Dow Jones futures edged higher overnight, along with S&P 500 futures and Nasdaq futures. The stock market ended mixed on Tuesday, but technology companies led a strong recovery even as recession fears weighed on US Treasury yields and commodity prices.
The Dow Jones closed lower, but far from lows, while the S&P 500 posted a small gain. The Nasdaq had advanced strongly, with aggressive growth stocks such as Roblox (RBLX) and data dog (DDOG) are rallying above their 50-day moving average. Apple (AAPL), Amazon.com (AMZN) and Google parent company alphabet (GOOGL) reclaimed a key short-term level.
Meanwhile, crude oil prices plunged below $100 a barrel. Gasoline, copper and wheat futures fell sharply, extending significant losses over the past few weeks.
The Treasury yield curve inverted between the 2-year and 10-year notes, a notable recession signal. Markets still see aggressive Federal Reserve tightening in the next two meetings, but also expect rate hikes to end this year.
money tree (DLTR), Halozyme Therapeutics (HALO) and PRVA stocks showed bullish action on Tuesday. In the meantime, Northrop Grumman (NOK) and UnitedHealth (UNH) fell but found important support.
NOC shares and UnitedHealth are on the IBD leaderboard. DLTR stocks are on SwingTrader. Google stock is on IBD Long-Term Leaders. UNH stock is on the IBD 50. private health (PRVA) was Tuesday’s IBD stock of the day.
The video embedded in this article covered Tuesday’s interesting market action, analyzing shares of Dollar Tree, Halozyme Therapeutics and DDOG.
Dow Jones futures today
Dow Jones futures rose 0.1% from fair value. S&P 500 futures were up 0.1% and Nasdaq 100 futures were up 0.2%.
US crude futures were up 1%, back above $100 a barrel.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
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stock market rally
The stock market rally sold off Tuesday morning but rallied to end mixed daily highs.
The Dow Jones Industrial Average fell 0.4% in trading on Tuesday. The S&P 500 index rose 0.2%. The Nasdaq Composite rose 1.75%. Small-cap Russell 2000 rallied 0.8%.
Apple stock, a Dow Jones, S&P 500 and Nasdaq behemoth, rose 1.9%, above its 21-day moving average. Google shares rose 4.2% and Amazon 3.6%, also conquering the 21-day moving average and approaching their long-term 50-day moving averages. All three megacap technologies are far from viable.
Recession fears are shaking the financial markets, especially commodities and bonds.
US crude prices plummeted 8.2% to $99.50 a barrel after falling sharply from early June highs. Gasoline futures plunged 9%, continuing their rapid decline. Prices at the pump have fallen for 20 straight days, a trend that should continue.
Copper futures plunged more than 4%, extending a long selloff. Crop futures fall sharply.
The 10-year government bond yield fell 16 basis points to 2.81%. The two-year yield fell 2 basis points to 2.82%, meaning the yield curve is now slightly inverted. The one-year Treasury yield rose 4 basis points to 2.76%.
Despite mounting recession risks – and the prospect of significantly lower inflation in the coming months – the Fed is expected to hike rates by 75 basis points at the late July meeting and 50 basis points at the September meetings. However, markets see only quarter-point hikes at the last two Fed meetings of the year and now see no movement in February 2023.
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Among the best ETFs, Innovator IBD 50 ETF (FFTY) is up 0.15%, while Innovator IBD Breakout Opportunities ETF (BOUT) is up 1 cent. The iShares Expanded Tech-Software Sector ETF (IGV) is up 2.6%. The VanEck Vectors Semiconductor ETF (SMH) is up 0.6%.
