF (JETS) fell 1.3%. SPDR S&P Homebuilders ETF (XHB) fell 1.25%. Energy Select SPDR ETF (XLE) jumped 3.2% and the Financial Select SPDR ETF (45) increased by 0.8 per cent. Health Care Select Sector SPDR Fund (XLV) moved 0.4% higher.
Reflecting more speculative history stocks, the ARK Innovation ETF (SHEET) fell 6.9% to hit a new five-year low on Thursday. ARK Genomics ETF (ARKG) slipped 5.6% last week. Tesla stock remains a top holding across Ark Invest’s ETFs.
Five Best Chinese Stocks to Watch Now
Growth stocks to watch
Shift4Payment’s stock rose 4.1% to 54.06 last week. FOUR stocks have seen wild swings, but have tightened in the past few weeks near seven-month highs. That relative strength line is at its highest level in eight months, reflecting Shift4’s outperformance relative to the S&P 500 index. Still, FOUR shares don’t have a clear buy point right now.
Shift4 earnings and sales growth accelerated in the most recent quarter, as the company significantly expanded its target markets.
CELH stock fell 1.85% to 106.79 last week, consolidating just below the 21-day line and nearing the 10-week line. Celsius shares briefly peaked at 118.29 cup base buy points earlier in the month before you withdraw. But it is letting the 10-week line catch up, while the RS line has held near highs. A strong bounce off the 10-week line and above the 21-day line would also break a short-term downtrend and offer an early entry for CELH stock.
Celsius has booming sales growth and should see strong earnings in 2023, but the energy drink maker has a caffeinated valuation.
Impinj shares rose 4 cents to 111.87, with Friday’s 2.9% drop bringing it down to the 50-day and 10-week lines for the first time since a sharp earnings gap breakout on Oct. 27. PI stock has retreated modestly for four straight weeks from record highs, but its RS line has barely dipped. A bullish bounce off the 50-day line would offer an early one buy points.
Impinj earnings are up sharply in 2022, with robust gains next year.
Enphase shares fell 3.1% to 293.95 last week, below the 50-day mark. A buy point of 316.97 from a cup with handle the point of purchase is no longer valid. The always volatile ENPH stock could be a few weeks into another consolidation. A bullish move off the 50-day line—perhaps retracing the old buy point—could offer an aggressive entry.
Promote earnings and revenue growth rising rapidly, with solid growth seen in 2023 and beyond with solar incentives in place for years to come.
Box shares traded tight over the past few weeks, falling 0.7% to 31.01. The cloud-based data storage company is on the edge of a buy zone from a buy point of 29.57 cup-with-handles, according to MarketSmith analysis, after an outbreak on December 12. The recent pause could be seen as a lever for an eight-month consolidation. That buy point is 31.10, but investors could look for an early entry. Ideally, the 21-day line would catch up and the 50-day line would narrow the gap with Box shares.
Growth in the box office’s earnings has accelerated in the past two quarters.
Analysis of market rally
The stock market rise remains under severe pressure. The major indexes were mixed for the week, not bouncing back from the previous week’s big, ugly week off.
The Dow Jones rose modestly this week after testing its 50-day line several times.
The S&P 500 fell modestly, but that masked some big swings during the week. The benchmark index just regained its 50-day moving average on Wednesday. On Thursday, the S&P 500 and other major indexes fell to their worst levels in weeks, but did close off lows.
On Friday, the S&P 500 rose slightly, but below its 50-day line. Invesco S&P 500 Equal Weight ETF (RSP), with less weight to tech titans like Apple, rallied on Friday to just reclaim its 50-day.
The Nasdaq was the big laggard, with Tesla shares and Nvidia among the notable laggards. But there was broad weakness for growth stocks, particularly among chip names after weak results and guidance from memory chipmakers Micron technology (IN).
The S&P 500 needs to regain the 50-day line, but that would only be a first step.
It is unclear whether the market will bounce back, topple into bearish territory, or move sideways in a choppy fashion for an extended period. The latter may be more likely until there is some clarity on when and where the Fed will stop raising interest rates and whether the economy will slide into a clear recession.
While growth stocks like Enphase and Celsius are worth watching, many medical stocks and other defensive growth stocks are holding their own. Metals and mining, industrials, housing and some energy plays are doing relatively well.
Time The Market with IBD’s ETF Market Strategy
What should I do now
The stock market feinted higher and lower during the week, with the technical picture not changing dramatically. Except for the Dow Jones, the major indexes are below the major moving averages. Leading stocks have been difficult to hold at best.
Investors should have minimal exposure and be cautious about adding new positions. Don’t get excited by a strong open or even a bullish session or two.
Keep your watchlists fresh. A lot of stocks from a variety of sectors are creating or creating to create. Some names show strong relative strength but do not have a clear buy point. It’s ok right now.
In the meantime, take some time to review your trades over the past year, including your big winners and losers and the trades you didn’t make but wish you had. Did you follow your rules and were your rules healthy?
Read The big picture every day to stay in sync with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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