Dow Jones Futures: Market Recovery Isn't Over Yet; Tesla production in Shanghai halted

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Dow Jones futures will open Monday night along with S&P 500 and Nasdaq futures after the long Christmas weekend. Tesla Shanghai halted production as it rivals China no (NIO) unveiled new models.




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The stock market rally has had another rough week, but has recovered from Thursday’s lows. Major indexes were mixed last week, but many major stocks came under additional pressure. The market recovery looks shaky, but it’s not over yet.

It’s not a good time to buy stocks, especially growth names. But investors should always be looking for potential growth leaders for the next sustained market rally. Shift4Payments (FOUR), Celsius (CELH), Impinj (PI), Emphasis Energy (ENPH) and Box (CAIXA) are holding up relatively well in the current weak market. Shares in FOUR and Box are consolidating near recent highs, while shares in Impinj, Celsius and ENPH are trading around 50-day or 10-week lines. None are actionable at the moment and all could give way if the market continues to weaken. But keep an eye on them.

ENPH shares are on the IBD Leaderboard, with PI shares on the Leaderboard watchlist. Enphase, Shift4Payments, Box and CELH shares are in the IBD 50. ENPH shares are also in the IBD Big Cap 20. Shift4Payments was the IBD stock of the day on Friday.

But the growth megacaps had a tough exit, particularly Litter (AAPL), nvidia (NVDA) and tesla (TSLA).

Nio Day 2022

Finally, Tesla’s rival in China no (NIO) is holding its Nio Day 2022 on Saturday. He unveiled the EC7 coupe SUV, a likely competitor to the Tesla Model Y at the top of the range. EC7 deliveries will begin in May 2023. Nio also unveiled a revamped ES8 SUV, now on the NT 2.0 platform as its all-new models. Deliveries start in June.

Nio also announced state-of-the-art battery changing stations and charging options.

Nio production is ramping up on strong demand for its newest ET5 sedan and ES7 crossover SUV. But easing Covid rules could be triggering a massive wave of infections, and Nio and other EV makers in China could face production or supply chain problems again. giant EV BYD (BYDDF) said this week that Covid cases among workers are reducing production by 2,000 to 3,000 vehicles a day.

Nio shares fell 5.4% last week, below the 50-day line. Stocks are well below the 200-day line.

Tesla production in Shanghai halted

Tesla Shanghai halted production on Dec. 24, with workers returning on Jan. 1, 2023. A year-end production halt has been widely publicized in recent weeks but denied by the electric vehicle giant. Shanghai had already slowed production at the start of the month, with inventories rising rapidly despite a late-October price cut and substantial holiday incentives.

Last week, shares of Tesla fell 18% to 123.15 after falling 16.1% the previous week. Those are the worst weekly losses since the March 2020 Covid crash. TSLA shares are at 27-month lows, 70% below their November 2021 peak.

Dow Jones Futures Today

With Christmas falling on Sunday, US stock and bond 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 and Nasdaq 100 futures.

Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate to actual trading in the next regular stock market session.


Join the IBD experts as they analyze actionable stocks in the stock market rally on IBD Live


stock market rally

The stock market rally fell solidly over the week, but ended up at the worst levels of the week.

The Dow Jones Industrial Average was up 0.9% in last week’s stock market trades. The S&P 500 index fell 0.2%. The Nasdaq composite sank 1.9%. The small-cap Russell 2000 finished just above breakeven.

Apple shares fell 2% to 131.86 last week. It is testing its June market low of 129.04, falling to 129.64 on Friday morning.

Nvidia shares fell 8.2% to 152.06 after a nasty reversal below the 200-day line the previous week amid a broad chip sell-off. NVDA shares 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 disappeared in recent weeks.

US crude oil futures jumped 6.9% to $79.56 a barrel for the week, briefly reaching $80 on Friday.


Tesla prepares for a very interesting 2023


ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) was down 0.3% last week, while the Innovator IBD Breakout Opportunities (BOUT) ETF was up 0.7%. The iShares Expanded Tech-Software Sector (IGV) ETF was down 1.8%. The VanEck Vectors Semiconductor ETF (SMH) was down 4.7%, with NVDA stock being one of SMH’s top holdings.

The SPDR S&P Metals & Mining ETF (XME) rose 1.6% last week. The Global X US Infrastructure Development ETF (PAVE) was up 0.75%. The US Global Jets ETF (JETS) was down 1.3%. SPDR S&P Homebuilders ETF (XHB) was down 1.25%. The Energy Select SPDR ETF (XLE) jumped 3.2% and the Financial Select SPDR ETF (XLF) was up 0.8%. The Health Care Select Sector SPDR Fund (XLV) was up 0.4%.

