Dow futures fell Friday morning, along with futures for the S&P 500 and Nasdaq, heading into the final trading day of 2022. Major indexes rose strongly on Thursday on the back of jobs data, an Apple (AAPL) iPhone news and Tesla (TSLA) continue to bounce.
X
However, the market is in a correction after breaking the key levels on Wednesday. Thursday marked just the first day of a new stock market rally attempt. Investors should be very careful about taking new positions.
midpiece (MEDP) flashed a buy signal on Thursday, while KLA Corp. (KLAC), Starbucks (SBUX), United Rentals (URI), Mobileye (MBLY), Super microcomputer (SMCI) And the Fluor (FLR). But these stocks are likely to go up or down with the market.
MEDP, Fluor, and United Rentals stocks in the running IBD Leaderboard. KLAC stock is running Long-term leaders of IBD. MBLY stock is on file defect 50. KLA Corp. and URI are in IBD Big Cap 20.
Meanwhile, new Treasury guidance said many Model Y vehicles would not be eligible for US tax credits starting Jan. 1 without sharp price cuts. But there is a loophole that could allow all Tesla cars — and any electric vehicles — to qualify for massive tax credits at any price.
Dow jones futures today
Dow futures fell 0.4% against fair value. S&P 500 futures fell 0.6%. Nasdaq 100 futures fell 1%. Futures contracts weaken in the open market.
The 10-year Treasury yield rose 3 basis points, to 3.86%.
Remember to work in overnight Dow Jones futures contracts and elsewhere that does not necessarily translate into actual trading in the next regular session Stock market share.
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Market rally attempt
The stock market has had a strong rebound, rallying during the morning and then holding those gains into the afternoon.
The Dow Jones Industrial Average rose just over 1% on Thursday Stock market trading. The S&P 500 jumped 1.75%. The Nasdaq Composite and Russell 2000 Composite jumped 2.6%.
Initial claims rose slightly more-than-expected in the week ending Dec. 24, but remained low at 225,000. Continuing claims rose 41,000 to 1.71 million in the latest week, the highest level since early February.
AAPL stock jumped 2.8% to 129.61 after sliding 3.1% Wednesday to a bear market low. Apple iPhone production is rebounding, according to the Wall Street Journal, after another report on recent iPhone production problems.
US crude oil prices fell 0.7% to $78.40 a barrel.
The 10-year Treasury yield fell 5 basis points, to 3.83%.
Exchange Traded Funds
between the The best mutual fundsInnovator IBD 50 ETF (fifty(up 1.1%, while the Innovator IBD Breakout Opportunities ETF is up)fit) by 0.9%. IShares Expanded Technology and Software Fund (ETF)IGV) rebound 3%. ETF VanEck Vectors Semiconductor (SMH) increased by 3.3%. Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(jumped 5.2% and the ARK Genomics ETF)ARKG) 4.1%. Tesla stock is a major holding across Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETFs (XME) an advance of 1.9%. US Global Gates Foundation ETF (Planes) rose 2.65%. SPDR S&P Homebuilders ETF (XHB) increased by 2.4%. Energy Defined Fund SPDR ETF (xle(up just over 1% and Financial Select SPDR ETF)XLF) increased by 1.4%. SPDR Health Care Sector Selection Fund (XLV) by 1.1%.
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Tesla stock
Tesla stock jumped 8.1% to 121.82 after bouncing 3.3% on Wednesday. TSLA stock is still down slightly for the week and up 37% in December. After this sell-off, Tesla stock was set to rebound, but it remained well below key levels.
Tesla stock is on track for its worst annual loss ever.
Tesla Model Y tax credits
Tesla’s bull case for 2023 relies heavily on new US tax credits of up to $7,500 under inflation-reducing law, fueling high-margin domestic sales, offsetting weaker demand and prices in China and possibly Europe.
On Thursday, the Treasury Department listed vehicles that qualify for US motor vehicle credits. Most Model Y versions will have a maximum of $55,000 to receive EV credits, versus $80,000 for SUVs, vans and vans.
But seven-seat Model Y cars, which weren’t big sellers, would qualify up to $80,000.
The current base Model Y in the US starts at $65,990, and Tesla will need to lower the price, possibly by reintroducing the lower-range Model Y SR+, to get tax credits—unless it’s a seven-seat variant.
But, there is another twist! The Treasury also said that electric vehicles leased by consumers could qualify for commercial electric vehicle tax credits. This makes electric vehicles assembled outside North America eligible, including the Hyundai Ioniq 5 and Kia EV6. Foreign automakers and US allies in Europe and Asia adamantly opposed assembly requirements in North America. But the rental rules also seem to allow any electric vehicle to qualify at any price, with no income restrictions, either.
