Market Rally Holds Key Levels, But This Has Been Difficult; Tesla Woes Continue

Dow Jones futures will open Sunday night, along with S&P 500 and Nasdaq futures.


The stock market rally generally lost ground last week, but major indices found support at key levels. However, many promising stocks retreated shortly after crossing the buy points. Investors should follow certain rules for the current trading environment, ranging from keeping exposure light to taking partial profits.

Vertex Pharmaceuticals (VRTX), Charles Schwab (SCHW), excel energy (EE) and CALX stock are actionable, while Celsius (CELH) gets ready.

Vertex and CELH stocks are on the IBD List 50. The stock VRTX is also on the IBD Big Cap 20. Calix (CALX) was Friday IBD stock of the daywith Excelerate Energy and SCHW stocks picked earlier in the week.

A stock that is not holding up well is You’re here (TSLA). Tesla stock plunged last week, hitting fresh lows in the bear market on Friday.

Dow Jones Futures Today

Dow Jones futures open Sunday at 6 p.m. ET, along with S&P 500 and Nasdaq 100 futures.

Remember that overnight action in Futures contracts on Dow and elsewhere does not necessarily translate into actual trading over the next stock Exchange session.

Join the experts at IBD as they analyze actionable stocks in the stock market rally on IBD Live

Stock market rally

Outside of the Dow Jones, the stock market rally showed modest losses after the previous week’s big gains, although there was a sizable pullback from Tuesday’s highs to Thursday’s lows.

The Dow Jones Industrial Average made a fractional gain last week stock market trading. The S&P 500 index fell 0.7%. The Nasdaq composite fell 1.5%. Small cap Russell 2000 fell 1.7%.

The 10-year Treasury yield rose 1 basis point to 3.82% after falling to 3.69% on Wednesday.

U.S. crude oil futures plunged 10% last week to $80.08 a barrel. China’s zero Covid signals and hawkish comments from the Fed have raised concerns about demand. Natural gas prices rose 7.2%.


From best ETFsthe Innovator IBD 50 ETF (FFTY) slipped 1.1% last week, while ETF Innovator IBD Breakout Opportunities (FIGHT) fell slightly by 0.2%. The iShares Expanded Tech-Software Sector ETF (VIG) fell 3.55% as cloud software names were hit hard. The VanEck Vectors Semiconductor ETF (SMH) fell 0.65%, reaching resistance at the 200-day line.

Reflecting more speculative history stocks, ARK Innovation ETF (ARKK) plunged 9.5% last week and ARK Genomics ETF (ARKG) plunged 11.1%. TSLA stock is a major holding in Ark Invest ETFs.

SPDR S&P Metals & Mining ETF (XME) slipped 1.9% last week. The Global X US Infrastructure Development ETF (PAVE) slipped 0.1%. US Global Jets ETF (JETS) fell 2.9%. ETF SPDR S&P Home Builders (XHB) fell 3%. The SPDR Energy Select ETF (XLE) lost 1.6% and the Financial Select SPDR ETF (XLF) fell 1.4%. SPDR Healthcare Sector Fund (XLV) increased by 0.9%. VRTX is part of the XLV fund.

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Stocks close to buy points

VRTX stock rose 3.75% to 314.63 last week, recovering 306.05 point of purchase of flat bottom, part of a base-to-base training. Biotech plunged intraday on Nov. 11 as medical stocks came under pressure but pared losses. The relative force line is far from recent highs, but has shown steady progress throughout the year. Vertex’s earnings growth remains strong.

SCHW stock jumped 2.45% on Friday to 79.81, breaking the downtrend by a handful, offering early entry. The official buy point is 81.18 from a nine month deep level cup with handle base. However, the handle also formed just above a lower base entry of 77.51.

EE stock rose 2.7% to 27.17 on Friday, also breaking the downtrend by a handful. The April IPO has an official buy point of 28.49 cups with handle, according to MarketSmith Analysis.

CALX stock jumped 6.6% to 69.82 on Friday, rebounding higher after a pullback towards the 21-day moving average. The pullback follows a profit gap after several weeks of tight trading. Calix’s revenues continue to decline, but public funding for rural broadband is expected to drive future growth.

