An attempted stock market rally begins; Tesla bounces amid EV lending recommendations

Dow Jones futures fell after hours, along with S&P 500 futures and Nasdaq futures, ahead of the last trading day of 2022. Major indices rose strongly on Thursday on employment data, Apple (AAPL) iPhone news and Tesla (TSLA) keeps bouncing.


But the market is in correction after breaking through key levels on Wednesday. Thursday was the first day of a fresh attempt at a stock market rally. Investors should be very careful when opening new positions.

Medpace (MEDP) gave a buy signal on Thursday, while KLA Corp. (CLAC), Starbucks (SBUKS), United Rentals (URI) Mobile (MBLI), super micro computer (SMKI) and Fluor (FLR) are installed. But these stocks are likely to rise or fall with the market.

MEDP, Fluor and United Rentals shares are on the IBD leaderboard. KLAC shares are on IBD’s long-term leaderboard. MBLY shares are at IBD 50. KLA Corp. shares. and URIs are on IBD Big Cap 20.

Meanwhile, new Treasury Department guidelines say many Model Y vehicles will not qualify for U.S. tax credits from January 1 without a sharp price cut. But there is a loophole that could allow all Tesla vehicles – and any electric vehicles – to claim huge tax breaks at any price.

Dow Jones futures today

Dow Jones futures were down 0.1% from fair value. S&P 500 futures fell 0.2%. Nasdaq 100 futures fell 0.15%.

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

Join IBD experts as they analyze valuable stocks in the stock market rally in IBD Live.

Market rally attempt

There was a strong rebound in the stock market: in the morning it grew, and in the afternoon it held this growth.

The Dow Jones Industrial Average rose just over 1% in stock trading on Thursday. The S&P 500 rose 1.75%. The small-cap Nasdaq and Russell 2000 composite jumped 2.6%.

Initial jobless claims rose slightly more than expected in the week ended December 24 but remain low at 225,000. Continuous claims rose by 41,000 to 1.71 million in the last week, the highest since the start February.

Shares of AAPL rose 2.8% to 129.61 after falling 3.1% on Wednesday to bear market lows. According to The Wall Street Journal, Apple iPhone production is rebounding after another report of recent issues with iPhone production.

US crude oil prices fell 0.7% to $78.40 a barrel.

The 10-year Treasury yield fell 5 basis points to 3.83%.


Among the top ETFs, the Innovator IBD 50 ETF (FFTY) was up 1.1%, while the Innovator IBD Breakout Opportunities (BOUT) ETF was up 0.9%. IShares Expanded Tech-Software Sector ETF (IGV) jumped 3%. The VanEck Vectors Semiconductor (SMH) ETF rose 3.3%. Reflecting more speculative stocks, the ARK Innovation (ARKK) ETF jumped 5.2% and the ARK Genomics (ARKG) ETF jumped 4.1%. Tesla shares make up the bulk of the Ark Invest ETF.

The SPDR S&P Metals & Mining ETF (XME) rose 1.9%. The US Global Jets ETF (JETS) climbed 2.65%. The SPDR S&P Homebuilders ETF (XHB) climbed 2.4%. The Energy Select SPDR (XLE) ETF was up just over 1%, while the Financial Select SPDR (XLF) ETF was up 1.4%. The Health Care Select Sector SPDR Fund (XLV) rose 1.1%.

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Tesla shares

Tesla shares jumped 8.1% to 121.82 after rebounding 3.3% on Wednesday. TSLA stock is still down slightly on the week and down 37% in December. After such a huge sell-off, Tesla shares should have rebounded but remain well below key levels.

Tesla Model Y Tax Credits

Tesla’s bullish scenario for 2023 relies heavily on new U.S. tax credits of up to $7,500 under the Inflation Reduction Act, which encourage high-margin domestic sales, offsetting weaker demand and prices in China and possibly , in Europe.

On Thursday, the Treasury Department listed vehicles that are eligible for US EV credits. Most versions of the Model Y will have a $55,000 price cap for EV credits, compared to an $80,000 cap for SUVs, pickups and vans.

But seven-seater Model Y cars that haven’t been in high demand will be eligible for up to $80,000.

With the current base Model Y starting at $65,990 in the US, Tesla will have to cut the price, possibly reintroducing the lower range Model Y SR+ to get tax breaks – unless it’s a seven-seat option.

But there is another twist! The Treasury also said consumer-leased electric vehicles could qualify for tax credits for commercial electric vehicles. This gives eligibility to electric vehicles built outside of North America, including the Hyundai Ioniq 5 and Kia EV6. Foreign automakers and U.S. allies in Europe and Asia strongly objected to North American assembly requirements. But leasing rules also allow any electric vehicle to qualify for any price, as well as no income caps.

It will be interesting to see what Tesla and other automakers do with options and pricing to maximize the benefits of the new tax credits.

But investors seemed to be happy with the overall picture.

TSLA shares rose.

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Promotions near the points of purchase

Shares of Medpace rose 3.4% to 215.62, breaking the downtrend line, rebounding from the 21-day and 50-day lines. MEDP shares consolidated well, creating a 16% deep consolidation near the top of a long and deep base. The official buy point is 235, but early entry was offered on Thursday.

Shares of KLAC rose 3.3% to 379.86, rebounding from a 10-week high. A move above the 21-day line could offer a chance to buy KLAC shares as a long-term leader.

Shares of SBUX rose 1.2% to 99.77, rebounding from a 10-week period to top a 21-day period. This could be an early entry into a short, not-quite-base. This, in turn, can be seen as a 17-month deep consolidation of Starbucks stock.

Shares of URI rose 1.2% to 356.21, rebounding from the 21-day line. United Rentals is close to its 368.04 buy breakpoint in a 13-month consolidation, having briefly peaked earlier this month. URI stock traded very tightly in its pen. The relative strength line is at a new high, reflecting the superiority of United Rentals over the S&P 500 index.

Shares of MBLY rose 2.8% to 34.51, rebounding from an intraday drop in the 21-day moving average. Mobileye’s IPO went public at the end of October at a price of 21 shares. MBLY shares showed strength in a weak market but, like many new IPOs, had big swings. Stocks are starting to calm down. An aggressive investor may be looking for a trend line break to enter, but ideally Mobileye shares will create a new base.

Shares of FLR rose 0.8% to 34.95, continuing to trade heavily, working on a possible flat base that could be the underlying pattern. Fluor’s profits are expected to rise by 80% in 2023 as shares of infrastructure companies see gains in public and private projects.

Shares of SMCI rose 1.6% to 81.91, bouncing off the 50-day line but meeting resistance at the 21-day line. A strong move above Wednesday’s 21-day high at 84.35 could suggest an early entry. Super Micro Computer, one of the fastest-growing stocks in 2022, consolidated within weeks of breaking through the earnings gap on Nov. 2, and surged to 95.22 on Nov. 25. Shares of SMCI may have a new base at the level of the end of next week.

Market analysis

The stock market has shown a confident rebound after the sale on Wednesday. After dropping from an intraday high on Dec. 13, the major indexes should certainly have rebounded.

The question is whether they will follow in the coming days and weeks.

The market moved into a correction on Wednesday as the Dow Jones undermined its 50-day moving average and the Nasdaq set a two-year closing low.

So Thursday was just the first day of a new market rally attempt. It takes a lot more to feel more confident.

The Dow is back above its 50-day line, but still below its 21-day line.

The S&P 500 is still below its 50-day level, with further resistance at its 200-day line and December highs.

While shares of Tesla, Apple and many losing chip and software companies led the rebound on Thursday, some leading stocks gave buy signals or moved into position, such as MEDP stock.

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What to do now

It’s tempting to get back into the market when the indices are rising sharply and there’s a sea of ​​greenery among the leading and notable stocks.

But since the bear market bottomed out on October 13, breakouts and buy signals have largely faded.

Some sectors, including manufacturing, metals and medical, have fared better in recent weeks, so it’s easier to justify nibbling in those areas with either specific stocks or industry ETFs. But keep any risks small and take profits and cut losses quickly.

Bottom line: this is a market correction. Don’t play by the rules of a bull market, especially the Crazy Bull Rules of 2020.

Invest as if you were driving on an icy, windy road rather than an open highway. Drive carefully or wait on the side of the road.

This is more time to plan your trip rather than take risks. Work with watchlists. A number of stocks from various sectors are showing strength.

Read The Big Picture every day to stay up to date with 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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