It will be interesting to see what Tesla and other automakers do in terms of variants and pricing to maximize the benefits of the new tax breaks.
Guggenheim lowered Tesla’s estimates for 2023, in part because of tax credit guidelines.
In short, the disclosure is negative for TSLA as most of the Model Y is subject to the $55,000 price cap. As a result, only the 7-seat version of the Model Y will be eligible for the $80,000 price cap, while doing so will make these The car is more attractive, which we believe represents a lower percentage of total US sales,” the company’s analysts explained. “We previously estimated that 60-70% of US TSLA units are eligible for EV sales credits based on current pricing, but with revised guidance, that number will likely be closer to 10-20% excluding the price cut on the Model 3 LR.”
TSLA stock fell slightly on Friday morning.
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Stocks near buy points
Medpace rose 3.4% to 215.62, breaking the downtrend line as it bounced from the 21-day line and the 50-day line. MEDP stock has held up well, consolidating a deep 16% right next to the top of a long, deep base. the official Point purchase It is 235, but Thursdays offer early entry.
KLAC rose 3.3% to 379.86, bouncing back from the 10-week line. A move above the 21-day line could provide an opportunity to buy KLAC stock as a long-term leader.
SBUX stock rose 1.2% to 99.77, rebounding from a 10-week break from its 21-day high. This may be an early entry into a shortstop rather than quite a base. This, in turn, can be seen as an indication of a deep 17-month consolidation for Starbucks stock.
URI stock advanced 1.2% to 356.21, rebounding from the 21-day line. United Rentals has approached the 368.04 buy handle point on a 13-month consolidation period, and briefly surpassed it earlier this month. URI stock traded very tightly in its handle. the line of relative strength reached a new high, reflecting United Rentals’ outperformance against the S&P 500.
MBLY stock rose 2.8% to 34.51, rebounding from the intraday decline from the 21-day moving average. Mobileye’s IPO went public in late October at 21 shares. MBLY stock showed strength in a weak market, but like many new IPOs it saw big moves. Stocks are starting to cool off. An aggressive investor could look for a break of the trend line to get in, but ideally, Mobileye shares would form a new base.
FLR rose 0.8% to 34.95, continuing to trade tightly, working out the prospect Flat basewhich will be a file Base pattern on base. Fluor’s earnings are expected to rise 80% in 2023, as infrastructure stocks show strength in public and private projects.
SMCI rose 1.6% to 81.91, bouncing from the 50-day line but finding resistance at 21-days. A strong move above 21 days, past Wednesday’s high of 84.35, could provide an early entry. One of the strongest-growing stocks of 2022, Super Micro Computer stock has been consolidating for several weeks after breaching the earnings gap on November 2nd, with a continued advance to 95.22 on November 25th. SMCI stock could have a new base at the end of next week.
Market analysis
The stock market experienced a strong rebound after Wednesday’s sell-off. After retreating since the intraday high on Dec. 13, the major indices were definitely “due” for a bounce.
The question is whether they will follow through in the coming days and weeks.
The market moved towards a correction on Wednesday as the Dow lowered its 50-day moving average and put the Nasdaq at a closing low in two years.
So Thursday was only the first day of a fresh bullish attempt in the market. It will take a lot more than that to feel more confident.
The Dow Jones is back above the 50-day line, but it is still below the 21-day line.
The S&P 500 is still below 50 days, with more resistance at the 200-day line and the December highs.
While Tesla, Apple and several battered chip and software names led Thursday’s rebound, some leading stocks gave buy signals or moved into a position, such as MEDP stock.
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What are you doing now
It’s tempting to get back into the market when the indices are rising sharply and there’s a sea of green among the leading and notable stocks.
But since the bear market low on Oct. 13, the buy and breakout signals have largely faded.
Some sectors, including industrial, metals, and medical, have held up better in recent weeks, so it’s easier to justify nibbling in these areas, either with specific stocks or sector-specific ETFs. But make any exposure small and be quick to take profits and cut losses.
Conclusion: This is a market correction. Don’t act according to the bull market rules, especially the 2020 crazy bull rules.
Invest as if you were driving on an icy and windy road and not on an open highway. Proceed carefully, or wait on the side of the road.
It’s more time to plan your trip versus adventure. Work on watchlists. A number of stocks from a variety of sectors are showing strength.
Read The Big Picture Every day to keep up with the market trend, stocks and leading sectors.
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