Dow Jones futures open Monday evening, along with S&P 500 futures and Nasdaq futures, after the long Christmas weekend. Tesla Shanghai stopped production while China rival Nio (NIO) has unveiled new models.
The stock market rally had another tough week, but it rebounded from Thursday’s low. The major indexes were mixed last week, but many leading stocks came under more pressure. The market rally is looking shaky but not over yet.
It is not a good time to be buying stocks, especially growth names. But investors should always look for potential growth leaders for the next sustained market rally. Shift4Payments (FOUR), Celsius (CELH), Impinge (PI), Enphase energy (ENPH) and Box (BOX) are holding up relatively well in the current weak market. KAT stock and Box are consolidating near recent highs, while Impinj, Celsius and ENPH stock are trading around their 50-day or 10-week lines. None are taking action now, and all could fold if the market continues to weaken. But keep an eye on them.
ENPH stocks are on the IBD Leaderboard, and PI stocks are on the Leaderboard list. Enphase, Shift4Payments, Box and CELH stocks are on the IBD 50. ENPH Stock on the IBD Big Cap 20 as well. Shift4Payments was Friday’s IBD Stock of the Day.
But growth megacaps had a rough ride, notably Apple (AAPL), Nvidia (NVDA) and Tesla (TSLA).
Nio Day 2022
Finally, Tesla China rival Nio (NIO) is organizing its Nio Day 2022 on Saturday. It unveiled the EC7 coupe SUV, a likely high-end Tesla Model Y competitor. Deliveries of the EC7 will begin in May 2023. Nio also unveiled a revamped ES8 SUV, now on the NT 2.0 platform like all its new models. Delivery starts in June.
Nio also announced next-generation battery exchange stations and charging options.
Nio production is ramping up with strong demand for its new ET5 sedan and ES7 crossover SUV. But the easing of Covid rules could trigger a wave of infections, and Nio and other Chinese EV manufacturers could face production or supply chain hiccups again. Giant EV BYD (BYDDF) said this week that Covid cases among workers are cutting production by 2,000-3,000 cars a day.
Nio stock fell 5.4% last week, back below the 50-day line. Shares are well below the 200-day line.
Tesla Shanghai production stopped
Tesla Shanghai stopped production on December 24, and workers are expected to return on January 1, 2023. A year-end production stop has been reported in recent weeks, but the EV giant has denied. Shanghai had already slowed output earlier in the month, with inventories rising rapidly despite a price cut in late October and substantial year-end stimulus.
Last week, Tesla shares plunged 18% to 123.15 after plunging 16.1% in the previous week. These are the worst weekly losses since the Covid crash in March 2020. TSLA stock is at a 27-month low, down 70% from the November 2021 peak.
Dow Jones Futures Today
With Christmas falling on Sunday, US stock markets will be closed on Monday, along with many exchanges around the world.
Dow Jones futures open at 6 pm ET on Monday, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight actions in Dow futures and elsewhere do not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally fell strongly during the week, but ended at the worst level of the week.
The Dow Jones Industrial Average rose 0.9% in stock market trading last week. The S&P 500 index dipped 0.2%. The Nasdaq composite sank 1.9%. The small-cap Russell 2000 ended just above break-even.
Apple stock fell 2% to 131.86 in the past week. It tested its June bear-market low at 129.04, sliding to 129.64 Friday morning.
Nvidia stock fell 8.2% to 152.06, after a nasty reversal back below the 200-day line in the previous week, amid a major chip-off selloff. NVDA stock found support at the 50-day line on Friday.
The 10-year Treasury yield jumped 27 basis points to 3.75%. The inverse relationship between Treasury yields and stock prices has faded over the past several weeks.
U.S. crude oil futures rose 6.9% to $79.56 a barrel for the week, briefly above $80 on Friday.
Tesla is gearing up for a very exciting 2023
Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) was down 0.3% last week, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) was up 0.7%. The iShares Expanded Tech-Software Sector ETF ( IGV ) fell 1.8%. The VanEck Vectors Semiconductor ETF (SMH) fell 4.7%, with NVDA stock a major SMH hold.
The SPDR S&P Metals & Mining ETF ( XME ) rose 1.6% last week. Global X US Infrastructure Development ETF (PAVE) rose 0.75%. The US Global Jets ETF (JETS) is down 1.3%. The SPDR S&P Homebuilders ETF (XHB) declined 1.25%. The Energy Select SPDR ETF (XLE) rebounded 3.2% and the Financial Select SPDR ETF (XLF) rose 0.8%. The Healthcare Sector SPDR Fund ( XLV ) rose 0.4% higher.
Reflecting the stock’s more speculative history, the ARK Innovation ETF ( ARKK ) fell 6.9%, hitting a new five-year low on Thursday. ARK Genomics ETF (ARKG) slipped 5.6% last week. Tesla stock remains a top holding in Ark Invest’s ETFs.
The five best Chinese stocks to watch right now
Stock Growth To Watch
Shift4Payments stock rose 4.1% to 54.06 last week. KAT shares have had wild swings, but have tightened up in the past two weeks near seven-month highs. The relative strength line is at its highest level in eight months, reflecting Shift4’s performance against the S&P 500 index. Still, KAT stock doesn’t have a clear buy point right now.
Shift4’s earnings and sales growth accelerated in the last quarter, and the company significantly expanded its target market.
Shares of CELH fell 1.85% to 106.79 last week, consolidating just below the 21-day line and approaching the 10-week line. Celsius stock briefly topped a 118.29 cup-base buy point earlier this month before pulling back. But this left the line 10 weeks to catch up, while the RS line was kept close to o. A strong breakout from the 10-week line and above the 21-day line would also break a short downtrend, offering an early entry for CELH stock.
Celsius has booming sales growth and should see strong earnings in 2023, but the energy drink maker has a caffeinated rating.
Shares of Impinj rose 4 cents to 111.87, and Friday’s 2.9% decline pushed it below the 50-day, 10-week line for the first time since a major earnings crash on Oct. 27. four straight weeks from the upper levels, but its RS line barely fell. A bullish bounce off the 50-day line would offer an early buy point.
Impinj’s earnings are up in 2022, with strong gains seen next year.
Enphase stock fell 3.1% to 293.95 last week, below the 50-day line. A point purchase of 316.97 from a point purchase cup and handle is no longer valid. The still-volatile ENPH stock may be a few weeks away from a new consolidation. A bullish move from the 50-day line – perhaps retracing the old buy point – could offer an aggressive entry.
Enphase’s earnings and revenue growth is increasing rapidly, with solid growth seen in 2023 and beyond with solar incentives in place for years to come.
Stock Box has traded closely the past couple of weeks, dipping 0.7% to 31.01. The cloud-based data storage company is on the edge of a buy zone from a 29.57 cup-and-handle buy point, according to MarketSmith analysis, after a breakout on December 12. The latest pause could be seen as a sleeve in an eight-month consolidation. This buy point is 31.10, but investors might be looking for an early entry. Ideally, the 21-day line would catch up and the 50-day line would narrow the gap with Box stock.
Box’s earnings growth has accelerated for the past two quarters.
Market gathering analysis
The stock market rally remains under intense pressure. The major indexes were mixed for the week, not rebounding after the previous week’s big, ugly out week.
The Dow Jones rose modestly for the week after testing its 50-day line several times.
The S&P 500 fell modestly, 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 lower.
On Friday, the S&P 500 rose slightly, but below its 50-day line. The Invesco S&P 500 Equal Weight ETF (RSP), which is underweight on tech titans like Apple, rallied on Friday to just claim its 50-day high.
The Nasdaq was the biggest laggard, with Tesla and Nvidia stocks among the notable laggards. But there was significant weakness for growth stocks, especially among chip names after weak results and guidance from memory chip manufacturers. Micron Technology (MU).
The S&P 500 needs to regain the 50-day line, but that would be just a first step.
It is not clear whether the market will bounce back, fall towards bearish lows or move sideways in a jerky fashion for an extended period. 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 recession.
While growth stocks like Enphase and Celsius are worth watching, many medical stocks and other defensive growth plays are holding back. Metals and mining, industrial, housing and some energy plays are doing relatively well.
Market Timing and IBD’s ETF Market Strategy
What To Do Now
The stock market faltered higher and lower during the week, and the technical picture did not change dramatically. Aside from the Dow Jones, the major indexes are below their key moving averages. Leading actions were difficult to maintain, at best.
Investors should have minimal exposure and be wary of adding new positions. Don’t get excited by a big open or even an optimistic session or two.
Keep your watchlists fresh. A lot of actions from a variety of sectors are being set up or set up. Some names show strong relative strength but do not have a clear buy point. That’s OK now.
Meanwhile, spend some time reviewing your trades from the past year, including your big winners and losers, and the trades you didn’t make but wish you had. Are you following your rules, and were your rules good?
Read the Big Picture every day to stay connected with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson for the latest stock market news and more.
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