Futures: The market rally still needs to do this

Dow futures tilted higher early Wednesday, along with S&P 500 futures and Nasdaq futures. The stock market rally rebounded on Tuesday, with the S&P 500 regaining the 4,000 level.




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monastery (DE) reported better-than-expected earnings early Wednesday. DE stock rose strongly in pre-market trading, indicating an exit from the overbought zone.

Deira’s earnings and guidance are important to a variety of agricultural stocks, incl CF Industries (CF) f Archer Daniels Midland (ADM), as well as machine makers such as Larva (cat).

Energy stocks continue to do well. Solar leader Enphase energy (ENPH), charcoal producer Peabody Energy (BTU), strainer CVR Energy (CVI), a natural gas producer EQT Corp. (EQT) and LNG stocks energy superiority (EE) are all close to the points of purchase.

EE stock broke out on Wednesday, with Enphase back in buy territory. BTU, CVR Energy and EQT stocks actionable.

DE and Enphase Energy stocks are on the IBD Leaderboard. EQT stock is on SwingTrader. Deere stock is listed in IBD 50. ENPH stock is listed in IBD Big Cap 20. Peabody Energy is IBD Tuesday’s stock.

Apple iPhone factory riots

Riots broke out overnight at Apple’s largest iPhone factory in China, as hundreds of employees clashed with security. More than 100,000 workers have been forced to live on Foxconn’s Zhengzhou campus for weeks due to Covid concerns, with many not being paid during that time.

Protests are also spreading elsewhere amid renewed lockdowns and severe restrictions across much of China as COVID cases surge.

Apple recently warned that the Apple iPhone 14 Pro models will be in short supply due to the Foxconn factory in Zhengzhou.

Apple stock fell slightly early Wednesday. AAPL rose 1.5% to 150.18 on Tuesday, finding support near the 50-day line but still below the 200-day moving average.

Dow jones futures today

Dow futures rose against fair value. S&P 500 futures rose about 0.1%. Nasdaq 100 futures rose 0.2%, helped by Citigroup’s upgrade Tesla (TSLA).

The 10-year Treasury yield rose 2 basis points, to 3.78%.

Crude oil futures fell 3%. Natural gas prices in the United States jumped 7%. On Tuesday, Europe released details on the normal maximum prices, starting one year from January 1, which are more than double current levels.

The New Zealand central bank raised interest rates by 75 basis points as expected.

The Fed’s meeting minutes from its November meeting will be released on Wednesday. Before the open, investors will get weekly jobless claims, durable goods orders for October, and more.

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


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Stock market rise

The stock market opened mixed Tuesday but gained steam for broad gains, closing near session highs.

The Dow Jones Industrial Average rose 1.2% in stock market trading Tuesday. The S&P 500 and Nasdaq Composite both jumped nearly 1.4%. Small cap Russell 2000 rose 1.1%.

The 10-year Treasury yield fell 7 basis points, to 3.76%. But the two-year Treasury yield, which is closely tied to Fed policy, was roughly flat at 4.53%.

The dollar fell on Wednesday after rising in the previous three sessions. The dollar has fallen significantly since late September, and especially from early November.

US crude oil prices rose 1.1% to $80.95 a barrel, extending its recovery from Monday’s short-term decline. Gasoline futures jumped 4.3 percent, which is good news for refiners. Natural gas futures rose after falling more than 2% on the day.

Exchange Traded Funds

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) jumped 3.4%, supported by a number of energy and metals stocks. The iShares Expanded Tech-Software Sector (IGV) Index rose 1.8%. The VanEck Vectors Semiconductor Index (SMH) rose 2.9%.

The SPDR S&P Metals & Mining ETF (XME) was up 3.2%, while the US ETF Global X Infrastructure Development (PAVE) was up 1.3%. The SPDR S&P Homebuilders ETF (XHB) rebounded 1.9%. The Energy Select SPDR ETF (XLE) rose 3.1%. The SPDR Healthcare Sector Selection Fund (XLV) rose 0.9% to a seven-month high.

Reflecting stocks with speculative stories, ARK Innovation (ARKK) gained 0.3% and ARK Genomics (ARKG) fell 0.4%.


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Energy stocks near points of purchase

Enphase stock rose 4% to 320.44, closing above the 316.97 cup handle buy point for the first time. However, the last three times ENPH stocks hit these areas, they reversed lower. Enphase stock tends to have large daily fluctuations. So investors may be looking to see if ENPH stock retraces to its rapidly rising 21-day moving average.

Some other LNG stocks are showing strength, with Flex LNG (FLNG) break out and Cheniere Energy (LNG) regains its 50-day streak.

BTU stock jumped 6.7% to 29.62, just below the buy point of the 30.15 handle on the seven-month consolidation. Tuesday’s move broke the trend line of the handle, providing an early entry. However, BTU stock is 9.3% above the 21-day line and 17% above the 50-day line. The handle formed after strong earnings from Peabody Energy.

CVR Energy rose 4.85% to 40.85, clearing the old buy point of 39.81 that could still be considered valid. Also, CVI stock has a narrowing three-week pattern with an entry of 42.31. Entry above 41.31 may provide an early entry for this narrowing pattern.

EQT stock jumped nearly 6% to 43.79, and once again broke above the 50-day line after rebounding from the 200-day high on Monday. The stock is breaking a downward sloping trend line. The official buy point is 52.07.

EE stock rose 9.6% to the 30, losing 28.49 cups on a buy-point handle of above-average volume, according to MarketSmith analysis. This move to a record close cleared out a large amount of the trading that occurred way back in Excelerate Energy’s initial public offering in April. EE stock flashed early entries on Friday and Monday, though trading was lower than usual on those days. Excelerate has now extended slightly from the overbought area and has extended well from the 21 day line.

Market rally analysis

The stock market rally continues to show constructive action, trading in a narrow range after a modest decline and support last week. On Tuesday, the major indexes rebounded from Monday’s losses.

The S&P 500 has bounced off the 10-day line, right at the 4000 level, as it moves towards the 200-day line. Although it was no higher than the intraday high on November 15, it was the index’s best close in more than two months.

The 50-day streak is Just It started rising on the S&P 500.

Russell 2000 is approaching 200 days. The S&P MidCap 400 Index, which held its 200-day line last week, posted more gains.

The leading Dow Jones index surpassed the 34,000 level for the first time in three months, just below the peak on Aug. 16. The lagging Nasdaq found support at the 21-day line, just above the 50-day line, but it didn’t recoup all of Monday’s losses.

All of these indexes run on knobs, with the Dow Jones sneaking up above. Most of the stocks follow the movement of the main indices, so a lot of handles are formed on the stocks near the buy points. A little longer pause, perhaps until key economic reports late next week, could allow the moving averages to start catching up.


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What are you doing now

Until the S&P 500 moves decisively above the 200-day line, investors may not want to add too much exposure right now. With trading muted over the Thanksgiving holiday and important economic data released by the Federal Reserve next week, the market’s rally could be range-bound in the short term.

This can help stocks from a variety of sectors create handles and gain ground. Investors should build their watch lists. It’s definitely time to look beyond traditional technology growth stocks, which are often lagging behind right now.

Since many of the leaders extend from moving averages, such as Excelerate Energy stock or BTU, it is critical that you look for early entries and act quickly.

Read the big picture every day to stay in sync with market trend, leading stocks and sectors.

Please follow Ed Carson on Twitter at @employee For stock market updates and more.

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