Dow Jones futures open Monday night, along with S&P 500 and Nasdaq futures, after the extended Christmas holiday. Tesla Shanghai suspends production while Chinese rival Nio (NIO) revealed new models.
The stock market rally has had another rough week, but has recovered from Thursday’s lows. The major indexes were mixed last week, but many leading stocks came under additional pressure. The market rally looks shaky but isn’t over yet.
This is not a good time to buy stocks, especially growth stocks. But investors should always be on the lookout for potential growth leaders for the next sustained market rally. Shift4Payment (FOUR), poison (CELH), imprint (PI NUMBER), Enphase energy (ENPH) and Boxes (BOX) is holding relatively well in the current weak market. FOUR stocks and Box are consolidating near recent highs, while Impinj, Celsius and ENPH stocks are trading around the 50-day or 10-week line. There is nothing actionable right now and all could be locked in if the market continues to weaken. But keep an eye on them.
ENPH stock is on the IBD Leaderboard, with PI stock on the Leaderboard watchlist. Enphase, Shift4Payments, Box, and CELH stock are on the IBD 50 list. ENPH stock is also on the IBD Big Cap 20 list. Shift4Payments is IBD’s notable stock today.
But growth megacaps have had a rough ride, notably Apple (AAPL), Nvidia (NVDA) and Tesla (TSLA).
Nio Day 2022
Finally, the Chinese Tesla rival Nio (NIO) will celebrate Nio Day 2022 on Saturday. It unveiled the EC7 coupe SUV, a capable competitor to the Tesla Model Y in the premium segment. EC7 deliveries will begin in May 2023. Nio has also revealed a refurbished ES8 SUV, currently running on the same NT 2.0 platform as its all-new models. Deliveries begin in June.
Nio also announced next-generation battery swapping stations and charging options.
Nio production is ramping up with strong demand for the newer ET5 sedan and ES7 SUV crossover. But the easing of Covid rules could trigger a huge wave of infections and Nio and other Chinese electric vehicle makers could face production or supply chain hiccups again. . giant electric car BYD (BYDDF) this week said Covid cases among workers are cutting production by 2,000-3,000 vehicles per day.
Nio stock fell 5.4% last week, back below its 50-day moving average. The stock is below the 200-day line.
Tesla Shanghai stops production
Tesla Shanghai halted production on December 24, and workers will return to work on January 1, 2023. Year-end production shutdowns have been widely announced in recent weeks. Shanghai reduced output at the beginning of the month, with inventories rising rapidly despite price drops at the end of October and significant year-end incentives. Some Tesla workers and suppliers have also been frustrated with Covid.
Tesla, which previously denied production would be suspended, said the outage was for planned annual maintenance.
Last week, Tesla shares fell 18% to 123.15 after falling 16.1% in the previous week. Those are the worst weekly losses since the March 2020 Covid crash. TSLA stock is at a 27-month low, down 70% from its November 2021 peak.
Early Tuesday, China’s weekly electric vehicle registration numbers will show if the offers finally give Tesla a late boost. They will also indicate whether BYD manufacturing issues are affecting deliveries, as well as how Nio, Automobiles (LI) and XPeng (XPEV) will end in 2022.
Dow Jones Futures Today
With Christmas falling on Sunday, the US stock and bond markets will be closed on Monday, along with many exchanges around the world.
Dow Jones futures open at 6 p.m. ET on Monday, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading during the next regular stock trading session.
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 fell sharply for the week, but ended the week’s worst.
The Dow Jones Industrial Average rose 0.9% in stock market trading last week. The S&P 500 index fell 0.2%. The Nasdaq composite fell 1.9%. The Russell 2000 Small Cap Index ended just above breakeven.
Apple shares fell 2% to 131.86 in the past week. It is testing the June bear market low of 129.04, sliding to 129.64 on Friday morning.
Nvidia shares fell 8.2% to 152.06, following a nasty reversal below the 200-day line last week, amid a widespread chip sell-off. NVDA stock found support at the 50-day moving average on Friday.
The yield on the 10-year Treasury note rose 27 basis points to 3.75%. The inverse relationship between Treasury yields and stock prices has been steadily declining over the past few weeks.
U.S. crude oil futures rose 6.9% to $79.56 a barrel for the week, briefly hitting $80 on Friday.
Tesla ready for a very exciting 2023
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.3% last week, while the Innovator IBD Breakout OPPORTUNITY ETF (BOUT) gained 0.7%. The iShares Expanded Software Technology Industry ETF (IGV) fell 1.8%. The VanEck Vectors Semiconductor ETF (SMH) fell 4.7%, with NVDA stock mostly held by SMH.
