Dow Jones futures were up slightly after hours, along with S&P 500 futures and Nasdaq futures, with FedEx (FDX) and Nike (NKE) earnings lead the charge.
The stock market rally recovered modestly on Tuesday, breaking a four-day losing streak.
In the meantime, Apple (AAPL) flirted with underbidding its bear market low a day later Amazon.nl (AMZN) yes.
Tesla (TSLA) continued to fall. TSLA stock has now rounded up its gains since the August 2020 stock split.
On the upside, oil field services are at play Schlumberger (SLB), Halliburton (To fetch ProFrac (ACDC) are showing strength, with Schlumberger stock and ACDC stock giving buy points early Tuesday.
The video embedded in the article discussed Tuesday’s market action and analyzed SLB stocks, Halliburton and ProFrac.
Nike, FedEx earnings
Dow Jones giant Nike and FedEx reported results late Tuesday, also giving some idea of the holiday shopping season.
Nike’s revenues and sales topped ratings, but inventories were up 43% from a year earlier. Margins fell due to write-downs. NKE shares spiked 13% after hours, signaling that it was moving back above the 200-day line. Shares rose 0.2% to 103.21 on Tuesday.
FedEx revenue topped views, but revenue lagged. FDX shares rose 5% in extended trading. Shares closed 2.6% lower to 164.35, below the 50-day mark.
Dow Jones Futures Today
Dow Jones futures rose 0.65% from fair value, with NKE stocks boosting. S&P 500 futures rose 0.55%. Nasdaq 100 futures rose 0.65%.
The 10-year Treasury yield increased 3 basis points to 3.71%.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally erased opening losses and closed slightly higher.
The Dow Jones Industrial Average rose 0.3% during Tuesday’s stock trading. The S&P 500 index climbed 0.1%, with Tesla stock the worst performing index. The Nasdaq index rose 1 point. The small-cap Russell 2000 gained 0.5%.
Apple shares fell to a low of 129.89, within 1% of the June bear market low of 129.04. Shares rallied to close 7 cents to 132.30. Amazon shares rose 0.3% after briefly undercutting Monday’s fresh bear low.
US crude oil prices rose 1.2% to $76.09 a barrel. Natural gas prices fell 9% after falling more than 11% on Monday.
The 10-year Treasury yield rose 10 basis points to 3.68%, after rising 10 basis points on Monday. The Bank of Japan turned mildly aggressive on Tuesday, raising Japanese 10-year yields as high as 0.5%.
The 2-year rate, more closely linked to Fed policy, remained essentially flat at 4.27%.
On Friday, investors will receive the November PCE inflation report, with economists expecting another notable drop in headline and core inflation.
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) was up 0.5%. The VanEck Vectors Semiconductor ETF (SMH) fell 0.6%.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) fell 0.2%, marking a new five-year low. ARK Genomics ETF (ARKG) rose 0.8%. Tesla is a major holding in Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) soared 2.6% and the Global X US Infrastructure Development ETF (PAVE) rose 0.4%. US Global Jets ETF (JETS) rose 0.4%. SPDR S&P Homebuilders ETF (XHB) lost 0.55%. The Energy Select SPDR ETF (XLE) rallied 1.5% and the Financial Select SPDR ETF (XLF) climbed 0.4%. The Zorg Select Sector SPDR Fonds (XLV) closed fractionally lower.
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Stocks near buying points
Oil services companies are recovering, even with crude oil prices near a year low, perhaps in anticipation of higher prices in 2023. Exxon Mobil (XOM) and Chevron (CVX) recently released their investment plans for next year, signaling strong demand for service companies such as Halliburton, Schlumberger, ProFrac and more.
SLB shares rose 3.9% to 51.76, rebounding above the 50-day and 21-day moving averages and arguably breaking a tight downtrend line, arguing for an early entry. Schlumberger shares are back in a still valid buy zone from a deep cup base. SLB shares will have a new base after this week with a buy point of 56.14.
Fellow oil giant Halliburton bounced above its 21-day line, up 3.8% to 37.42, still close to its 50-day line. HAL shares have a buy point of 40.09 based on a 47% deep cup with handle, according to MarketSmith’s analysis. It has no obvious early entry. The handle will be long enough to be its own base after this week.
ProFrac shares jumped 6.9% to 23.23, back above the 50-day and 21-day lines and breaking a recent downtrend, as did SLB shares. That could serve as an early entry. ACDC stock should have another consolidation after this week with a buy point of 27.10. ProFrac shares went public at 18 per share. It has had three bases since then, with the breakaways not working for long.
Tesla shares plunged 8.1% to 137.80, hitting another two-year low. Shares of the EV giant are down 67% from their November 2021 peak and 29% as recently as December.
Tesla shares have now completed their run since the 5-for-1 stock split in August 2020. (TSLA stock split 3-for-1 also in August 2022.)
Tesla China sales fell for the second week in a row, according to weekly registration data. That’s despite ever-increasing year-end incentives, which will end on January 1, along with Chinese EV subsidies.
Elon Musk’s Twitter saga raises concerns about significant damage to the Tesla brand. Many notable long-term TSLA bulls are increasingly critical of Musk.
Evercore and Daiwa Capital Markets lowered TSLA’s price targets on Tuesday, both citing Twitter. Oppenheimer lowered Tesla on Monday.
Tesla shares fell Monday despite Elon Musk saying he would step down as CEO of Twitter after polling Twitter users on the subject.
Stocks continued to tumble Tuesday even as major indices and many leading stocks tried to hold their own. The large sales volumes in recent weeks suggest that major institutions are unloading or spun off TSLA stock.
Late Tuesday, Musk says he will step down as Twitter chief once he finds a successor and will lead the software and server teams.
At some point, Tesla stock may recover and move on, but that could take months or even years.
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Analysis of the market rally
After a sharp sell-off from the December 13 highs, the stock market rally barely ended its losing streak.
The major indices looked oversold and were arguably due for an upturn. They got one, although it wasn’t much.
The Dow Jones found support at the 50-day line, but the other major indices made no significant technical moves.
The stock market rally remains under pressure.
AAPL stocks bounced from near bear market lows, but that doesn’t mean it will stay that way.
Many leading stocks found support at key levels. But whether they will hold up and rebound strongly depends largely on the overall market.
Energy names could be a partial exception given how they trade on underlying crude oil or natural gas prices. Oil service companies like SLB Stock and coal producers like Consolidated Energy are currently doing better.
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What to do now
It’s not a good time to buy stocks. While major indices held up and some of the top stocks didn’t fall apart, the market rally is still weak.
The S&P 500 regaining the 50-day line appears to be a minimal sign of strength, with the 200-day and December highs much bigger tests.
Even if the market recovers, Tesla’s ongoing meltdown on Tuesday shows that not all stocks will follow suit.
If you feel compelled to play this market, take pilot positions and be ready to make quick profits and keep losses short.
Keep looking for stocks that hold up and find support at key levels. Stocks with strong relative strength during weak markets can be leaders in the next upside.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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