The stock market rally ended a four-day losing streak. Maybe Wednesday could provide more of a bounce. But the S&P 500 and Nasdaq are still far below their 50-day moving averages.
You’re here (TSLA) continued to plunge, Tuesday, rounding off all of its gains since the August 2020 stock split. Tesla stock edged higher early Wednesday after Elon Musk again pledged to find a Twitter’s new CEO. Tesla is considering further layoffs.
The video embedded in the article discussed Tuesday’s market action and analyzed SLB, Halliburton and ProFrac stocks.
Nike, FedEx Earnings
Dow Jones giant Nike and FedEx announced their results on Tuesday evening, also offering some insight into the holiday shopping season.
Nike revenue and sales topped views, but inventory jumped 43% from a year earlier. Margins fell due to markdowns. NKE stock soared 11% in premarket trading, signaling a return above the 200-day line. The shares edged up 0.2% to 103.21 on Tuesday.
FedEx Revenue views in mind, but the income has been insufficient. FDX stock rose 4% in extended trade. Shares closed down 2.6% at 164.35, below the 50-day line.
Dow Jones Futures Today
Dow Jones futures climbed 0.7% relative to fair value, with NKE shares providing a boost. S&P 500 futures advanced 0.5%. Nasdaq 100 futures rose 0.3%.
Crude oil futures rose 2%.
The 10-year Treasury yield fell 1 basis point to 3.67%.
Stock market rally
The stock market rally erased the opening losses and closed slightly higher.
The Dow Jones Industrial Average rose 0.3% on Tuesday stock market trading. The S&P 500 index climbed 0.1%, with Tesla stock the worst performer in the index. The Nasdaq composite edged up 1 point. The small cap Russell 2000 rose 0.5%.
Apple stock fell to 129.89, less than 1% from its June bear market low of 129.04. Shares rebounded to close down 7 cents at 132.30. Amazon stock edged up 0.3% after briefly undercutting Monday’s new bearish low.
U.S. crude oil prices rose 1.2% to $76.09 a barrel. Natural gas prices fell 9% after falling more than 11% on Monday.
The 10-year Treasury yield rose 10 basis points to 3.68%, after jumping 10 basis points on Monday. On Tuesday, the Bank of Japan turned slightly hawkish, letting the Japanese 10-year yield climb as high as 0.5%.
The 2-year yield, more closely tied to Fed policy, was essentially flat at 4.27%.
Investors will receive November’s PCE inflation report on Friday, with economists expecting another notable drop in headline and core inflation.
SPDR S&P Metals & Mining ETF (XME) jumped 2.6% and the Global X US Infrastructure Development ETF (PAVE) increased slightly by 0.4%. US Global Jets ETF (JETS) rose 0.4%. ETF SPDR S&P Home Builders (XHB) lost 0.55%. The SPDR Energy Select ETF (XLE) rebounded 1.5% and the Financial Select SPDR ETF (XLF) climbed 0.4%. SPDR Healthcare Sector Fund (XLV) closed slightly lower.
Stocks close to buy points
Oil service companies are rallying, even with crude prices near year-to-year lows, perhaps in anticipation of higher prices in 2023. Exxon Mobil (XOM) and Chevron (CLC) recently released their capital spending plans for next year, suggesting strong demand for service companies such as Halliburton, Schlumberger, ProFrac and many others.
SLB stock rose 3.9% to 51.76, returning above the 50- and 21-day moving averages and arguably breaking a tight falling trendline, arguing for early entry. Schlumberger stock is back in a still valid buy zone from a depth cup bottom. SLB stock should have a new base with a buy point of 56.14 after this week.
Oil services giant Halliburton bounced above its 21-day line, up 3.8% to 37.42, still close to its 50-day line. HAL stock has a buy point of 40.09 from a depth of 47% cup with handle background, according to MarketSmith Analysis. It has no obvious early entry. The handle will be long enough to be its own base after this week.
ProFrac stock jumped 6.9% to 23.23, returning above its 50- and 21-day lines and breaking a recent downtrend, as did SLB stock. This could serve as an early entry. ACDC stock should have further consolidation with a buy point of 27.10 after this week. ProFrac shares went public at 18 per share. He’s had three bases since then, with breakouts not working for long.
Tesla stock plunged 8.1% to 137.80, hitting a new two-year low. Shares of the electric vehicle giant have plunged 67% from their November 2021 peak and 29% just in December.
Tesla stock has now gone back and forth since its 5-for-1 stock split in August 2020. (TSLA shares also split 3-for-1 in August 2022.)
Tesla’s China sales slowed for a second straight week, according to weekly record data. This is despite ever-increasing end-of-year incentives, which are set to end on January 1, as well as Chinese subsidies for electric vehicles.
Elon Musk’s Twitter saga raises fears of significant damage to the Tesla brand. Many notable long-term TSLA bulls are increasingly critical of Musk.
Evercore and Daiwa Capital Markets cut TSLA stock price targets on Tuesday, both citing Twitter. Oppenheimer demoted Tesla on Monday.
Tesla stock failed to rally on Monday despite Elon Musk saying he would step down as CEO of Twitter after polling Twitter users on the issue.
Stocks continued to fall on Tuesday even as major indexes and many top stocks tried to take positions. The high volume of selling over the past few weeks suggests that major institutions are unloading or reducing their holdings of TSLA shares.
Late Tuesday, Musk said he would step down as head of Twitter as soon as he found a successor and would lead the software and server teams.
Tesla is implementing a hiring freeze and will begin a new round of layoffs in early 2023, Electrek reported, citing sources.
Tesla stock rose 1% on Wednesday morning.
Market rally analysis
After a strong sell-off from the December 13 highs, the stock market rally ended its losing streak, just barely.
The main indices looked oversold and probably “due” to a rebound. They got one, although it wasn’t a lot.
The Dow Jones found support at the 50-day line, but the other key indices made no notable technical moves.
The stock market rally remains under pressure.
AAPL stock rebounded from a near-bear market low, but that doesn’t mean it will continue to do so.
Many leading stocks found support at key levels. But their ability to hold and rebound strongly depends largely on the overall market.
Energy names could be a partial exception, given how they trade against underlying crude oil or natural gas prices. Oil service companies like SLB stock and coal producers like Consolidated Energy are doing better right now.
What to do now
This is not the right time to buy stocks. While major indexes have held firm and some top stocks have not slumped, the market rally is still weak.
The S&P 500 returning to the 50-day line would appear to be a minimal sign of strength, with much stronger tests for the 200-day and December highs.
Even if the market rebounds, Tesla’s continued slump on Tuesday shows that not all stocks will follow.
If you feel compelled to play in this market, take pilot positions and be prepared to take quick profits and cut losses.
Continue to look for stocks that are holding up and find support at key levels. Stocks with strong relative strength during weak markets can be leaders in the next advance.
Read 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.
YOU MIGHT ALSO LIKE: