Dow futures were down slightly Monday morning, along with S&P 500 futures and Nasdaq futures. Crude oil prices rose as OPEC+ maintained existing crude oil production quotas. Tesla (TSLA) amid reports of a significant production cut in China.
The stock market rally showed strength and resilience last week. Major indices rose on Wednesday in a bullish reaction to Federal Reserve Chairman Jerome Powell’s speech, as the S&P 500 regained its 200-day moving average. On Friday, the S&P 500 tested and held this key level for the second straight session, despite the hot jobs report.
Investors may gradually increase exposure, but the 200-day streak still applies. Don’t be too aggressive until there is a critical clear for that long range level.
OPEC and its key allies such as Russia agreed to leave oil production targets unchanged, after OPEC+ cut quotas by 2 million barrels per day at an October meeting. And on Friday, European Union leaders set a price cap for Russian crude at $60 a barrel, followed by the other G7 countries and Australia. The goal is to punish Moscow for the Ukraine war without cutting off Russian oil.
A few weeks ago, some OPEC+ members considered increasing production to offset a possible hit to Russian production, and US Strategic Petroleum Reserve issuances are likely to slow or stop soon. But crude oil prices have fallen over the past month, amid concerns about demand in China. But it rose last week as Beijing finally eases Covid restrictions.
Early Monday, crude oil futures rose about 3%. Natural gas prices fell by 7%.
Tesla production cut
Tesla (TSLAIt sold a record 100,291 Chinese-made electric vehicles in November, according to data released by the company. Many of these vehicles are exported. But Tesla will cut production at its Shanghai plant by up to 20% as soon as this week, according to widespread reports. Chinese demand has struggled to keep pace with rising production, even with a price cut in late October and several other stimulus. Tesla, which had talked about building up European inventory to end its “delivery wave,” has not exported from Shanghai to Europe in the past few weeks.
Tesla stock fell 3%.
Dow jones futures today
Dow Jones futures lost 0.5% against fair value. S&P 500 futures fell 0.5% and Nasdaq 100 futures fell 0.4%. Tesla stock pressures S&P 500 and Nasdaq 100 futures.
Hong Kong’s Hang Seng jumped 4.5% on Monday, extending its recent rally, as China begins to reopen its economy and ease Covid restrictions. The Chinese yuan rose above 7 yuan against the dollar for the first time since September.
Stocks to watch
Dow Jones giant Boeing (BA), the lithium giant Square meters (Square meters), dexcom (DXCM), Cheniere Energy (liquefied natural gas) and Invesco Solar ETF (tan) are all close Buy points. Boeing, Dexcom, SQM and TAN ETF – which include First Solar (FSLR), Enphase inrgy (ENPH) and many other notable names – now actionable. LNG stocks contain Flat base.
Chip giants Taiwan Semiconductor (TSM) And the nvidia (NVDA) has risen strongly over the past several weeks, closing above the 200 day moving average. Taiwan Semi and Nvidia stock back above the 200-day lines will not provide buying opportunities, but it will be a positive sign for technology and the overall market recovery. Chips are almost always involved in recent bull market trends, due to their market weight and key role in many industries.
Meanwhile, the EV chip is playing Allegro Microsystems (ALGM) getting ready to go out on Monday. ALGM stock and CubeSmart You will join the S&P MidCap 400The S&P Dow Jones Indexes announced late Friday.
The video embedded in the article discussed market action over the past week and analyzed Dexcom, LNG stock, and TAN ETF.
Earnings season has finally eased, while the economic calendar will be less severe next week.
Stock market rise
The stock market rally had a strong week. The indices’ gains were modest to solid but found support and breached above key resistance.
The Dow Jones Industrial Average rose 0.2% in the past week Stock market trading. The S&P 500 rose 1.1%. The Nasdaq Composite Index jumped 2.1%. Small Capital Russell 2000 1.3%.
The 10-year Treasury yield fell 18 basis points to 3.51%, the lowest since late September. The 10-year earnings rebounded on Friday with the strong jobs report, but eventually closed slightly lower for the day
US crude oil futures rose 4.9% to $79.98 a barrel last week, but fell below $80 on Friday. Natural gas is down more than 14%.
Exchange Traded Funds
VanEck Vectors Semiconductor Corporation (SMH) rose 1.1% last week, but fell below the 200-day line on Friday. TSM and Nvidia stock are two major components. Quasi Taiwan shares rose 0.1% for the week. Nvidia stock rose 3.7%.
