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Stock Market Rally Awaits Fed Chief Powell, Key Economic Data; Apple extends the slide

Stock Market Rally Awaits Fed Chief Powell, Key Economic Data;  Apple extends the slide
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Dow Jones futures edged lower overnight, along with S&P 500 futures and Nasdaq futures, Fed chief Jerome Powell and the start of key economic data on tap.




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Stock markets ended mixed on Tuesday Manjana (AAPL) again pull one over the main indexes, including Amazon.com (AMZN) and Tesla (TSLA) Meanwhile, Apple’s fellow Dow giants Boeing (B. A), Chevron (CLC) and Goldman Sachs (GS) is near Buy points.

Hewlett Packard Enterprises (HPE) and netapp (NTAP) headlined Tuesday’s late earnings report, with Crowdstrike (CRWD) and working day (WDAY) to close the big software report this week.

HPE stock rose modestly in later overnight trade HPE Income top view. HP Enterprise stock, above its 200-day line, is operating in a long cup base. NTAP stock plunged into extended action Weak NetApp earnings and guidance. WDAY Stock Jumped overnight Q3 beat and $500 million buyback. CRWD stock sank despite beating Q3 views as subscriptions came under fire and the cybersecurity firm missed Q4 revenue.

On Wednesday morning, ADP will release its private payrolls account for November. The Department of Labor will publish job openings in the October JOLTS report. The job opening is being closely watched by Fed chief Jerome Powell, who will speak Wednesday afternoon.

The Fed’s favorite inflation gauge, the PCE price index, is due Thursday morning, ahead of Friday’s November jobs report as well as other significant economic releases.

Investors should be cautious about opening new positions until there is more clarity on the economy and the outlook for Fed rate hikes. If anything they want to lighten the position in the very short term.

CLC stock is on IBD Leaderboard. BA stock is on swing trader.

Fed Chief Powell speech

Fed Chief Jerome Powell will speak at the Brookings Institution on Wednesday at 1:30 p.m. He expects the central bank to move to a 50-basis-point rate hike on Dec. 14. Markets see a 67.5% chance of a half-point move, but there is still a modest chance of a fifth Fed rate hike of 75 basis points. But he is likely to indicate that rate hikes will continue until 2023.

Whatever Powell says will be quickly overcome by economic data. If inflation begins to show significant cooling and the labor market eases, even the most irrational Fed policymakers will favor slowing rate hikes and ending earlier than market expectations. Hot price and employment data will tighten the resolve of many Fed doves. Of course, economic data in the coming days may show mixed results or marginal improvement.

Dow Jones futures today

Dow Jones futures are fair value with leverage low vs. S&P 500 futures. Nasdaq 100 futures fell 0.15%.

Remember that overnight action Dow futures and otherwise does not necessarily translate into subsequent regular actual trading in the stock market session.


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Stock market rally

After Monday’s sharp sell-off, the stock market rally ended mixed on Tuesday.

The Dow Jones Industrial Average closed just above Tuesday’s break Stock market trading. The S&P 500 index fell about 0.2%. The Nasdaq Composite declined 0.6%. The small-cap Russell 2000 rose 0.3%.

Apple stock fell 2.1%, its third consecutive significant decline, as China’s Covid cases, lockdowns and protests weighed on the tech giant. On Tuesday, shares fell 2.6% below their 50-day moving average. Above the 50-day line is 200-day resistance for AAPL stock. Apple has seen rest at a giant Foxconn iPhone assembly plant in China.

Amazon stock fell 1.6% and Tesla stock fell 1.1%, both retreating from near their 21-day lines. Both are relatively close to market lows.

U.S. crude oil prices rose 2.4% to $79.62 a barrel. Intraday Monday, crude oil futures hit their lowest levels of the year.

The 10-year Treasury yield rose 5 basis points to 3.75%.

ETF

in Best ETFsInventor IBD 50 ETF (ffty) declined 0.2%, while the Innovator IBD Breakout Opportunity ETF (out) increased by 0.5%. iShares Expanded Tech-Software Sector ETF (IGV) sank 0.8%. Vanek Vector Semiconductor ETF (HMS) decreased by 0.3%.

SPDR S&P Metals & Mining ETF (XME) gained 2.3% and the Global x US Infrastructure Development ETF (seasoned) 0.1%. US Global Jet ETF (Jet) increased by 1.8%. Financial Select SPDR ETF (XLF) increased by 0.6%. Healthcare Select Sector SPDR Fund (XLV) decreased by 0.25%.

Reflecting a more speculative stock story, the ARK Innovation ETF (ARKK) 0.5% and ARK Genomics ETF (RKG) decreased by 0.4%. Tesla stock is a major holding across Arc Invest’s ETFs.


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Dow stocks near buy points

Boeing stock rose 2% to 175.32 on Tuesday, up from 173.95. cup base Buy points, accordingly MarketSmith Analysis. Shares traded firmly on light volume near buy points after a big run-up on optimism for the aerospace giant. Analysts expect Boeing to return to profit in 2023 after four years of losses. BA stock’s recent break caught the 21-day line.

Chevron stock rose 1.45% to 180.94, slightly below the 182.50 buy point and just above the 21-day line. CVX stock has been trading near that official buy point every month. An initial entry around 167 on October 19 was probably a safe bet initially. But since Chevron’s stock is no longer extended at just 21-days and 50-days, it looks more attractive.

GS stock rose 0.35% to 383.71 on Tuesday. The investment bank’s 389.68 buy point from 35%-deep Cup-with-handle Base is moving back to November 2021. Investors may view the recent break as a shelf just above the buying range from a bottoming base that Goldman stock cleared in early November. The 21-day moving average is close to catching up, while the 50-day line is starting to gain ground. The Relative strength lines GS stock outperformed versus multi-year highs. S&P 500.

Market rally analysis

The stock market rally is returning with key technical tests and economic data on tap, with uncertainty over China’s Covid policy.

The S&P 500 index is extending a pullback from just below its 200-day moving average, but still above its 21-day line. The Russell 2000, which fell below the 200-day and 21-day lines on Monday, bounced back above the 21-day.

Lagging Nasdaq fell below its 21-day line and is closing at its 50-day line.

Apple stock, Tesla and other megacaps are weighted on the Nasdaq and S&P 500 indexes.

Invesco S&P 500 Equal Weight ETF (RSP) is still above its 200-day moving average.

But don’t overstate Apple’s influence. Many of the leading stocks are testing buy points or round-tripping modest gains or moving lower.

The silver lining is that the stock market is not rallying on the Fed’s speech and key economic data. This could mean that the market may bounce if there are no negative surprises, with potential for big gains if the upcoming headlines are positive.

But market rallies are going to do what they’re going to do.


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what to do now

Not many stocks are flashing signals as markets pull back. Investors should probably wait for Powell’s speech and economic data to roll in before making significant new purchases. Investors may want to take at least some partial profit in winners, especially if winning stocks trail buy points.

If the market rally picks up soon, a large number of stocks will look effective. But today many attractive stocks will start to look damaged if the major indices fall significantly from here.

So investors need to stay engaged and flexible. Keep your watchlists up to date but also have exit strategies for your holdings.

read on big picture Daily to stay in tune with market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.

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