Dow Jones futures will open Monday evening along with S&P 500 futures and Nasdaq futures after a long Christmas weekend. The stock market rally had another difficult week, but rebounded from Thursday morning’s lows.
Major indexes were mixed for the week, but many leading stocks came under further pressure. The market rally seems to be faltering but not over yet.
This is not a good time to buy stocks, especially growth names. But investors should always be on the lookout for potential growth leaders for the next sustained market rally. Shift4Payments (four) Celsius (CELH) Impinj (PI) Enphase energy (ENPH) and the box (BOX) is holding up relatively well in the current weak market. Four stocks and Bucks are consolidating near recent highs, while Ampange, Celsius and ENPH stocks are trading around the 50-day or 10-week lines. None are viable right now, and all will suffer if the market continues to weaken. But keep an eye on them.
ENPH stock is on the IBD leaderboard, PI stock is on the leaderboard watchlist. Enphase, Shift4Payments, Box and CELH stocks are in the IBD 50. ENPH stock is also in IBD’s Large Cap 20. Shift4Payments was Friday’s IBD Stock of the Day.
But Megacaps of Growth has had a bit of a journey, in particular Appl (AAPL) Nvidia (NVDA) and Tesla (TSLA).
New day 2022
Finally, Tesla competes in China Nio (NIO) will hold a Christmas EV NIO Day on December 24, 2022. Nio will showcase its updated ES8 SUV, built on the NT 2.0 platform, as well as a new EV, likely the EC7 coupe SUV.
Nio production continues to grow 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 Chinese EV makers could face production or supply chain problems again. EV large BYD (BYDDF) said this week that Covid cases among workers are reducing production by 2,000-3,000 vehicles per day.
Nio stock fell 5.4% last week, back below the 50-day line. Shares are well below the 200-day line.
Dow Jones futures today
With Christmas falling on Sunday, US stock and bond markets will be closed on Monday, along with most global exchanges.
Dow Jones futures open at 6pm ET on Monday along with S&P 500 futures and Nasdaq 100 futures.
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 fell sharply during the week, but ended at its worst weekly level.
The Dow Jones Industrial Average rose 0.9% in last week’s stock market trade. The S&P 500 index was down 0.2%. The Nasdaq composite sank 1.9%. Small Cap Russell 2000 ended just above the break.
Apple stock fell 2% last week to 131.86. It tested the June market low of 129.04, sliding to 129.64 on Friday morning.
Nvidia stock fell 8.2% to 152.06, after a nasty swing below its 200-day line last week, amid widespread chip selling. NVDA stock found support at the 50-day line on Friday.
Tesla stock fell 18% to 123.15 after plunging 16.1% last week, its worst weekly loss since the March 2020 Covid crash. TSLA stock is at a 25-month low, down 70% from its November 2021 high.
The 10-year Treasury yield rose 27 basis points to 3.75%. The inverse correlation between Treasury yields and stock prices has weakened over the past few weeks.
U.S. crude futures rose 6.9% to $79.56 a barrel during the week, having briefly topped $80 on Friday.
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Among the top ETFs, the Innovative IBD 50 ETF ( FFTY ) fell 0.3% last week, while the Innovative IBD Breakout Opportunities ETF ( BOUT ) rose 0.7%. The iShares Expanded Tech Software Sector ETF ( IGV ) fell 1.8%. The VanEck Vector Semiconductor ETF ( SMH ) fell 4.7%, along with NVDA stock as SMH’s biggest holding.
The SPDR S&P Metals and Mining ETF ( XME ) rose 1.6% last week. Global X’s U.S. Infrastructure Development ETF ( PAVE ) rose 0.75%. The US Global Jets ETF ( JETS ) was down 1.3%. The SPDR S&P Homebuilders ETF ( XHB ) was down 1.25%. The Energy Select SPDR ETF (XLE) fell 3.2% and the Financial Select SPDR ETF (XLF) rose 0.8%. The Healthcare Select Sector SPDR Fund ( XLV ) rose 0.4%.
Reflecting a more speculative stock story, the ARK Innovation ETF ( ARKK ) fell 6.9%, hitting a new five-year low on Thursday. The ARK Genomics ETF ( ARKG ) fell 5.6% last week. Tesla stock remains the top holding across Ark Invest’s ETFs.
