Why the market rally can take a vacation; Tesla bounces back, 5 stocks near buy points

Dow futures edged higher overnight, along with S&P 500 futures and Nasdaq futures heading into the Thanksgiving holiday.




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Stocks rose for a second straight session. Fed officials see a slowdown in rate hikes “soon” according to the minutes of the Fed’s November meeting released Wednesday afternoon.

Nasdaq leads gains, buoyed by rebound tesla (Tesla). So far in this holiday-shortened week, the major averages have posted steady gains. But a longer holiday could be constructive for a market rally.

Given key technical headwinds ahead and notable economic reports, investors should be cautious about increasing their exposure.

However, Dekang (DXCM), joint health (University of New Hampshire), neurocrine bioscience (NBIX), Metro Holdings (MEDP) and Shockwave Medical (SWAV) are five healthcare stocks showing interesting action.

DXCM stock and Neurocrine Biosciences are on the IBD Leaderboard, and MEDP stock is on the Leaderboard Watchlist. NBIX stock and Medpace are in the IBD 50.

Dow Jones Futures Today

Dow Jones futures rose 0.1% to fair value. S&P 500 futures rose 0.2%, while Nasdaq 100 futures rose 0.25%.

The 10-year Treasury yield fell 2 basis points to 3.69%.

U.S. stock exchanges were closed on Thursday for the Thanksgiving holiday. U.S. exchanges will close early at 1 p.m. ET on Friday. But other exchanges around the world will be open as normal on Thursday and Friday.

Keep in mind that overnight moves in Dow futures and elsewhere don’t necessarily translate into actual trading during the next regular stock market session.


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stock market rebound

Stocks rebounded on Wednesday with some volatility, but extended gains led by technology stocks.

Initial jobless claims rose to a three-month high, while continuing claims hit an eight-month high. S&P Global’s U.S. manufacturing and services PMIs both pointed to contraction.

The minutes of the Federal Reserve meeting reinforced expectations for a 50 basis point rate hike at the Dec. 14 meeting. The market still favors another 0.5 basis point hike in February, but a 25 basis point hike is highly likely.

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The Dow Jones Industrial Average rose 0.3% in Wednesday’s stock market session. The S&P 500 rose 0.6%, led by TSLA stock. The Nasdaq Composite rose 1%. The mini-Russell 2000 inched up 0.1 percent.

U.S. crude fell 3.7 percent to $77.94 a barrel. Natural gas futures rose 7.2%.

The 10-year Treasury yield fell 5 basis points to 3.71%. The yield on the two-year note, which is more closely tied to the prospect of a Fed rate hike, fell below 4.5%.

The dollar fell sharply for the second straight session, back near recent lows.


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ETF

The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.5%. The VanEck Vectors Semiconductor ETF (SMH) rose 0.9%.

The SPDR S&P Metals and Mining ETF (XME) edged up 0.3%. The U.S. Global Jets ETF (JETS) edged up 0.1%. The SPDR S&P Homebuilders ETF (XHB) rose 0.5%. The Energy Select SPDR ETF (XLE) fell 1.1%. The Healthcare Select Sector SPDR Fund (XLV) rose 0.4%. Dow Jones giant UNH stock is the top holding in XLV.

ARK Innovation ETF (ARKK) and ARK Genomics ETF (ARKG) rose 2.9% and ARK Genomics ETF (ARKG) reflected more speculative stocks. TSLA Stock Is a Top Holding in the Ark Investments ETF

Shares of Tesla rose 7.8% to 183.20 on Wednesday, bouncing off Tuesday’s bear market lows, as Citigroup upgraded the electric car giant to hold from sell. TSLA stock is still down 19.5% so far this month and has roughly halved into 2022.


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stocks to watch

Dexcom stock rose 1.7 percent to 112.92, finding support at its 21-day moving average. DXCM stock has stalled this month after gapping earnings on Oct. 28. Dexcom stock has arguably the long handle, with a 123.46 buy point from a seven-month consolidation. Investors could buy DXCM stock with an early entry from the 21-day line, perhaps using Tuesday’s high of 113.88 as a specific entry point.

Medpace shares fell 1.3 percent to 218.81 on Wednesday. Shares have been consolidating near all-time highs since surging 38% following the Oct. 25 earnings report. Since then, MEDP stock has been forging a messy handle on a deep, year-long cup base. Despite some wild swings in shares during the session, MEDP stock is now on track to form a three-week tight pattern by Friday’s close. Investors may use the November 15 close of 226.57 as an early entry point, above most of recent trading.

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NBIX shares fell 1.5 percent to 118.97. Shares are consolidating near multi-year highs, extending an October breakout. Despite falling to its 50-day line last week, Neurocrine stock remains in a three-week tightening pattern and is on track for a fourth straight week of gains. Technically, this has a 126.09 buy point, although investors may want to wait for some quieter action.

Shockwave stock rose 4.7% to 264.06 on Wednesday, back above its 21-day line, but met resistance at its 50-day line. SWAV stock rallied this past week after a failed breakout in late October and a continued sharp sell-off in earnings. A new basis point will take more time, but aggressive investors can use the strong move above the 50-day as an early entry.

UNH shares rose 1.3% to 529.71, bouncing back above their 50-day and 21-day lines after briefly falling below their 200-day line last week. UnitedHealth stock was once a long-term leader in IBD and still shares many of its characteristics. Investors can use the bounce off the 50-day line as an early entry or a long-term leader entry. UNH stock needs to build a new base after its breakout from a cup-and-handle base failed quickly last month.


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Market rebound analysis

A rebound in stocks added to Tuesday’s gains. The S&P 500 just broke its Nov. 15 intraday high and closed within 1% of its 200-day line.

The Russell 2000 just hit its 200-day line.

The Nasdaq rebounded from its 21-day moving average on Tuesday, but remains below its Nov. 15 short-term high and its 200-day moving average.

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The Dow is within 20 points of its Aug. 16 intraday high.

The S&P 500’s decisive break above its 200-day line — which roughly coincides with a year-long downtrend line — is a big test of the market’s rebound.

A slew of economic data could affect Fed rate expectations and, by extension, stocks. On Wednesday, November 30th, the October JOLTS report will show job vacancies and Fed Chairman Jerome Powell will speak later in the day. On Thursday, the Fed’s favorite inflation gauge, the PCE price index, is due to be released along with initial jobless claims and the ISM manufacturing index. The November jobs report will be released on Friday, November 2nd.

Ideally, the market will trade sideways for a few days, at least allowing the 21-day line to catch up and get into those economic reports.


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what to do now

The market rally this week has shown some nice gains, with more stocks giving buy signals over the past few days. Therefore, investors could have increased their exposure a bit.

But they may want to be cautious about heavy new buying with the S&P 500 hovering below its 200-day line and with so much key economic data coming out of the Fed next week.

Also consider taking some profits in fast-rising stocks. Stocks have been making short-lived gains amid choppy uptrends and industry rotations.

Still, investors should be working hard on their investing shopping list, looking for institutional and actionable names across industries.

Read The Big Picture daily to stay abreast of market direction and leading stocks and sectors.

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