Dow Jones futures will open on Monday evening, along with S&P 500 futures and Nasdaq futures, after the long Christmas weekend. Tesla Shanghai halted production while China rival Nio (NIO) unveiled new models.
The stock market rally had another difficult week, but did bounce from Thursday’s lows. The major indexes were mixed last week, but many leading stocks came under further pressure. The market rally is looking shaky but isn’t finished yet.
It’s not a good time to be buying 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), Enphase Energy (ENPH) and Box (BOX) are holding up relatively well in the current weak market. FOUR stock and Box are consolidating near recent highs, while Impinj, Celsius and ENPH stock are trading around the 50-day or 10-week lines. None are actionable right now, and all could buckle if the market continues to weaken. But keep an eye on them.
ENPH stock is on IBD Leaderboard, with PI stock on the Leaderboard watchlist. Enphase, Shift4Payments, Box and CELH stock are on the IBD 50. ENPH stock also is on the IBD Big Cap 20. Shift4Payments was Friday’s IBD Stock Of The Day.
Nio Day 2022
Finally, Tesla China rival Nio (NIO) is holding its Nio Day 2022 on Saturday. It unveiled the EC7 coupe SUV, a likely Tesla Model Y competitor on the high end. EC7 deliveries will start in May 2023. Nio also unveiled a revamped ES8 SUV, now on the NT 2.0 platform like its all-new models. Deliveries begin in June.
Nio also announced next-generation battery swap stations and charging options.
Nio production is ramping up with strong demand for its newer ET5 sedan and ES7 crossover SUV. But easing Covid rules may be triggering a massive wave of infections, and Nio and other China EV makers could face production or supply-chain hiccups again. EV giant BYD (BYDDF) said this week that Covid cases among workers is cutting production by 2,000-3,000 vehicles per 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 Halted
Tesla Shanghai halted production on Dec. 24, with workers set to return Jan. 1, 2023. A year-end production halt had been widely reported in recent weeks, but denied by the EV giant. Shanghai had already slowed output earlier in the month, with inventories building up rapidly despite a late October price cut and substantial year-end incentives.
Last week, Tesla stock dived 18% to 123.15 after plunging 16.1% in the prior week. Those are the worst weekly losses since the March 2020 Covid crash. TSLA stock is at a 27-month low, down 70% from the November 2021 peak.
Dow Jones Futures Today
With Christmas falling on Sunday, U.S. stock and bond markets will be closed Monday, along with many exchanges around the world.
Dow Jones futures open at 6 p.m. ET on Monday, along with S&P 500 futures and Nasdaq 100 futures.
Stock Market Rally
The stock market rally fell solidly during the week, but did finish off the worst levels of the week.
The Dow Jones Industrial Average rose 0.9% in last week’s stock market trading. The S&P 500 index dipped 0.2%. The Nasdaq composite sank 1.9%. The small-cap Russell 2000 finished just above break-even.
Apple stock fell 2% to 131.86 in the past week. It’s testing its June bear-market low of 129.04, sliding to 129.64 Friday morning.
Nvidia stock tumbled 8.2% to 152.06, following a nasty reversal back below the 200-day line in the prior week, amid a broad chip sell-off. NVDA stock did find 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 in the past several weeks.
U.S. crude oil futures jumped 6.9% to $79.56 a barrel during the week, briefly topping $80 on Friday.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) edged down 0.3% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.7%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 1.8%. The VanEck Vectors Semiconductor ETF (SMH) tumbled 4.7%, with NVDA stock a major SMH holding.
SPDR S&P Metals & Mining ETF (XME) rose 1.6% last week. The Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.75%. U.S. Global Jets ETF (JETS) descended 1.3%. SPDR S&P Homebuilders ETF (XHB) declined 1.25%. The Energy Select SPDR ETF (XLE) bounced 3.2% and the Financial Select SPDR ETF (XLF) edged up 0.8%. The Health Care Select Sector SPDR Fund (XLV) nudged 0.4% higher.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) tumbled 6.9%, hitting a new five-year low on Thursday. ARK Genomics ETF (ARKG) skidded 5.6% last week. Tesla stock remains a top holding across Ark Invest’s ETFs.
