The stock market rally bounced modestly Tuesday, snapping a four-day losing streak.
The video embedded in the article discussed Tuesday’s market action and analyzed SLB stock, Halliburton and ProFrac.
Nike, FedEx Earnings
Dow Jones giant Nike and FedEx reported earnings late Tuesday, also offering some sense about the holiday shopping season.
Nike earnings and sales topped views, but inventories surged 43% vs. a year earlier. Margins fell due to markdowns. NKE stock spiked 13% after hours, signaling a move back above the 200-day line. Shares edged up 0.2% to 103.21 on Tuesday.
FedEx earnings topped views, but revenue fell short. FDX stock rose 5% in extended trade. Shares closed down 2.6% to 164.35, below the 50-day line.
Dow Jones Futures Today
Dow Jones futures climbed 0.65% vs. fair value, with NKE stock offering a boost. S&P 500 futures advanced 0.55%. Nasdaq 100 futures rallied 0.65%.
The 10-year Treasury yield climbed 3 basis points to 3.71%.
Stock Market Rally
The stock market rally erased opening losses and closed slightly higher.
The Dow Jones Industrial Average rose 0.3% in Tuesday’s stock market trading. The S&P 500 index climbed 0.1%, with Tesla stock the index’s worst performer. The Nasdaq composite edged up 1 point. The small-cap Russell 2000 advanced 0.5%.
Apple stock fell as low as 129.89, within 1% of its June bear-market low of 129.04. Shares rebounded to close down 7 cents to 132.30. Amazon stock edged up 0.3% after briefly undercutting Monday’s fresh bear low.
U.S. crude oil prices rose 1.2% to $76.09 a barrel. Natural gas prices sank 9% after tumbling more than 11% on Monday.
The 10-year Treasury yield rose 10 basis points to 3.68%, after popping 10 basis points on Monday. The Bank of Japan on Tuesday turned slightly hawkish, letting Japan’s 10-year yield rise as high as 0.5%.
The 2-year yield, more closely tied to Fed policy, was essentially flat at 4.27%.
On Friday, investors will get the November PCE inflation report, with economists expecting another notable drop in overall and core inflation.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) edged down 0.2%, hitting a fresh five-year low. ARK Genomics ETF (ARKG) rose 0.8%. Tesla is a major holding across Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) popped 2.6% and the Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.4%. U.S. Global Jets ETF (JETS) advanced 0.4%. SPDR S&P Homebuilders ETF (XHB) gave up 0.55%. The Energy Select SPDR ETF (XLE) rebounded 1.5% and the Financial Select SPDR ETF (XLF) climbed 0.4%. The Health Care Select Sector SPDR Fund (XLV) closed fractionally lower.
Stocks Near Buy Points
Oil services firms are rallying, even with crude prices near one-year lows, perhaps in anticipation of stronger prices in 2023. Exxon Mobil (XOM) and Chevron (CVX) recently released their capital spending plans for next year, suggesting strong demand for services firms such as Halliburton, Schlumberger, ProFrac and more.
SLB stock rose 3.9% to 51.76, moving back above the 50-day and 21-day moving averages and arguably breaking a tight downward-sloping trendline, making a case for an early entry. Schlumberger stock is back in a still-valid buy zone from a deep cup base. SLB stock is set to have a new base with a 56.14 buy point after this week.
Fellow oil services giant Halliburton bounced above its 21-day line, up 3.8% to 37.42, still close to its 50-day line. HAL stock has a 40.09 buy point from a 47%-deep cup-with-handle base, according to MarketSmith analysis. It doesn’t have an obvious early entry. The handle will be long enough to be its own base after this week.
ProFrac stock jumped 6.9% to 23.23, back above its 50-day and 21-day lines and breaking a recent downtrend, much like SLB stock. That could serve as an early entry. ACDC stock should have a new consolidation with a 27.10 buy point after this week. ProFrac stock came public at 18 a share. It’s had three bases since then, with the breakouts not working for long.
Tesla stock dived 8.1% to 137.80, hitting yet another two-year low. Shares of the EV giant have plunged 67% from the November 2021 peak and 29% just in December.
Tesla stock has now round-tripped its advance since its August 2020 5-for-1 stock split. (TSLA stock split 3-for-1 in August 2022 as well.)
Tesla China sales slowed for a second straight week, according to weekly registration data. That’s despite ever-increasing year-end incentives, which are set to end on Jan. 1 along with China EV subsidies.
Elon Musk’s Twitter saga is raising concerns of significant damage to the Tesla brand. Many long-term notable TSLA bulls are increasingly critical of Musk.
Evercore and Daiwa Capital Markets on Tuesday cut TSLA stock price targets, both citing Twitter. Oppenheimer downgraded Tesla on Monday.
Tesla stock failed to rally Monday despite Elon Musk saying he would step down as Twitter CEO after polling Twitter users on that issue.
Shares kept tumbling Tuesday even as the major indexes and many leading stocks tried to make a stand. The heavy volume selling in the past several weeks suggests big institutions are unloading or paring TSLA stock holdings.
Late Tuesday, Musk says he will step down as Twitter chief as soon as he finds a successor and that he’ll run the software and server teams.
At some point Tesla stock may rebound and go on another run, but that could be months or even years away.
Market Rally Analysis
After a sharp sell-off from the Dec. 13 highs, the stock market rally ended its losing streak, barely.
The major indexes were looking oversold and arguably “due” for a bounce. They got one, though it wasn’t much.
The Dow Jones found support at the 50-day line, but the other key indexes didn’t make any notable technical moves.
The stock market rally remains under pressure.
AAPL stock bounced from near bear market lows, but that doesn’t mean it’ll continue to do so.
Many leading stocks found support at key levels. But whether they’ll hold and rebound strongly is largely dependent on the overall market.
Energy names could be a partial exception, given how they trade on underlying crude oil or natural gas prices. Oil services firms such as SLB stock and coal producers like Consolidated Energy are doing better right now.
What To Do Now
It’s not a good time to be buying stocks. While the major indexes held their ground and some top stocks didn’t fall apart, the market rally is still weak.
The S&P 500 regaining the 50-day line would seem like a minimum sign of strength, with the 200-day and December highs much-bigger tests.
Even if the market rebounds, Tesla’s continued meltdown Tuesday shows that not all stocks will follow.
If you do feel compelled to play this market, take pilot positions and be ready to take quick profits and cut losses short.
Keep looking for stocks holding up and finding support at key levels. Stocks with strong relative strength during weak markets can be leaders in the next advance.
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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