Dow Jones Futures: Stock Market Rally Still Needs To Do This

Dow Jones futures edged higher early Wednesday, along with S&P 500 futures and Nasdaq futures. The stock market rally resumed on Tuesday, with the S&P 500 retaking the 4,000 level.




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Deere ( DE ) reported better-than-expected earnings early on Wednesday. DE stock jumped in pre-market trading, signaling an exit from a buy zone.

Deere’s earnings and guidance are important for a variety of agricultural stocks, including CF industry (CF) and Archer – Daniel – Midland (ADM), as well as machine manufacturers viz Caterpillar (CAT).

Energy storage continues to perform well. Solar Chief Enphase energy (ENPH), a coal producer Peabody Energy (BTU), purifier CVR Energy (CVI), a natural gas producer EQT Corp. (EQT) and LNG storage Increase energy (EE) are all near shopping points.

EE stock broke on Wednesday, with Enface moving back into the buy zone. BTU Stock, CVR Energy and EQT are applicable.

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

Apple iPhone factory riots

A series of overnight protests broke out at a major Apple iPhone factory in China, when hundreds of workers clashed with security. More than 100,000 workers have been forced to live at the Foxconn campus in Zhengzhou for weeks due to Covid concerns, many of whom have reportedly not been paid during this time.

The protests also come amid a surge in Covid cases in many parts of China amid renewed lockdowns and tighter restrictions elsewhere.

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

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

Dow Jones futures today

Dow Jones futures were less than 0.1% below fair value. S&P 500 futures rose 0.1%. Nasdaq 100 futures rose 0.2%.

The 10-year Treasury yield rose 1 basis point to 3.77%.

Crude oil prices fell by 2 percent. US natural gas prices rose 7%. On Tuesday, Europe published details of the natural price cap, which will come into effect on January 1 for a year, more than double the current level.

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New Zealand’s central bank raised rates by a record 75 basis points, as expected.

Fed minutes from the November meeting will be released Wednesday.

Before the opening, investors will get weekly jobless claims, October durable goods orders and more.

Note 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 rally

The stock market rally opened mixed on Tuesday but gained momentum for broad-based gains, nearing session highs.

The Dow Jones Industrial Average rose 1.2% in stock market trading on Tuesday. The S&P 500 index and the Nasdaq composite both rose about 1.4%. The small-cap Russell 2000 popped 1.1%.

The 10-year Treasury yield fell 7 basis points to 3.76%. But two-year Treasury yields, more closely tied to Fed policy, were roughly flat at 4.53%.

The dollar, after rallying for the past three sessions, fell back on Wednesday. The greenback has fallen significantly since late September, especially since early November.

U.S. crude rose 1.1% to $80.95 a barrel, continuing to recover from Monday’s short-term dive. Gasoline futures rose 4.3%, good news for refiners. Natural gas futures rose after falling more than 2% on the day.

ETFs

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

The SPDR S&P Metals and Mining ETF ( XME ) gained 3.2%, and the Global X U.S. Infrastructure Development ETF ( PAVE ) ticked up 1.3%. The SPDR S&P Homebuilders ETF ( XHB ) returned 1.9%. The Energy Select SPDR ETF ( XLE ) rose 3.1%. The health care select sector SPDR fund ( XLV ) rose 0.9% to a seven-month high.

Reflecting stocks with more speculative stories, ARK Innovations ( ARKK ) gained 0.3% and ARK Genomics ( ARKG ) declined 0.4%.

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Energy stocks close to purchase points

Inface stock rose 4% to 320.44, closing above a manual buy point for the first time with a 316.97 cap. However, the last three times ENPH stock climbed into these areas, it pulled back down. Enface stocks have large daily fluctuations. So investors may be looking to see if ENPH stock pulls back to its fast-rising 21-day moving average.

Some other LNG stocks are showing strength, too Flex LNG (FLNG) breaking and Cheniere Energy (LNG) is reclaiming its 50-day line.

BTU stock climbed 6.7% to 29.62, just shy of the 30.15 handle buy point in the seven-month consolidation. Tuesday’s move broke the handle trend line, suggesting an early entry. However, BTU stock is 9.3% above its 21-day line and 17% above its 50-day line. The deal follows strong earnings from Peabody Energy.

CVR Energy stock rose 4.85% to 40.85, above an old 39.81 buy point that still looks valid. Also, CVI stock has a tough three-week pattern with a 42.31 entry. A move above 41.31 may suggest an early entry into this tight pattern.

EQT stock rose nearly 6% to 43.79, breaking above the 50-day line on Monday after retracing its 200-day high. Shares break a downtrend line. The official buy point is 52.07.

EE stock rose 9.6% to 30, clearing a 28.49 cup-hand buy point on above-average volume, according to MarketSmith analysis. The move to a record close cleared much of the trade going back to Excelerate Energy’s April IPO. EE stock held off early Friday and Monday entries, although trading was below normal on those days. Excelerate has now extended slightly above the buy zone and extended well above the 21-day line.

Market rally analysis

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

The S&P 500 has bounced back from its 10-day line, right at the 4,000 level, as it moves toward the 200-day line. While not above the Nov. 15 intraday high, it was the index’s best close in more than two months.

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There is a 50 day line only The S&P 500 is starting to turn higher.

The Russell 2000 is getting very close to its 200-day mark. The S&P MidCap 400, which hit a 200-day line last week, made other gains.

The leading Dow Jones topped the 34,000 level for the first time in three months, just below the August 16 peak. Lagging Nasdaq found support at its 21-day line, just above the 50-day, but hasn’t recouped all of Monday’s losses.

All these indicators work hand in hand, with the Dow moving up. Many stocks follow the action of major indexes, so many trades are made in stocks near buy points. A slightly longer break, perhaps until key economic reports later next week, will allow for moving averages.


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what to do now

Until the S&P 500 moves decisively above its 200-day line, investors may not want much exposure right now. With the Thanksgiving holiday quiet trading and Fed-important economic data next week, the market’s rally may reach a limit in the short term.

It can help stocks of different sectors to adjust manually and get moving averages. Investors should make their own watch list. It’s definitely a time to look beyond traditional tech growth stocks, which many are lagging behind right now.

Given that many leaders are extended from moving averages, such as Excelerate Energy or BTU stock, it’s important to look for early entries and act quickly.

Read the big picture daily to stay in tune with market direction and leading stocks and sectors.

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

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