Why The Market Rally Could Use A Holiday; Tesla Rebounds, 5 Stocks Near Buy Points

Dow Jones futures rose slightly on Thursday morning, along with S&P 500 futures and Nasdaq futures, after US markets were closed for the Thanksgiving Day holiday.




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The stock market turned positive for the second straight session on Wednesday. Fed officials see a slower rate hike coming “soon,” according to Fed minutes of the November meeting released Wednesday afternoon.

Nasdaq buoyed by rebounding, led by Tesla (TSLA). All the major indices are up solidly so far this short holiday week. But a long holiday can be constructive for the market to be bullish.

Investors should be cautious about adding exposure given the key technical resistance and notable economic reports.

Although, Dexcom (DXCM), unitedhealth (UNH), Neurocrine Biosciences (nbx), Medspace Holdings (MEDP) and shockwave medical (SWAV) are five health care stocks that are showing interesting action.

DXCM stock and Neurocrine Biosciences are on the IBD leaderboard, along with MEDP stock on the leaderboard watchlist. NBIX stock and Medpace are on the IBD 50.

dow jones futures today

Dow Jones futures rose 0.2% versus fair value. S&P 500 futures rose 0.25% and Nasdaq 100 futures rose 0.4%.

Mainland China reported more than 31,000 Covid cases, including people without symptoms, which topped mid-April levels during the Shanghai lockdown. Symptomatic Covid infections are still below the April high.

US stock exchanges will be closed on Thursday for the Thanksgiving Day holiday. On Friday, US exchanges will close early at 1PM ET. But other exchanges around the world are normally open on Thursdays and Fridays.

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

There were some wobbles in the stock market rally on Wednesday, but gains led by tech extended.

Initial jobless claims rose to a three-month high, while ongoing claims posted an eight-month best. S&P Global’s Purchasing Managers’ Index for US manufacturing and services both indicated a contraction.

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Fed minutes reinforced expectations for a 50-basis point rate hike at the December 14 meeting. The market still favors another half-point move in February, but there’s a good chance of a quarter-point increase.

The Dow Jones Industrial Average rose 0.3% in Wednesday’s stock market trading. The S&P 500 index climbed 0.6%, led by TSLA stock. The Nasdaq Composite popped 1%. The small-cap Russell 2000 rose 0.1%.

US crude oil prices fell 3.7% to $77.94 per barrel. Natural gas futures jumped 7.2%.

The 10-year Treasury yield fell 5 basis points to 3.71%. The two-year Treasury yield, which is more closely tied to the Fed rate hike outlook, fell below 4.5%.

The US dollar fell significantly for the second straight session, nearing recent lows.


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ETF

The iShares Extended Tech-Software Sector ETF (IGV) climbed 1.5%. VanEck Vectors Semiconductor ETF (SMH) rose 0.9%.

The SPDR S&P Metals & Mining ETF (XME) climbed 0.3%. The US Global Jets ETF (JETS) rose 0.1% more. The SPDR S&P Homebuilders ETF (XHB) climbed 0.5%. The Energy Select SPDR ETF (XLE) fell 1.1%. The Health Care Select Sector SPDR Fund (XLV) rose 0.4%. Dow Jones heavyweight UNH stock is a top holding in XLV.

Reflecting more-speculative story stocks, the ARK Innovations ETF (ARKK) popped 2.9% and the ARK Genomics ETF (ARKG) popped 0.9%. TSLA stock is a major holding in Ark Invest’s ETF

Tesla stock jumped 7.8% to 183.20 on Wednesday, rebounding from Tuesday’s bear market lows as Citigroup upgraded the EV giant from sell to hold. TSLA stock is down 19.5% so far this month and has a chance of nearly halving in 2022.


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to see stock

DexCom stock rose 1.7% to 112.92, finding support at its 21-day moving average. DXCM stock is trailing this month after missing earnings on Oct. 28. Dexcom stock arguably has a long handle, with a 123.46 buy point from seven months of consolidation. Investors can buy DXCM stock from the initial entry from the 21-day line, perhaps using Tuesday’s high of $113.88 as a specific buy point.

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MedSpace stock fell 1.3% to 218.81 on Wednesday. Shares have been consolidating near record highs since skyrocketing 38% on Oct. 25 after earnings. Since then, MEDP stock has been making a messy handle on a deep, year-over-year cup base. While shares have seen some large intraday swings, MEDP stock is currently on track to form a three-week-tightening pattern by Friday’s close. Investors can use the November 15 close of 226.57 as an opening entry, above the bulk of recent trading.

NBIX stock fell 1.5% to 118.97. Shares boosted by October’s breakout are consolidating near multi-year highs. Despite a decline to the 50-day line last week, Neurocrine stock has a tight three-week pattern that is on track to extend into the fourth week. Technically, it has a buy point at 126.09, although investors may want to wait for some calmer action.

Shockwave stock rose 4.7% on Wednesday to 264.06, above the 21-day line but hitting resistance at the 50-day line. After a failed breakout in late October and a sharp selloff that continued through earnings, SWAV stock has staged a comeback over the past week. A new base will take longer, but aggressive investors can use a strong move above the 50-day high as an initial entry.

UNH stock climbed 1.3% to 529.71, rebounding above its 50-day and 21-day lines after briefly dipping below its 200-day line last week. UnitedHealth stock used to be an IBD long-term leader and still shares several characteristics. Investors can use the bounce off the 50-day line as either an early entry or a long-term leader entry. UNH stock needs to form a new base after failing quickly to breakout from a cup-with-handle base last month.


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Market Rally Analysis

The stock market rally added to Tuesday’s gains. The S&P 500 just hit an intraday high of November 15 and closed within 1% of the 200-day line.

The Russell 2000 came up to its 200 day line.

The Nasdaq added to Tuesday’s rebound from its 21-day moving average, though it is still well below its Nov. 15 short-term high and 200-day low.

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The Dow Jones came within 20 points of its August 16 intraday high.

The S&P 500 moving decisively above its 200-day line — which roughly coincides with the one-year declining-top trendline — is a major test for the market’s rally.

A large number of economic data can swing Fed rate expectations and thus the stock market. On Wednesday, November 30, the JOLTS report will reflect employment opportunities, with Fed chief Jerome Powell speaking later. On Thursday the PCE price index, the Fed’s favorite inflation gauge, will be released along with jobless claims and the ISM manufacturing index. The November jobs report is due out on Friday, November 2.

Ideally, the market would move sideways for a few days, holding at least the 21-day line, leading into those economic reports.


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What should we do now

The market rally has shown some decent gains this week, with more stocks flashing buy signals over the past few days. As a result, investors could add a little more risk.

But they may want to be cautious about making significant new purchases with the S&P 500 hovering below its 200-day line and plenty of Fed-key economic next week.

Also consider taking some partial profits in fast moving stocks. Stock is making short term progress amid volatile uptrend and sector rotation.

Still, investors should work hard on their investment shopping list, looking for set-up and actionable names in a variety of sectors.

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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