The SPDR S&P Metals & Mining ETF (XME) has gained 1.6% in the last week. The Global X US Infrastructure Development ETF (PAVE) is up 0.75%. The US Global Jets ETF (JETS) fell 1.3%. The SPDR S&P Homebuilders ETF (XHB) fell 1.25%. The Energy Select SPDR ETF (XLE) gained 3.2% and the Financial Select SPDR ETF (XLF) gained 0.8%. Selective Healthcare Sector SPDR Fund (XLV) rose 0.4%.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) fell 6.9%, hitting a new five-year low on Thursday. The ARK Genomics ETF (ARKG) slipped 5.6% last week. Tesla stock remains the top hold on Ark Invest ETFs.
The five best Chinese stocks to watch right now
Growth stocks to watch
Shares of Shift4Payments rose 4.1% to 54.06 last week. FOUR stock has had wild swings, but has tightened in the past few weeks near a seven-month high. The relative strength line is at an eight-month high, reflecting Shift4’s outperformance against the S&P 500 index. FOUR stock doesn’t currently have a clear buy point.
Shift4 sales and earnings growth accelerated in the latest quarter, with the company significantly expanding its target markets.
CELH stock fell 1.85% to 106.79 last week, consolidating just below the 21-day line and approaching the 10-week line. Celsius stock briefly surpassed a base buy point of 118.29 cups earlier this month before falling back down. But that is for the 10-week line to catch up, while the RS line has held near the high. A strong bounce from the 10-week line and above the 21-day line will also break the short-term downtrend, providing an early opportunity for CELH stock.
Celsius has explosive sales growth and will be high in earnings in 2023, but the energy drink maker has a caffeinated valuation.
Impinj stock rose 4 cents to 111.87, with Friday’s 2.9% drop, bringing it below the 50-day and 10-week line for the first time since its strong earnings gap breakout on the 27th October. PI stock has fallen modestly for four straight weeks from record highs, but its RS line has barely fallen. A bullish bounce from the 50-day line will provide an early buy point.
Impinj’s earnings skyrocketed in 2022, with strong gains next year.
Enphase stock fell 3.1% to 293.95 last week, below its 50-day moving average. Purchase point 316.97 from point of purchase of cup with handle is no longer valid. ENPH stock is always volatile which can take weeks for a fresh consolidation. An upside move from the 50-day line – perhaps retrieving the old buy point – could yield a positive entry.
Enphase’s revenue and earnings growth is accelerating, with solid growth seen through 2023 and beyond with solar incentives in place for years to come.
The box stock has been closely traded 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 29.57 cup-with-handle buy point, according to MarketSmith analysis, following the breakout on December 12, according to MarketSmith analysis. The recent pause can be seen as an 8-month consolidation treatment. That buy point is 31.10, but investors could be looking for an early entry. Ideally, the 21-day line will catch up and the 50-day line will close the gap with Box stock.
Box earnings growth has accelerated over the past two quarters.
Analysis of market recovery
The stock market rally remains under heavy pressure. The major indexes were mixed during the week, not recovering from the previous week.
The Dow Jones Industrial Average rose slightly for the week after testing the 50-day line several times.
The S&P 500 fell modestly, but that covered up some of the big swings for the week. The benchmark index just regained 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 low.
On Friday, the S&P 500 was up slightly, but below its 50-day moving average. The Invesco S&P 500 Equal Weight ETF (RSP), less important to tech giants like Apple, rallied on Friday to regain its 50-day price.
Nasdaq is a big laggard, with Tesla and Nvidia among the notable laggards. But growth stocks have weaknesses, especially chip names after weak results and guidance from the memory chip maker. Micro technology (MU).
The S&P 500 needs to get back to the 50-day line, but that’s just the first step.
It is not clear if the market will recover, drop to lows or move sideways in an oscillating fashion for a long time. The latter is more likely until there is some clarity on when and where the Fed will stop raising interest rates, and whether the economy is headed for a clear recession.
While growth stocks like Enphase and Celsius are worth a look, many health stocks and other defensive growth games are holding up. Metals and mining, industry, housing and some energy sectors are doing relatively well.
Market Timing with IBD’s ETF Market Strategy
What to do now
The stock market fluctuated up and down during the week with the technical picture unchanged. Aside from the Dow Jones, the major indexes are all below the major moving averages. Top stocks have been hard to hold, at best.
Investors should have minimal exposure and be wary of adding new positions. Don’t get excited by a strong or even bullish opening or two.
Keep your watchlist fresh. Lots of stocks in many different sectors are either setting up or set to set up. Some names are showing relatively strong strength but no clear buy point. That’s fine right now.
In the meantime, take some time to review your trades from the past year, including your big wins and losses, and the ones you didn’t make but wish you did. Do you follow your rules, and are your rules reasonable?
Read the 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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