Dow Jones futures were little changed after the close, as were S&P 500 futures and Nasdaq futures.
The stock market rally on Tuesday showed divergent action, with the Dow rallied, the Nasdaq slumped and the S&P 500 was somewhere in between.
On the plus side is the giant Dow Jones Caterpillar (CAT), deer (EN), AND YOU (AND YOU), Freeport-McMoRan (FCX) and Schlumberger (SLB) are industrial, metal, mining and energy games in or near buy points. Underlying commodity prices rose solidly on Tuesday, helped by China, which continues to ease Covid restrictions.
Dow Jones futures today
Dow Jones futures remained flat vs. fair value. S&P 500 futures edged higher. Nasdaq 100 futures edged lower with TSLA stock extending losses overnight.
stock market rally
The stock market rally was a mixed bag, with industrials and metals stocks holding up or rising as growth struggled.
The Dow Jones Industrial Average rose 0.1% on Tuesday stock exchange trading. The S&P 500 Index fell 0.4%, with Tesla stock the worst performer on the day, followed by Moderna and Nvidia. The Nasdaq Composite fell 1.4%. Small cap Russell 2000 fell 0.7%.
Apple shares fell 1.4% to 130.03. For the day, AAPL hit 128.76, just below its bear market low.
Tesla shares plunged 11.4% to 109.01, its worst one-day drop in 11 months amid a factory shutdown in Shanghai, weak sales data from China and other news. TSLA stock has now plunged 44% in this month alone to its lowest since August 2020. Volume was very high throughout the month, indicating institutional selling. TSLA stock was down slightly in extended trading.
Nvidia stock fell 7.1% to 141.21, breaking its 50-day moving average. NVDA stock is down 19% since December. 13 intraday high of 187.90.
MRNA shares fell 9.5% to 180.17 and fell below 188.75 Cup with handle point of purchase, accordingly MarketSmith Analysis. Moderna blew that base on 12/13 on bullish cancer vaccine data, up 20% on the day and hit 217.25 in the following session. But MRNA stock has posted a 15% plus round-trip gain.
ENPH shares fell 6.6% to 274.54, well below the 50-day moving average after falling below that level on Friday.
US crude prices fell 3 cents to $79.53 a barrel after surpassing $80 on Tuesday morning.
The 10-year Treasury yield rose 11 basis points to 3.86% after rising 27 basis points last week.
among the The best ETFsthe innovator IBD 50 ETF (FFTY) fell 0.5%, while innovator IBD Breakout Opportunities ETF (STRUGGLE) rose by 0.7%. The iShares Expanded Tech Software Sector ETF (IGV) fell by 0.6%. The VanEck Vectors Semiconductor ETF (SMH) fell by 1.8%. NVDA stock is a large SMH holding.
The SPDR S&P Metals & Mining ETF (XME) rose by 0.8%. FCX shares and ATI are XME components. The Industrial Select Sector SPDR Fund ETF (XLI) gained 0.3% with shares of Caterpillar and DE both being top 10 holdings.
The US Global Jets ETF (JETS) declined by 1.3%. SPDR S&P Homebuilders (XHB) fell by 0.3%. The Energy Select SPDR ETF (XL) gained 1.1% with SLB stock a key component. The Financial Select SPDR ETF (XLF) was just below the breakeven point. The SPDR Fund for Selected Healthcare Sectors (XLV) fell 0.3%.
Reflecting stocks with more speculative histories, ARK Innovation ETF (ARKK) fell 4.15% to hit a new five-year low. ARK genomics (ARKG) fell 3.8%, nearing June’s bear market low. Tesla stock remains a key position in Ark Invest’s ETFs.
stocks to look at
Caterpillar shares rose 1.4% to 243.14, resolving a buy point of 239.95 from a flat base right next to a depth cup bottom. Breakouts have struggled over the past year, but the 6% deep base lowers risk somewhat. That relative strength line is at its best in almost 10 years.
Deere shares fell 0.2% to 436.15, still close to its 21-day moving average while the 10-week moving average is catching up. DE stock traded tight after a strong run. It is on track to have a flat base by the end of the week with a buy point of 448.50. A move above the Dec 21 high of 444.51 would provide early entry in Deere stock. The RS line for DE shares is at a record high.
ATI shares rose 3.8% to 31.45, recovering from the 10-week moving average and hitting a trendline entry. The official buy point is 31.84 from one handle. The RS line for ATI is at a three-year high.
Freeport-McMoRan shares are up a little over 2% to 38.88 and rebounded off the 21-day and 10-week moving averages. This provides early entry from a long, deep cup-and-handle base with a buy point of 41.26. FCX stock has not yet extended its 50-day moving average, which just broke above the 200-day moving average
Schlumberger shares rose 1% to 53.50 and worked at a buy point of 56.14 from a short basis. SLB stock broke a trendline entry and is still near its 21-day and 50-day moving averages.
Analysis of the market rally
The stock market rally showed divided, divergent action in Tuesday’s session.
The Dow Jones found renewed support at its 50-day moving average but faced resistance at its 21-day moving average.
The S&P 500 lost a little more ground vs. a rising 50-day moving average.
The Invesco S&P 500 Equal Weight ETF (RRP) edged up and briefly surpassed its 50-day MA as the influence of Tesla, Nvidia, Moderna and Enphase faded.
The Nasdaq slid Tuesday, nearing Thursday’s intraday lows. The composite toyed with a bear market closing low.
In addition to industrials, metals, mining and energy stocks such as Caterpillar, Schlumberger and FCX stocks, many medical stocks are doing well. Housing stocks, from builders to materials to retailers, are also showing strength, along with some retailers. The Chinese internet is recovering as the economy opens up.
But growth stocks and tech in general are looking terrible.
An uptrend under pressure, which is also a divergent market rally amidst enormous macroeconomic uncertainty, is unstable and highly risky. And that before the individual equity risk.
It’s possible that real-economy names will pull techs higher on a stock market rally in 2023, especially as headwinds from the Federal Reserve and the economy ease. Or tech and growth stocks could drag the broad market back towards bear lows. Or the main indices could lash sideways with significant sector rotation for an extended period of time.
The stock market rally is still going on. Parts of the market are doing well as the uptrend shows increasing divergence.
A nimble investor might try to buy CAT stock, ATI, or Schlumberger, for example. But exposure should be small, and any new positions should be small. Investors could also play the sector or theme via ETFs like XME, XLE, OIH or XLI.
There’s nothing wrong with not taking new positions or even being fully cash.
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.
YOU MAY ALSO LIKE: