Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures. Stocks closed mixed on Tuesday, but techs led a strong recovery even as recession fears dragged down Treasury yields and commodity prices.
While the S&P 500 eked out a small gain, the Dow Jones ended lower, but well, lower. The Nasdaq had a strong advance with aggressive growth names such as Roblox (RBLX) and Datalog (the dog) rebounding above their 50-day lines. Apple (AAPL), Amazon.com (AMZN) and Google Parents letters (Google) a key short-term position is restored.
Meanwhile, crude oil prices fell below $100 a barrel. Gasoline, copper and wheat futures fell sharply, extending significant losses over the past few weeks.
The Treasury yield curve has inverted between the two-year and 10-year benchmarks, a significant bearish signal. Markets still see intense Federal Reserve tightening in the next two meetings, but expect rate hikes to end the year.
NOC Stock and UnitedHealth are active IBD Leaderboard. DLTR share is active Swing Trader. Google stock is active IBD long-term leaders. UNH has a role IBD 50. Privya Health (First) was on Tuesday IBD stock of the day.
A video embedded in this article analyzed Tuesday’s interesting market action and shares of Dollar Tree, Halozyme Therapeutics and DDOG.
Dow Jones Futures Today
Dow Jones futures fell 0.3%. fair value. S&P 500 futures were down 0.3% and Nasdaq 100 futures were down 0.2%.
U.S. crude futures rose more than 1%, once again above $100 a barrel.
The 10-year Treasury yield rose 2 basis points to 2.83%. The two-year yield rose 1 basis point to 2.83%, with the yield curve ever so slightly inverted.
Stock market rally
The stock market rally sold off Tuesday morning, but returned to a mixed finish at the session high.
The Dow Jones industrial average fell 0.4% on Tuesday Stock market trading. The S&P 500 index rose 0.2%. The Nasdaq composite rose 1.75%. The small-cap Russell 2000 rose 0.8%.
Apple shares, the Dow Jones, the S&P 500 and the Nasdaq, rose 1.9% above their 21-day moving average. Google shares rose 4.2% and Amazon rose 3.6%, retracing their 21-day streak and closing above their long-term flexible 50-day lines. All three megacap technologies are far from operational.
Recession fears roil financial markets, particularly commodities and bonds.
U.S. crude oil prices fell 8.2% to $99.50 a barrel, having already retreated significantly from early June peaks. Gasoline futures fell 9%, continuing a rapid decline. Prices at the pump have fallen for 20 consecutive days and this should continue.
Copper futures fell more than 4%, extending a long selloff. Crop futures are declining sharply.
The 10-year Treasury 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.
Ed Yardeni of Yardeni Research has raised the odds of a recession, albeit shallow and short-lived, from 45% to 55%.
The latest batch of leading economic indicators evokes weak contingency indicators. As a result, we raise the probability of a shallow, short-term recession in the US economy to 55% (from 45%). This now creates a recession from which we derive our earnings and stock market forecasts. …
Despite rising recession risks — and the prospect of inflation slowing significantly in the coming months — the central bank is still expected to raise rates by 75 basis points at its July meeting and 50 basis points at its September meeting. However, markets see only a quarter-point hike in the last two Fed meetings of the year, and now no move in February 2023.
in the middle Best ETFsInnovator IBD 50 ETF (FFTY) rose 0.15%, while the Innovator IBD Breakout Opportunities ETF (Bot) is 1 cent higher. iShares Expanded Technology-Software Sector ETF (VAT) gained 2.6%. VanEck Vectors Semiconductor ETF (SMHrose 0.6%.
SPDR S&P Metals & Mining ETF (XME) 4.9% and the Global X US Infrastructure Development ETF (sidewalkfell 1.1%. US Global Jets ETF (JETS) rose 0.2%. SPDR S&P Homebuilders ETF (XHB) received 2.5%. Energy Select SPDR ETF (XLEfell 4% and fund choice SPDR ETF (XLFdecreased by 0.3%. Health Care Select Sector SPDR Fund (XLV) fell 0.6%, with UNH stock a key holding.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) rose 9.1% above its 50-day line. ARK Genomics ETF (ARKG), closed above its 50-day high on Friday, rising 8.2% to a two-month high. Arc Invest holds some RBLX shares in its ETFs.
Stocks to watch
Dollar Tree shares rose 5.5% to 164.84 above the average, rebounding from the 50-day line and breaking a trendline from late April, providing an early entry. The DLTR stock has a cup-with-handle base with an officer Point to buy 166.45. The Relative strength line Reflects Dollar Tree’s outperformance against the S&P 500 index. Archive Dollar General (DG) is buying from its own range Cup-with-handle base.
Privia Health stock opened lower, then bounced back from the 21-day line. PRVA stock rose 7.4% to 31.04, briefly touching an 11-month high of 33.88. The self-described Uber of doctor’s offices is now slightly extended from 29.07 Cup-base Point to buy. But investors can consider its recent pause above the buy point as a high handle with a buy point of 30.25. That high handle can be seen as a typical handle for the long consolidation last November.
Halozyme stock rose 4.2% to 46.33, rebounding from its 50-day line and breaking a short, but very steep decline. This may provide an early entry in HALO stock, which has a flat base with a weekly buy point of 48.68. Market Smith Chart. That Flat base A pre-Feb 2021 base can be seen as a handle. The RS line for Halozyme stock is at a new high.
Meanwhile, Northrop shares fell 4.5% to 464.36, although it rebounded from below the 50-day line. However, NOC stock almost erased last week’s 4.9% gain, prompting buy signals.
UnitedHealth stock fell 2.35% to 505.24, but closed in the upper half of its range as it found support at its 50-day line. Below its 507.35 double-bottom fundamental buy point, UNH stock has yet to flash any sell signals. UnitedHealth can now work with a handle.
Market rally analysis
Major indices fell sharply at the open on Tuesday, but recovered to varying degrees.
The Dow Jones closed lower, despite breaking through its worst levels. The S&P 500 turned positive before the closing hours. The Nasdaq roared back for solid gains, with Apple shares rising while DDOG stock, Roblox and Arc-type stocks rose sharply, a big driver of falling Treasury yields.
Datatag rose 7.25% and is above its 50-day line. Roblox stock rose 14% to its best level since late April. But those stakes are very high.
Despite being under pressure for the past week, the stock market bullishness is still in effect.
Shares of Apple, Google and Amazon retook their 21-day lines on Tuesday. While the Nasdaq is close, all major indexes are below it. The 50-day line, highs in early June, and several resistance points are above that short-term level.
Beyond the risks of another leg of the 2022 bear market, seemingly good stocks will flash buy signals and then quickly turn lower.
The Northrop and UNH stocks fall into that camp, though they may not be finished. It is definitely not a good day for security makers and health insurers.
Despite a tough day for health insurers, the medical sector remains the leading sector.
Ideally, the stock market will move sideways in the long run. As investors gain more clarity about the Federal Reserve and the economy, higher stocks will allow the bases to set. But the market is going to do what it’s going to do.
What to do now
Stock market action was relatively positive on Tuesday, with recession fears raging in bonds and commodities pits. But the bull market is under pressure. There are few good stocks to buy or build, and stocks that perform are susceptible to sudden changes.
Investors buying biotech should be prepared to take a small position, take quick profits, and keep any losses small.
When a sustained market rally takes place, investors have plenty of opportunities to increase exposure and let the winners run. For now, the focus should be on preparing for the next bull market.
According to Big picture Each day should be in sync with the direction of the market and the leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.
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