The SPDR S&P Metals & Mining ETF (XME) was down 4.9% and the Global X US Infrastructure Development ETF (PAVE) was down 1.1%. The US Global Jets ETF (JETS) rose 0.2%. The SPDR S&P Homebuilders ETF (XHB) is up 2.5%. The Energy Select SPDR ETF (XLE) tumbled 4% and the Financial Select SPDR ETF (XLF) slumped 0.3%. Health Care Select Sector SPDR Fund (XLV) was down 0.6% with UNH stock taking a key position.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) jumped 9.1% above its 50-day moving average. The ARK Genomics ETF (ARKG), which closed just above its 50-day price on Friday, is up 8.2% to a two-month high. Ark Invest owns some RBLX stocks in its ETFs.
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stocks to look at
Dollar Tree stock rose 5.5% to 164.84 on above-average volume, bouncing off the 50-day moving average and breaking a trendline from the late April peak, allowing for early entry. DLTR stock has a cup-and-handle basis with an official buy point of 166.45. The line of relative strength is already at a new high, reflecting Dollar Tree’s outperformance versus the S&P 500 Index. archrival Dollar General (DG) is a range of products from a separate cup-with-handle base.
Privia Health shares opened lower, then rebounded from the 21-day moving average and moved higher. PRVA stock surged 7.4% to 31.04 in a big way and briefly touched an 11-month high of 33.88. The self-proclaimed Uber of doctor’s offices is now slightly extended, starting at a 29.07 cup base buy point. But investors may treat the recent break above the buy point as a top with a buy point of 30.25. This high level could be considered a regular level for a longer consolidation that dates back to last November.
Halozyme shares rose 4.2% to 46.33, recovering from its 50-day moving average and breaking a brief but very steep downtrend. That could offer early entry into HALO stock, which has a flat basis with a buy point of 48.68 on a weekly MarketSmith chart. This flat base could be seen as a grip on a base going back to February 2021. The RS line for Halozyme stock is at a new high.
Meanwhile, Northrop shares are down 4.5% to 464.36, despite recovering from below the 50-day moving average on the day. Still, NOC stock has almost erased last week’s 4.9% gain that prompted buy signals.
UnitedHealth’s stock fell 2.35% to 505.24 but closed in the top half of its range as it found support at its 50-day moving average. While below its double bottom basis buy point of 507.35, UNH stock is not showing any sell signals yet. UnitedHealth could now be working on a handle.
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Analysis of the market rally
Major indices fell sharply shortly after Tuesday’s open but rallied to varying degrees.
The Dow Jones closed lower despite being well below its worst levels. The S&P 500 turned positive just before the closing bell. The Nasdaq roared back, posting solid gains, with Apple stock surging while DDOG stock, Roblox and Ark stock rallied, with falling Treasury yields likely being a big driver.
Datadog jumped 7.25% above its 50-day moving average. Roblox stock jumped 14% in volume to its best since late April. But these stocks are well off highs.
A stock market rally is still in force despite being under pressure for the past week.
Apple, Google and Amazon shares reclaimed their 21-day moving averages on Tuesday. All major indices are still below, although the Nasdaq is close. The 50-day moving average, early June highs and many other resistance points are above this short-term level.
Risks of another downtrend in the 2022 bear market aside, seemingly good stocks will give buy signals and then quickly turn lower.
Northrop and UNH stocks fall into this camp, although they may not be done yet. It was certainly not a good day for defense manufacturers and health insurers.
Despite the tough day of health insurers, the medical industry remains the leading industry.
Ideally, the stock market would move sideways for an extended period of time. That would allow more stocks to establish bases while giving investors more clarity on the Federal Reserve and the economy. But the market will do what it will.
Tuesday’s stock market action was relatively upbeat amid recession fears raging in the bond and commodity pits. But the market rally is under pressure. There are few good stocks to buy or build, and actionable stocks are prone to sudden reversals.
Investors buying a biotech, for example, should keep their position small and be prepared to take quick profits and minimize any losses.
When a sustained market rally takes hold, investors have many opportunities to increase exposure and let the winners run. For now, the focus should be preparing for the next bull market.
Read The Big Picture every day to keep up to date with market direction and leading stocks and sectors.
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These discounters are close to buying points as the recession risk grows