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Growth stocks to watch
Shift4Payments stock rose 4.1% to 54.06 last week. Four stocks have had wild swings, 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 Shift4’s outperformance against the S&P 500 index. Still, the four stocks currently lack a clear buy point.
Shift4’s revenue and sales growth accelerated last quarter, with the company significantly expanding its target markets.
CELH stock fell 1.85% last week to 106.79, just below the 21-day line and nearing the 10-week line. Celsius stock briefly topped a 118.29 cup base buy point earlier this month before pulling back. But let it hold the 10-week line, while the RS line is close to the highs. A strong pullback above the 10-week line and above the 21-day line would break a short downtrend, suggesting an early entry for CELH stock.
Celsius has been growing sales and should see strong earnings in 2023, but the energy drink maker is caffeinated.
Ampange stock rose 4 cents to 111.87, with Friday’s 2.9% drop pushing it below the 50-day and 10-week lines for the first time since an interval of strong earnings on Oct. 27. PI stock has modestly recovered four straight weeks from record highs, but its RS line has barely budged. A sharp bounce above the 50-day line would suggest an early buy point.
Ampange’s revenue is projected to rise in 2022, with strong gains in the following year.
Enface stock fell 3.1% last week to 293.95, below the 50-day line. 316.97 purchase point from manual purchase point with cup is no longer valid. The ever-volatile ENPH stock may be in a new consolidation for a few weeks. A sharp move above the 50-day line—perhaps a retracement of an old buy point—could suggest an aggressive entry.
Revenue growth and earnings growth are expected to increase rapidly, with strong growth seen in 2023 and solar incentives for the coming years thereafter.
Bucks stock has traded strongly over the past few weeks, falling 0.7% to 31.01. The cloud-based data storage company is on the edge of a buy zone from a manual buy point with a 29.57 cap, according to MarketSmith analysis, after a Dec. 12 breakout. The last interval can be seen as a handle for the eight-month integration. The buy point is 31.10, but investors can look for an early entry. Meanwhile, the 21-day line will hold and the 50-day line will close the gap with the box stock.
Box revenue growth has accelerated over the past two quarters.
Market rally analysis
The stock market rally remains under severe pressure. The major indexes were mixed for the week, not bouncing back after last week’s big, ugly out week.
The Dow Jones rose modestly for the week after testing the 50-day line several times.
The S&P 500 fell moderately, but that masked some big swings during the week. The benchmark index just retook its 50-day moving average on Wednesday. On Thursday, the S&P 500 and other major indexes fell to their worst levels in weeks, but closed off the lows.
On Friday, the S&P 500 rose slightly, but below its 50-day line. The Invesco S&P 500 Equal Weight ETF ( RSP ), with an underweight to tech titans like Apple, rallied to its 50-day rebound on Friday.
The Nasdaq was a big laggard with Tesla stock and Nvidia in significant declines. But there was widespread weakness for the growth stock, particularly among chip names following weak results and memory chipmaker guidance. Micron Technology (MU).
The S&P 500 needs to retrace its 50-day line, but that would be just the first step.
It is unclear whether the market will rebound for a longer period of time, fall to lower lows or move sideways in a longer-term flat fashion. The latter may be more likely until there is some clarity on when and where the Fed will stop hiking rates, and whether the economy will slide into a clear deficit.
While growth stocks like Enphys and Celsius are worth watching, many medical stocks and other defensive growth plays continue to be. Metals and mining, industrials, construction and some energy plays are doing relatively well.
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what to do now
The stock market went up and down during the week, with the technical picture not changing dramatically. Apart from the Dow Jones, the major indexes are below key moving averages. Leading stock was difficult to maintain, at best.
Investors should have minimal exposure and be careful of adding new positions. Don’t get carried away with a strong opening or even a quick session or two.
Keep your watch list up to date. Many stocks from different sectors are organized or arranged to be organized. Some names show strong relative strength but lack a clear buying point. That’s right now.
Alternatively, spend some time reviewing your trades over the past year, including your big winners and losers, and the trades you didn’t make but wish you had. Did you follow your rules, and were your rules correct?
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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