Dow Jones rises, but Tesla, Moderna lead growth sell-off; 5 stocks near the buy point

Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures.


The stock market rally showed mixed action on Tuesday, with the Dow rising, the Nasdaq falling and the S&P 500 somewhere in between.

Tesla (TSLA), modern (mRNA), Nvidia (NVDA) and Enphase energy (ENPH) are notable losers, with Apple (AAPL) set a new bear market low.

On the positive side, the Dow Jones giant caterpillars (CAT), Deere (DE), ATI (ATI), Freeport-McMoRan (FCX) and Schlumberger (SLB) are industries, metals, mining and energy in or near buy points. Commodity prices surged on Tuesday, helped by China’s continued lifting of Covid-19 restrictions.

Dow Jones Futures Today

Dow Jones futures contract is unchanged from fair value. S&P 500 futures were down slightly and Nasdaq 100 futures were down 0.1%, with TSLA stock extending its losses overnight.

Remember that action overnight in future index and other places that don’t necessarily translate into actual transactions the next time stock market meeting.

Join IBD experts as they analyze stocks that could act in the stock market rally on IBD Live

Stock market recovers

The stock market rally had a mixed session, with industrials and metals holdings or rising while growth struggled.

The Dow Jones Industrial Average rose 0.1% on Tuesday stock market trading. The S&P 500 fell 0.4%, with Tesla stock having the worst performer of the day, followed by Moderna and Nvidia. The Nasdaq composite fell 1.4%. The Russell 2000 small-cap index rose 0.7%.

Apple shares fell 1.4% to 130.03. On the day, AAPL hit 128.76, just below the bear market low.

Tesla shares fell 11.4% to 109.01, the worst one-day drop in 11 months, amid the closure of the Shanghai factory, China’s weak sales data and other news. TSLA stock is now down 44% this month alone to its lowest level since August 2020. Volume was very high for the whole month, signaling institutional selling.

TSLA stock fell nearly 2% in extended trading.

Nvidia stock fell 7.1% to 141.21, breaking below its 50-day moving average. NVDA stock is down 19% from its December 13 high of 187.90.

mRNA reserves fell 9.5% to 180.17, dipped below 188.75 cup with handle buy points, follow MarketSmith Analysis. Moderna broke out of that base on December 13 thanks to bullish cancer vaccine trial data, up 20% that day and hitting 217.25 the next session. But mRNA stock is up 15% and more.

ENPH stock fell 6.6% to 274.54, now below its 50-day moving average after falling to that level on Friday.

U.S. crude oil prices fell 3 cents to $79.53 a barrel after touching $80 Tuesday morning.

The yield on the 10-year Treasury note rose 11 basis points to 3.86% after rising 27 basis points last week.

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Among the best ETFsIBD 50 Innovator ETF (FFTY) fell 0.5%, while Innovator’s IBD Breakthrough Opportunity ETF (HOUR) increased by 0.7%. iShares Expanded Tech-Soft Sector Sector ETF (IGV) decreased by 0.6%. VanEck Vectors Semiconductor ETF (SMH) decreased by 1.8%. NVDA stock is a large holding SMH stock.

SPDR S&P Metals & Mining ETF (XME) increased by 0.8%. FCX and ATI securities are components of XME. SPDR Industry Selection ETF (XLI) rose 0.3%, with Caterpillar and DE both in the top 10.

US Global Jet ETF (jet plane) decreased by 1.3%. SPDR S&P Home Builder (XHB) decreased by 0.3%. Energy Select SPDR ETF (XLE) rose 1.1%, with SLB stock as the main component. Financial Options SPDR ETF (XLF) just below breakeven. SPDR Foundation for healthcare sector (XLV) gave up 0.3%.

Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) fell 4.15%, hitting a new 5-year low. The ARK genome (ARKG) fell 3.8%, closing at the lowest end of the bear market in June. Tesla stock remains the big holding on Ark Invest ETFs.

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stocks to watch

Caterpillar shares rose 1.4% to 243.14, clearing a buy point of 239.95 from one flat sole right next to an abyss cup base. Breakouts have been difficult over the past year, but a deep 6% base should reduce the risk somewhat. The relative strength line is at its best level in nearly 10 years.

Deere stock fell 0.2% to 436.15, still close to the 21-day line with the 10-week line catching up. DE stock has been trading closely after a strong rally. It is on track to have a shallow flat base at the end of the week with a buy point of 448.50. A move above the Dec. 21 high of 444.51 will provide an early entry opportunity for Deere stock. DE stock’s RS line is at a record high.

ATI stock rose 3.8% to 31.45, recovering from the 10-week line and hitting the trendline. The official buy point is 31.84 from a handle. The RS line for ATI is at a three-year high.

Freeport-McMoRan stock rose just over 2% to 38.88, bouncing off the 21-day and 10-week lines. That gives the possibility of an early entry from a long, deep handle cup base with a 41.26 buy point. FCX stock has yet to extend beyond the 50-day line, it just crossed the 200-day line

Schlumberger stock rose 1% to 53.50, operating above a 56.14 buy point from a short basis. SLB stock has broken the entry point of the trendline and remains near its 21-day and 50-day lines.

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Analysis of market recovery

The stock market rally showed divergent, divergent action in Tuesday’s session.

The Dow Jones once again found support at the 50-day line, but hit resistance at the 21-day line.

The S&P 500 depreciated slightly more than the rising 50-day line.

Invesco S&P 500 Equal Weight ETF (RSP) rose slightly, quickly hitting the top of the 50-day line, with the impact of Tesla, Nvidia, Moderna and Enphase easing.

Nasdaq slid on Tuesday, approaching an intraday low on Thursday. Synthetic flirting with a bear market closing at the lows.

In addition to industrial, metals, mining and energy stocks like Caterpillar, Schlumberger and FCX stocks, many health stocks are doing well. Housing stocks, from builders to materials to retailers, along with several retailers, are also showing strength. China’s internet is recovering as the economy opens up.

But growth and tech stocks are generally looking bad.

An uptrend under pressure is also a divergent market rally amid major macroeconomic uncertainty that is volatile and high risk. And that’s before individual stock risk.

It’s possible that the real economy names will pull tech up during the stock market rally of 2023, especially if the Federal Reserve and economic headwinds recede. Or tech and growth stocks could drag the overall market back to the lows. Or the major indexes may move sideways with significant industry turnover for an extended period of time.

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What to do now

The stock market rally is still ongoing. Parts of the market are doing well, as the uptrend shows a growing divergence.

An astute investor might try buying CAT, ATI or Schlumberger stock. But the exposure should be light, and any new positions should be small. Investors can also enter the sector or topic through ETFs such as XME, XLE, OIH or XLI.

There’s nothing wrong with not taking a new position, or even all cash.

Read Big picture every day to stay in sync with market trends and top stocks and sectors.

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


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