Reflecting stocks from more speculative stories, the ARK Innovation ETF (ARKK) dropped 6.9% to hit a new five-year low on Thursday. ARK Genomics ETF (ARKG) is down 5.6% over the past week. Tesla stock remains one of the top holdings in Ark Invest’s ETFs.


Five best Chinese stocks to watch right now


Growth stocks to watch

Shares in Shift4Payments rose 4.1% to 54.06 last week. FOUR shares have seen wild swings, but have rallied in the past two weeks near seven-month highs. The relative strength line is at its highest level in eight months, reflecting Shift4’s outperformance against the S&P 500 Index. Still, FOUR shares have no clear buy point at the moment.

Shift4’s earnings and sales growth accelerated in the last quarter as the company significantly expanded its target markets.

CELH shares fell 1.85% to 106.79 last week, consolidating just below the 21-day line and approaching the 10-week line. Celsius shares briefly topped a buy point of 118.29 cups earlier this month before pulling back. But that allows the 10-week line to catch up, while the RS line has held close to the highs. A strong rebound from the 10-week line and above the 21-day line would also break a minor downtrend, offering an early entry for CELH stocks.

Celsius has sales growth on the rise and should see strong earnings in 2023, but the energy drink maker has a caffeine valuation.

Shares in Impinj rose 4 cents to 111.87 as Friday’s 2.9% decline took them to the 50-day and 10-week lines for the first time since a sharp break in gains on Oct. . PI shares have modestly retreated for four consecutive record-breaking weeks, but its RS line has barely dipped. A bounce from the 50-day high would offer an early buy point.

Impinj’s earnings skyrocketed in 2022, with robust earnings seen in the coming year.

Shares in Enphase fell 3.1% to 293.95 last week, below the 50-day line. A 316.97 point purchase of a cup with handle point purchase is no longer valid. The ever-volatile ENPH stock could be in a few weeks on a new trading range. A move up to the 50-day line – perhaps resuming 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.

Box shares have traded heavily in recent weeks, falling 0.7% to 31.01. The cloud-based data storage company is on the edge of a buy zone of a 29.57 point buy handle cups, according to MarketSmith analysis, following a breakout on Dec. 12. The recent pause can be seen as leverage for an eight-month consolidation. That buy point is 31.10, but traders may look for an early entry. Ideally, the 21-day line would catch up and the 50-day line close the gap with Box stock.

Cash earnings growth has accelerated over the past two quarters.

Market Rally Analysis

The stock market recovery remains under severe pressure. The major indexes were mixed for the week, failing to recover after the big ugly outside week of the previous week.

The Dow rose modestly on the week after testing its 50-day line several times.

The S&P 500 declined modestly, but that masked some big swings during the week. The benchmark index just rebounded from 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 at lows.

On Friday, the S&P 500 rose slightly but below the 50-day line. The Invesco S&P 500 Equal Weight ETF (RSP), underweight to tech titans like Apple, rallied on Friday to just recover its 50 days.

The Nasdaq was the big laggard, with shares of Tesla and Nvidia among the notable laggards. But there was broad weakness in growth stocks, especially among chip names, after weak earnings and guidance from the memory chip maker. Micron Technology (MU).

The S&P 500 needs to reclaim the 50-day line, but that would only be a first step.

It is unclear whether the market will rebound, drop towards bear lows or move sideways erratically for an extended period. The latter may be more likely until there is some clarity on when and where the Fed will stop raising rates and whether the economy will go into a clear downturn.

While growth stocks such as Enphase and Celsius are worth watching, many medical stocks and other defensive growth plays are holding up. Metal and mining, industrial, housing and some energy plays are doing relatively well.


Time the market with IBD’s ETF market strategy


What to do now

The stock market simulated bullish and bearish during the week, with the technical picture not changing dramatically. Other than the Dow Jones, the major indices are below major moving averages. Major stocks have been difficult to hold at best.

Investors should have minimal exposure and be careful when adding new positions. Don’t get excited about a strong open or even a session or two higher.

Keep your watchlists up to date. Many stocks from various sectors are gearing up or getting ready to settle down. Some names are showing strong relative strength but don’t have a clear buying point. Everything fine now.

In the meantime, spend some time reviewing your trades from the past year, including your big winners and losers and the trades you didn’t take but wish you had. Were you following your rules and were your rules solid?

Read The Big Picture every day to stay in sync with market direction and key stocks and sectors.

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

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