Dow Jones futures were little changed early Wednesday, along with S&P 500 futures and Nasdaq futures. The stock market rally recovered on Tuesday, with the S&P 500 retaking the 4,000 level. A huge Apple iPhone factory in China faced riots overnight amid Covid restrictions.
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Deere (DE) reported better-than-expected earnings early Wednesday. DE stock was still trading after closing Tuesday in a buy zone.
Deer earnings and guidance can be important for a variety of agricultural stocks, including CF Industries (CF) and Archer-Daniels-Midland (ADM), as well as machinery makers such as Caterpillar (CAT).
Energy stocks continue to perform well. Solar leader Enphase Energy (ENPH), a coal producer Peabody Energy (BTU), refiner CVR Energy (CVI), a natural gas producer EQT Corp. (EQT) and LNG stock Accelerate Energy (EE) are all close to the points of purchase.
EE stock broke out on Wednesday, with Enphase back in a buy zone. BTU stock, CVR Energy and EQT are actionable.
ENPH stock is on IBD Leaderboard. EQT stock is on SwingTrader. Deere stock is on the IBD 50. Peabody Energy is Tuesday’s IBD of the Day.
Apple iPhone Factory Riots
Riots reportedly broke out overnight at Apple’s biggest iPhone factory in China, as hundreds of workers clashed with security. More than 100,000 workers were forced to live at the Foxconn campus in Zhengzhou for weeks due to concerns about Covid, with many reportedly not being paid during that time.
It comes amid renewed lockdowns and severe restrictions across much of China as Covid cases rise.
Apple recently warned that Apple iPhone 14 Pro models will be in short supply due to the Foxconn factory in Zhengzhou.
Apple stock was down a fraction early Wednesday. AAPL rose 1.5% to 150.18 on Tuesday, finding support near its 50-day line but still below its 200-day moving average.
Dow Jones Futures Today
Dow Jones futures rose less than 0.1% vs. fair value. S&P 500 futures rose a fraction. Nasdaq 100 futures edged lower.
Crude oil futures fell 2%. US natural gas prices jumped 7%. On Tuesday, Europe released details on a natural price cap, which starts for one year from January 1, that is more than double the current levels.
New Zealand’s central bank raised rates by a record 75 basis points, as expected.
The Fed’s minutes from the November meeting will be released Wednesday.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Stock market rally
The stock market rally opened mixed on Tuesday but got a flow for broad-based gains, closing near session highs.
The Dow Jones Industrial Average rose 1.2% in Tuesday’s stock trading. The S&P 500 index and the Nasdaq composite both jumped nearly 1.4%. The small-cap Russell 2000 dropped 1.1%.
The 10-year Treasury yield fell 7 basis points to 3.76%. But the two-year Treasury yield, more closely tied to Fed policy, was roughly flat at 4.53%.
The dollar, after rising for the previous three sessions, fell back on Wednesday. The greenback has declined significantly since the end of September, especially since the beginning of November.
US crude oil prices rose 1.1% to $80.95 a barrel, continuing a rebound from Monday’s short-term count. Gasoline futures jumped 4.3%, good news for refiners. Natural gas futures edged higher after falling more than 2% on the day.
ETFs
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) jumped 3.4%, helped by a number of energy stocks and metals. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.8%. The VanEck Vectors Semiconductor ETF (SMH) yielded 2.9%.
The SPDR S&P Metals & Mining ETF (XME) gained 3.2%, and the Global X US Infrastructure Development ETF (PAVE) gained 1.3%. SPDR S&P Homebuilders ETF (XHB) recovered 1.9%. The Energy Select SPDR ETF (XLE) rose 3.1%. The Healthcare Select Sector SPDR Fund ( XLV ) rose 0.9% to a seven-month high.
Reflecting stocks with more speculative stories, ARK Innovation ( ARKK ) gained 0.3% and ARK Genomics ( ARKG ) declined 0.4%.
Five Best Chinese Stocks To Watch Now
Energy Stores Near Points of Purchase
Enphase stock rose 4% to 320.44, closing above the 316.97 cup-with-handle buy point for the first time. However, the last three times the ENPH stock reached these areas, it reversed lower. Enphase stock tends to have large daily swings. So investors can look to see if ENPH stock pulls back to its 21-day moving average.
Some other LNG stocks are showing strength, with Flex LNG (FLNG) breaking out and Cheniere Energy (LNG) to call back its 50-day line.
BTU stock jumped 6.7% to 29.62, just below a 30.15 handle buy point in a seven-month consolidation. Tuesday’s move broke the trend of the handle, offering early entry. However, BTU stock is 9.3% above its 21-day line and 17% above its 50-day. The handle formed after strong earnings of Peabody Energy.
CVR Energy stock rose 4.85% to 40.85, back above an old buy point of 39.81 that could still be considered valid. Also, CVI stock has a tight three-week pattern with an entry of 42.31. Getting above 41.31 could offer an early entry into that tight pattern.
EQT stock jumped nearly 6% to 43.79, breaking back above the 50-day line after recovering from the 200-day on Monday. Shares are breaking a downtrend line. The official buy point is 52.07.
EE stock rose 9.6% to 30, clearing a 28.49-cup buy point on above-average volume, according to MarketSmith analysis. That move toward a record close cleared much of the trading that took place dating back to Excelerate Energy’s April IPO. EE stock was a brochure early entries on Friday and Monday, although trading was below normal on those days. Excelerate is now slightly extended from the buy zone and well extended from the 21 day line.
Market Rally Analysis
The stock market rally continues to show constructive action, trading in a narrow range after modest pullback and support last week. On Tuesday, the main indices recovered from Monday’s losses.
LS&P 500 recovered from its 10-day line, right at the 4,000 level, as it moves towards its 200-day line. While not higher than the intraday high of November 15, it was the index’s best close in more than two months.
The 50 day line is only starts to turn higher on the S&P 500.
The Russell 2000 is very close to its 200th day. LS&P MidCap 400, which held its 200-day line last week, made more gains.
The main Dow Jones reached the level of 34,000 for the first time in three months, just below the peak of August 16. The lagging Nasdaq found support at its 21-day line, just above its 50-day, but did not recover all of Monday’s losses.
All these indexes are running on handles, with the Dow sneaking up here. Most stocks follow the action of the major indexes, so many handles are forming on stocks near buy points. A slightly longer pause, perhaps until key economic reports late next week, will allow the moving averages to begin to catch up.
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What To Do Now
Until the S&P 500 moves decisively above its 200-day line, investors may not want to add much exposure right now. With the Thanksgiving holiday muting trading and critical Fed economic data next week, the market rally may be rangebound in the short term.
This can help stocks from a variety of sectors establish handles and have moving averages gain ground. Investors should be building their watch lists. It’s definitely time to look beyond traditional tech growth stocks, which are mostly lagging right now.
Because many leaders are extended by moving averages, such as Excelerate Energy or BTU stock, it is all the more important to be looking for early entries and act quickly.
Read The Big Picture daily to stay in sync with market direction and key stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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