Dow Jones Futures: Market Rally Not Finished Yet; Tesla Shanghai Production Halted

Dow Jones futures will open on Monday evening, along with S&P 500 futures and Nasdaq futures, after a long Christmas weekend. Tesla Shanghai halts production while China rivals nio (NIO) unveiled new models.




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The stock market rally had another tough week but bounced back from Thursday’s lows. Major indices were mixed last week, but many major stocks came under further pressure. The market rally is looking shaky but not over yet.

This is not a good time to buy stocks, especially growth stocks. But investors should always look for potential growth leaders for the next market rally. Shift4Payments (four), Celsius (CELH), impinj (PI), enphase energy (ENPH) and Box (BOX) are holding relatively well in the current weak market. Four stocks and Box are consolidating near recent highs, while Impinj, Celsius and ENPH stocks are trading near the 50-day or 10-week lines. None are actionable now, and all could be trapped if the market continues to weaken. But keep an eye on them.

ENPH stock is on the IBD leaderboard, with PI stock on the leaderboard watchlist. Enphase, Shift4Payments, Box and CELH are stocks on the IBD 50. ENPH stock is also on the IBD Big Cap 20. Shift4Payments was Friday’s IBD Stock of the Day.

But Growth Megacaps Had A Rough Outing, Especially Apple (AAPL), NVIDIA (NVDA) and Tesla (TSLA).

Neo Day 2022

Finally, Tesla China rival nio (NIO) is celebrating its Nio Day 2022 on Saturday. It unveiled the EC7 coupe SUV, a potential Tesla Model Y competitor on the high end. Deliveries of the EC7 will begin in May 2023. Nio also unveiled a revised ES8 SUV, which is now based on the NT 2.0 platform like all its new models. Delivery starts in June.

Nio also announced next-generation battery swap stations and charging options.

Nio’s production is ramping up with strong demand for its new ET5 sedan and ES7 crossover SUV. But easing Covid regulations could trigger a huge wave of infections, and Nio and other China EV makers could face production or supply-chain constraints again. EV Giants BYD (BYDDF) said this week that Covid cases among workers were cutting production by 2,000-3,000 vehicles per day.

Nio stock fell 5.4% last week, below its 50-day line. The shares are well below the 200 day line.

Tesla Shanghai production halted

Tesla Shanghai ceased production on December 24, with workers set to return on January 1, 2023. Shanghai had already slowed output earlier in the month, with inventories rising sharply despite a late October price cut and substantial year-end stimulus.

Last week, Tesla stock plunged 18% to 123.15 after falling 16.1% in the prior week. This is the worst weekly loss since the Covid crash in March 2020. TSLA stock is at a 27-month low, down 70% from its November 2021 peak.

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dow jones futures today

With Christmas falling on Sunday, US stock and bond markets will be closed on Monday, along with many exchanges around the world.

Dow Jones futures open on Monday at 6 PM ET, along with S&P 500 futures and Nasdaq 100 futures.

Remember that overnight action in Dow futures and elsewhere does not translate into actual trading in the next regular stock market session.


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stock market rally

The stock market rallied strongly during the week, but ended the week at its worst levels.

The Dow Jones Industrial Average rose 0.9% in last week’s stock market trading. The S&P 500 index dropped 0.2%. The Nasdaq Composite sank 1.9%. Small-cap Russell 2000 ended just above break-even.

Apple stock fell 2% last week to 131.86. It is testing its June bear-market low of 129.04, having slipped to 129.64 on Friday morning.

Nvidia stock fell 8.2% to 152.06 amid a broad chip selloff, marking a nasty reversal below the 200-day line last week. 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 Treasury yields and stock prices has faded over the past several weeks.

US crude futures jumped 6.9% during the week to $79.56 a barrel, from above $80 on Friday.


Tesla is gearing up for a very interesting 2023


ETF

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) went down 0.3% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 0.7%. The iShares Extended Tech-Software Sector ETF (IGV) fell 1.8%. The VanEck Vectors Semiconductor ETF (SMH) fell 4.7%, with NVDA stock a major SMH holding.

The SPDR S&P Metals & Mining ETF (XME) gained 1.6% last week. The Global X US Infrastructure Development ETF (PAVE) rose 0.75%. The US Global Jets ETF (JETS) dropped 1.3%. The SPDR S&P Homebuilders ETF (XHB) declined 1.25%. The Energy Select SPDR ETF (XLE) jumped 3.2% and the Financials Select SPDR ETF (XLF) jumped 0.8%. The Health Care Select Sector SPDR Fund (XLV) inched higher by 0.4%.

