Dow Jones futures were lower overnight along with S&P 500 futures and Nasdaq futures, ahead of Federal Reserve Chairman Jerome Powell and key economic data.
Stock market gains mixed on Tuesday apple (AAPL) dragged down major stock indexes again, along with amazon.com (Amazon) and tesla (Tesla).Meanwhile, Apple’s Dow giant Boeing (Bachelor), Chevron (CVX) and Goldman Sachs (GS) is approaching a buy point.
Hewlett Packard Enterprise (Hewlett Packard Enterprise) and netease (NTAP) released its earnings report late Tuesday, in which crowd strike (CRWD) and working day (WDAY) started the week with a big software report.
HPE stock edged higher in overnight trading after HPE earnings topped expectations. Hewlett-Packard Enterprise stock is above its 200-day line and is working on a long cup bottom. NTAP stock tumbled in extended action on weak NetApp revenue and guidance. WDAY stock rose overnight on third-quarter results and a $500 million buyback. Despite the dive in CRWD shares, the cybersecurity company hinted at fourth-quarter revenue misses, despite lower expectations for the third quarter, as the subscription situation improved.
On Wednesday morning, ADP is to release its private payrolls estimate for November. The Labor Department will release job openings in the October JOLTS report. Job vacancies will be closely watched by Federal Reserve Chairman Jerome Powell, who is due to speak on Wednesday afternoon.
All of this points to Thursday morning’s PCE price index, the Fed’s favorite inflation gauge, as well as Friday’s November jobs report, among several other important economic data releases.
Investors should be cautious about opening new positions until there is more clarity on the economy and the outlook for Fed rate hikes. If anything, they may want to lighten their positions in the short term.
CVX stock is on the IBD Leaderboard. BA stock on SwingTrader.
Fed Chairman Powell speaks
Federal Reserve Chairman Jerome Powell will speak at the Brookings Institution on Wednesday at 1:30 p.m. ET. He is expected to reinforce expectations that the central bank will switch to a 50 basis point hike on Dec. 14. Markets are pricing in a 67.5% chance of a half-basis-point rate hike, but the chances of the Fed’s fifth straight rate hike remain high at 75 basis points. But he could also signal that rate hikes will continue until 2023.
Whatever Powell says will be quickly overtaken by economic data. If inflation starts to cool significantly and the labor market slows, even the most hawkish Fed policymakers would favor a slower pace of rate hikes and an end to them earlier than market expectations. Fiery price and employment data will strengthen the resolve of many Fed doves. Of course, the economic data in the coming days could be mixed or slightly improving.
Dow Jones Futures Today
Dow futures traded slightly lower in fair value compared to S&P 500 futures. Nasdaq 100 futures fell 0.2%.
Keep in mind that overnight moves in Dow futures and elsewhere don’t necessarily translate into actual trading during the next regular stock market session.
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stock market rebound
After Monday’s sharp sell-off, Tuesday’s stock market rally was mixed.
In stock market trading on Tuesday, the Dow Jones Industrial Average closed just above breakeven. The S&P 500 fell about 0.2%. The Nasdaq Composite fell 0.6%. The mini-Russell 2000 rose 0.3 percent.
Apple shares fell 2.1%, their third sharp drop in a row, as Covid cases, lockdowns and protests in China weighed on the tech giant. On Tuesday, shares fell 2.6%, below their 50-day moving average. AAPL stock looms above its 50-day line with 200-day resistance. Riots erupted at Apple’s massive Foxconn iPhone assembly plant in China.
Amazon shares fell 1.6 percent and Tesla shares fell 1.1 percent, both retreating from near their 21-day moving averages. Both are relatively close to bear market lows.
U.S. crude rose 2.4 percent to $79.62 a barrel. Crude oil futures hit their lowest levels this year during intraday trading on Monday.
The 10-year Treasury yield rose 5 basis points to 3.75%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) was down 0.2%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.8%. The VanEck Vectors Semiconductor ETF (SMH) fell 0.3%.
The SPDR S&P Metals & Mining ETF (XME) rose 2.3%, while the Global X US Infrastructure Development ETF (PAVE) gained 0.1%. The U.S. Global Jets ETF (JETS) rose 1.8%. The Financial Select SPDR ETF (XLF) rose 0.6%. The Healthcare Select Sector SPDR Fund (XLV) fell 0.25%.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK ) edged down 0.5 percent and the ARK Genomics ETF (ARKG ) fell 0.4 percent. Tesla stock is the main holding of the Ark Investment ETF.
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Dow Stocks Near a Buy Point
Boeing shares rose 2 percent to $175.32 on Tuesday, according to MarketSmith analysis, back above a cup-based buy point of $173.95. Shares have been trading thinly near buy points after a surge in optimism for the aerospace giant. Analysts expect Boeing to return to profitability in 2023 after four years of losses. BA stock’s recent pause has caught up to its 21-day line.
Chevron’s stock price rose 1.45% to 180.94, slightly below the 182.50 buy point and slightly above the 21-day line. CVX stock has traded near that official buy point all month. An early entry around 167 on October 19 might initially be a safer bet. But with Chevron stock at exactly 21 days and no more than 50 days, it looks more interesting.
GS stock inched up 0.35% to 383.71 on Tuesday. The investment bank has a 389.68 buy point from the 35% deep cup-and-handle bottom from November 2021. Investors can also view the recent pause as a bottom-out for Goldman Sachs stock liquidation in early November above the bottom of the buy range. The 21-day SMA is about to catch up, while the 50-day SMA is starting to gain a foothold. The relative strength line is at a multi-year high, reflecting the outperformance of GS stock against the S&P 500.
Market rebound analysis
Equity gains are retreating amid key technical tests and economic data releases, as well as uncertainty over China’s Covid policy.
The S&P 500 is extending its pullback from below its 200-day moving average, but remains above its 21-day line. The Russell 2000 fell back below its 200-day and 21-day moving averages on Monday before falling back above its 21-day moving average.
The lagging Nasdaq fell below its 21-day line and approached its 50-day line.
Apple stock, Tesla and other large-cap stocks have been dragging down the Nasdaq and S&P 500.
The Invesco S&P 500 Equal Weight ETF (RSP) remains above its 200-day moving average.
But don’t overstate Apple’s impact. Many leading stocks are testing or falling below buy points or rounding out solid gains.
The silver lining is that stocks didn’t bounce back on the Fed’s speech and key economic data. That could mean the market could rally if there are no negative surprises, and potentially bigger gains if the upcoming headlines are positive.
But the market rally will do what it does.
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what to do now
Not many stocks are giving buy signals as the market pulls back. Investors should probably wait for Powell’s speech and economic data before committing to significant new buying. Investors may want to take at least some profits in a winning stock, especially if the winning stock retraces a buy point.
If the market rebounds higher soon, a large number of stocks will look operable. But if the major indexes fall sharply from here, many interesting stocks will start to suffer today.
Therefore, investors need to remain engaged and flexible. Keep your watchlist up to date, but also develop an exit strategy for your holdings.
Read The Big Picture daily to stay abreast of market direction and leading stocks and sectors.
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