Celsius stock rose 3.9% to 96.99 last week, but reversed on Friday. This could be good news. The energy drink maker has a consolidation buy point of 118.29. A break here might offer a lower entry, although it’s too low to be a good handle. The 50 day line continues to slide for CELH stocks, but the 10 and 21 day lines are above this key level.

Tesla Stock

Tesla stock fell just over 8% to 180.19 last week, sliding to a new bear market low of 176.55 on Friday. This followed declines of 5.5% and 9.2% in the previous two weeks, continuing a steep decline since late September.

It’s a tough environment for aggressive growth stocks, especially electric vehicle makers. Tesla has concerns about demand as production increases and competition intensifies. This is to reduce prices in China, with further reductions likely with the end of subsidies on December 31. Meanwhile, the “Twitter circus” remains a concern. CEO Elon Musk’s chaotic reign in just three weeks threatens to damage the Tesla brand.

Tesla continues to grow at a healthy pace, while new US subsidies are expected to support domestic demand in 2023.

But TSLA stock has had multi-year periods of drift or decline. So while the EV giant may rise again, investors should wait for the chart to recover. It could take a long time.

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Market rally analysis

The stock market rally had a down week. After the CPI-fueled surge of the previous week, the indices initially rose but then retreated from Tuesday’s highs, testing key levels on Thursday. But stocks rebounded slightly from Thursday’s lows.

A market pause was not a big surprise given recent gains and the S&P 500 index approaching its 200-day line. Maintaining support zones is a positive, while the Nasdaq 21-day line is poised to cross the 50-day mark. Assuming the indices maintain these levels and eventually move higher, it would be a constructive week for the major indices.

But it was a frustrating week for major stocks. A decent number of stocks broke or issued buy signals early in the week. But with the removal of the indexes, many of these names soon returned under the entries. Some may rebound quickly or settle soon, but that will likely depend on the market.

Energy stocks had a rough week as crude prices fell, although LNG play EE stock was an exception.

Medical stocks, which have come under pressure with defensive growth stocks, rebounded this week. This includes VRTX stocks as well as many biotechs and health insurers.

Networking companies such as Calix, some financials like Schwab, as well as building materials and a number of sectors still look interesting.

Aggressive growth has not had a good week. This includes Tesla stocks, cloud software, and ARK-like names. The CELH stock was an exception.

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Investment rules for this stock market rally

Investors should always have sound trading rules. But the current market’s tricky rally means investors should favor light and flexible trading. Here are seven guidelines.

Keep exposure light: This is not a crazy bull market. Investors should participate in this rally, but now is not the time to be on the sidelines.

Gradually add exposure: Do not increase the exposure rapidly. Buying a bunch of stocks on, say, Tuesday would have created quick losses because of the resulting market pullback. Let the market pull you in gradually.

Look for the first entries: Breakouts have struggled in 2022, in part due to choppy markets and sector rotation. By the time a stock reaches a traditional buy point, especially from a deep base, it may be due for a pullback. Early entries offer a chance to enter promising stocks before the mini-race break.

Take partial profits: Given the bullish nature of the current uptrend, investors should consider taking early partial profits. This can give you the confidence to let the remaining position roll. Know the character of your holdings. Some stocks are more prone to large volatile moves, with particularly large partial profits.

Know your line in the sand: You need to enter a trade knowing where you will get out of it, either entirely or moving forward. If the stock is moving higher, you can increase your stops.

Leadership Diversity: While it’s a good idea to focus on a small number of stocks, don’t focus too much on one particular industry or theme. Sector rotation has alternately affected defensive, defensive growth and growth stocks over the past few days. Try to acquire top stocks from a variety of backgrounds.

Be ready : If you want to buy the best stocks, early entries, you need to do your homework. Work on screens to build your watchlists. Focus on specific names that are “ready” or close to being, but also have a large list of quality actions that are starting to fall into place.

Lily The big picture every day to stay in tune with market direction and key stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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