SPDR S&P Metals & Mining ETFs (XME) jumped 4.4%% last week to the best level in nearly six months. Global Infrastructure Development Fund X US (cradle) increased by 1%. US Global Gates Foundation ETF (Planes) went up. 0.7%. SPDR S&P Homebuilders ETF (XHB) an advance of 0.9%. Energy Defined Fund SPDR ETF (xle(by 1.7% and the Financial Select SPDR ETF)XLF) decreased by 1.7%. SPDR Health Care Sector Selection Fund (XLV) advanced 1.9%, near a record high. DXCM stock is a component of XLV.
Stocks near buy points
Boeing shares rose 2.5 percent to 182.87 for the week. Boeing popped 4% on Friday, ON Wall Street Journal Report that United Airlines (UAL) is about to buy “dozens” of 787 Dreamliners. BA stock is just above its 5% chase zone of 173.95 cup base Point buying, but investors can treat the liquidation of recent levels as an alternative entry.
SQM shares rose 7.8% to 99.85 last week, bouncing back from near the 200-day line and regaining 50-days. While the lithium giant has an official buy point of 112.45 cups with a handle, early entry around current levels could be safer.
DXCM stock rebounded from the 21-day line last week, breaking through the short consolidation downtrend to make an early entry. Stocks closed up 5.5% at 118.11, still relatively close to the 21-day line, with their 10-week line to catch up. Dexcom stock is now flat on the weekly chart with 123.46 points Buy, according to MarketSmith Analysis. This flat base can be thought of as the handle of a deep cup that dates back to early April.
LNG stocks rose nearly 1% to 174.72, finding support at the 50-day line. Stocks have risen for three consecutive weeks, but on a small scale, which is not significant. On the weekly chart, Cheniere Energy now has a flat bottom with 182.45 buy points, immediately followed by failed Cup base with handle. LNG stock could make an early entry above Thursday’s high of 178.12, which corresponds to some recent key trading levels.
The Invesco Solar ETF is in a range of 83.20 cups with a buy point handle, rising 1.5% to 83.76 for the week. FSLR stocks and Enphase are the clear leaders, but the whole group is rebounding again. TAN is a bit less volatile than individual solar stocks but can still make big moves.
Market rally analysis
The stock market rally had an impressive week, although the lagging Nasdaq was the only big index to post solid gains.
On Wednesday, Fed Chair Powell largely reiterated expectations for a slower rate hike but there was no quick end to tightening. But the major indices jumped that day, with the S&P 500 regaining the 200-day line for the first time since early April.
The market sell-off wasn’t a shocker on Friday given the hot jobs report and the big move on Wednesday. However, the indices closed narrowly mixed. The S&P 500 trimmed losses and held the support at the 200-day line. The Russell 2000 Index, which also returned above the 200-day line on Wednesday, bounced quickly from a 200-day test on Friday to close higher.
The Nasdaq rebounded from its 50-day moving average in the middle of the week to reach a two-month high. The Dow Jones index, which led the market rally, rose to a seven-month high.
However, the S&P 500 has yet to decisively clear the 200-day line and is right on a downtrend line.
In late March, the S&P 500 looked decisively above 200 days. But the Nasdaq hit resistance at the 200-day line, pulling back and pulling the other indices lower.
Today, the Nasdaq has some distance before it reaches the 200 day average, but that will also be a big test. This is another reason why investors want to see Taiwan Semiconductor stock and NVDA stock liquidate the 200-day lines, even though TSM stock is listed on the NYSE.
However, while some chip names have pioneered and others are in the making, semiconductors and technologies in general are not driving the current market rally.
Industrial, infrastructure, solar, financial and medical groups are among those doing well.
What are you doing now
The stock market rally continues to behave well, coming after a big week of news regarding the Federal Reserve.
But the upside is not clear, as the S&P 500 still plays a big role.
Investors can gradually add exposure here, though standing with existing holdings remains a solid strategy. If this market rally has real legs, you’ll have plenty of time to fully invest.
Either way, be prepared to expand should conditions change. Taking partial profits relatively quickly still makes sense.
When looking for potential buys, keep looking for early entries. With individual stocks, sectors, and the market in general still subject to significant swings, buying on excessive strength often means buying near a short-term top.
Keep working on your watchlists. Look beyond traditional tech growth names, which are generally still underdeveloped.
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