Reflecting the over-speculative story stocks, ARK Innovations ETF (ARKK) fell 6.9% on Thursday to hit a five-year low. The ARK Genomics ETF (ARKG) declined 5.6% last week. Tesla stock is the top gainer in Arc Invest’s ETF.


Five Best Chinese Stocks to Watch Now


growth stocks to watch

Shift4Payments stock rose 4.1% to 54.06 last week. The four stocks have fluctuated wildly but have tightened near seven-month highs over the past few weeks. The relative strength line is at its highest level in eight months, reflecting the outperformance of Shift4 versus the S&P 500 index. Still, there is no clear buy point in the four stocks right now.

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Shift4 earnings and sales growth accelerated in the latest quarter, with the company significantly expanding its target markets.

CELH stock fell 1.85% last week to 106.79, consolidating just below the 21-day line and approaching the 10-week line. The Celsius stock briefly topped the 118.29 cup-basis buy point earlier this month before pulling back. But this lets it hold the 10-week line while the RS line is near the high. A strong bounce off the 10-week line and above the 21-day line would also break a short decline, offering an early entry for CELH stock.

Celsius has grown sales quickly and should have strong earnings in 2023, but the energy-drink maker has a caffeinated valuation.

Impinj stock rose 4 cents to 111.87, reversing Friday’s 2.9% decline on both the 50-day and 10-week lines for the first time since a powerful earnings intraday breakout on Oct. 27. PI stock has pulled back modestly for four straight weeks from record highs, but its RS line has fallen hard. A bullish bounce off the 50-day line will provide an initial buy point.

Impinge’s earnings are projected to increase in 2022, with the following year seeing tremendous gains.

Enphase stock fell 3.1% last week to 293.95, below its 50-day line. 316.97 purchase point from a cup-with-handle purchase point is no longer valid. The always-volatile ENPH stock could be weeks into a new consolidation. A bullish move from the 50-day line – perhaps retaking an old buy point – could prompt an aggressive entry.

Enphase earnings and revenue growth is accelerating, with solar incentives seeing solid growth in 2023 and in the years ahead.

Box stock traded tightly over the past few weeks, falling 0.7% to 31.01. According to MarketSmith analysis, the cloud-based data storage firm is at the edge of the buy zone from the $29.57 cup-with-handle buy point after its December 12 breakout. The recent halving can be seen as a handle for an eight-month consolidation. That buy point is 31.10 but investors can look for early entry. Ideally, the 21-day line would catch up and the 50-day line would narrow the gap with the box stock.

Box earnings growth has accelerated over the last two quarters.

Market Rally Analysis

There is a lot of pressure on the speed of the stock market. The major indexes were mixed for the week, not bouncing back after last week’s big, ugly outing.

The Dow Jones rose modestly for the week after testing the 50-day line several times.

The S&P 500 fell modestly, but that hid some big moves during the week. The benchmark indices retrieved their 50-day moving averages on Wednesday. On Thursday, the S&P 500 and other major indexes fell to their worst levels in weeks, but closed lower.

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On Friday, the S&P 500 rose slightly, but remained below its 50-day line. The Invesco S&P 500 Equal Weight ETF (RSP), with a lower weighting to tech titans like Apple, rallied on Friday to reclaim its 50-day.

The Nasdaq was the big laggard, with Tesla stock and Nvidia among notable laggards. But there was widespread weakness for growth stocks, especially among chip names after weak results and guidance from the memory-chip maker micron technology (MU).

The S&P 500 needs to retest the 50-day line, but this will be only a first step.

It is unclear whether the market will reverse, drop towards bear lows or move sideways in a volatile 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 rates, and whether the economy will slip into an outright recession.

While growth stocks like Enphase and Celsius are worth watching, many medical stocks and other defensive growth plays are on the rise. Metals & mining, industrials, housing and some energy plays are doing relatively well.


Tim the market with IBD’s ETF market strategy


What do I do now

The stock market fell higher and lower during the week, with the technical picture not changing dramatically. Apart from the Dow Jones, the major indexes are trading below major moving averages. It has become difficult to get hold of key stocks.

Investors should have a minimum risk appetite and should be wary of adding new positions. Don’t get too excited by a strong open or even one or two bullish sessions.

Keep your watchlist fresh. Lots of stocks from different sectors are setting up or preparing to set up. Some names are showing strong relative strength but not a clear buy point. It’s okay now.

In the meantime, spend some time reviewing your trades over the past year, including your big winners and losers, and trades you made but wish you had. Were you following your rules, and were your rules correct?

Read The Big Picture every day to keep up with market direction and the leading stocks and sectors.

Please follow Ed Carson on Twitter @IBD_ECarson For stock market updates and much more.

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