Growth Stocks To Watch
Shift4Payments stock rose 4.1% to 54.06 last week. FOUR stock has had wild swings, but has tightened up in the past couple of weeks near seven-month highs. The relative strength line is at its highest level in eight months, reflecting Shift4’s outperformance vs. the S&P 500 index. Still, FOUR stock doesn’t have a clear buy point right now.
Shift4 earnings and sales growth accelerated in the latest quarter, with the company significantly expanding its target markets.
CELH stock 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 that’s let the 10-week line catch up, while the RS line has held near highs. A strong rebound 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 valuation.
Impinj stock rose 4 cents to 111.87, with Friday’s 2.9% decline bringing it down to the 50-day and 10-week lines for the first time since a powerful earnings gap-up breakout on Oct. 27. PI stock has pulled back modestly for four straight weeks from record highs, but its RS line has barely fallen. A bullish bounce from the 50-day line would offer an early buy point.
Impinj earnings have soared in 2022, with robust gains seen next year.
Enphase stock slumped 3.1% to 293.95 last week, below the 50-day line. A 316.97 buy point from a cup-with-handle buy point is no longer valid. The always-volatile ENPH stock may be a few weeks into a new consolidation. A bullish move from the 50-day line — perhaps retaking the old buy point — could offer an aggressive entry.
Enphase earnings and revenue growth is ramping up fast, with solid growth seen in 2023 and beyond with solar incentives in place for years to come.
Box stock traded tightly the past couple of weeks, dipping 0.7% to 31.01. The cloud-based data storage firm is at the edge of a buy zone from a 29.57 cup-with-handle buy point, according to MarketSmith analysis, following a Dec. 12 breakout. The recent pause could be seen as a handle to an eight-month consolidation. That buy point is 31.10, but investors could look 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 earnings growth has accelerated for the past two quarters.
Market Rally Analysis
The stock market rally remains under heavy pressure. The major indexes were mixed for the week, not bouncing back after the prior week’s big, ugly outside week.
The Dow Jones rose modestly for the week after testing its 50-day line multiple times.
The S&P 500 fell modestly, but that masked some big swings during the week. The benchmark index just reclaimed 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 did close off lows.
On Friday, the S&P 500 rose slightly, but below its 50-day line. The Invesco S&P 500 Equal Weight ETF (RSP), with less weight to tech titans such as Apple, rallied Friday to just reclaim its 50-day.
The Nasdaq was the big laggard, with Tesla stock and Nvidia among the notable laggards. But there was broad weakness for growth stocks, especially among chip names following weak results and guidance from memory-chip maker Micron Technology (MU).
The S&P 500 needs to regain the 50-day line, but that would be just a first step.
It’s unclear if the market will rebound, tumble toward bear lows or move sideways in a choppy fashion for an extended period. The latter may be more likely until there is some clarity over when and where the Fed will stop hiking rates, and whether the economy will slip into a clear-cut recession.
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.
What To Do Now
The stock market feinted higher and lower during the week, with the technical picture not changing dramatically. Aside from the Dow Jones, the major indexes are below key moving averages. Leading stocks have been hard to hold, at best.
Investors should have minimal exposure and be wary of adding new positions. Don’t get excited by a strong open or even a bullish session or two.
Keep your watchlists fresh. A lot of stocks from a variety of sectors are setting up or setting up to set up. Some names are showing strong relative strength but don’t have a clear buy point. That’s OK right now.
Meanwhile, spend some time reviewing your trades over the past year, including your big winners and losers, and the trades you didn’t make but wish you had. Were you following your rules, and were your rules sound?
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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