Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures. The stock market rally largely Tuesday after running up in the prior four sessions. New Covid cases exceeded one million on Tuesday, but vaccinations and milder Omicron infections have kept deaths from rising.
Trend lines can offer early entries for stocks, offering a technical resistance point. They can be drawn across declining tops in a base, the breaking of the downslope of a handle or rebounding from a pullback to the 50-day line or other key level. All these names except Tesla stock have trend lines that coincide relatively closely to the 50-day lines, offering another reason to consider them.
Dow Jones Futures Today
Dow Jones futures edged lower vs. fair value. S&P 500 futures were flat. Nasdaq 100 futures rose 0.1%.
Coronavirus cases worldwide reached 283.01 million. Covid-19 deaths topped 5.42 million.
Coronavirus cases in the U.S. have hit 54.07 million, with deaths above 841,000.
New coronavirus cases have topped 1 million for the first time on Dec. 28, with U.S. Covid cases already near record highs. But hospitalizations have not seen a sharp increase and deaths have not picked up. Credit vaccinations, past infections and a milder Omicron variant.
Stock Market Rally
The stock market rally had a mixed session. The Dow Jones Industrial Average rose 0.3% in Tuesday’s stock market trading. The S&P 500 index dipped 0.1%. The Nasdaq composite fell 0.6%. The small-cap Russell 2000 also retreated 0.6%.
The 10-year Treasury yield was flat at 1.48%, continuing to trade around its 200-day line. U.S. crude oil prices rose 0.5% to $75.98 a barrel, off intraday highs but extending a win streak to five sessions.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) gave up 1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) dipped 0.3%. The iShares Expanded Tech-Software Sector ETF (IGV) and VanEck Vectors Semiconductor ETF (SMH) both fell 1%.
SPDR S&P Metals & Mining ETF (XME) sank 0.75% and Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.1%. U.S. Global Jets ETF (JETS) rose 0.6%. SPDR S&P Homebuilders ETF (XHB) edged up 0.3%. The Energy Select SPDR ETF (XLE) dipped 0.1%, with PXD stock a component. The Financial Select SPDR ETF (XLF) was just above break-even. The Health Care Select Sector SPDR Fund (XLV) sank 0.3%.
Stocks At Trend Lines
Meta Platforms, formerly Facebook, rose 4 cents to 346.22, giving up intraday gains. On Monday, FB stock rose 3.3% to 347.87, rebounding from its 50-day and 200-day lines. That broke above a trend line starting near the early September peak, with 344.46 also a relevant point. Meta stock is still close to those levels, with the Nov. 22 short-term high of 353.83 another potential resistance area. FB stock is a long way from the official buy point of 384.43.
PXD stock fell 1.1% to 183.72, barely holding its 50-day line. Shares reversed lower after just topping a trend line intraday. Pioneer stock rose 3.2% on Monday to 185.77, reversing higher and reclaiming its 50-day as rebounding crude oil prices lifted a lot of shale plays. PXD stock has a 196.74 official buy point.
Saia stock sank 0.9% to 330.19, right around a trend line. On Monday, shares rose 2.9% to 333.05, rebounding from the 50-day line, as several trucking stocks went into higher gear. Saia stock has rebounded strongly from its Dec. 20 low of 288.23. It should have a proper base with a 365.60 buy point after this week.
Tesla dipped 0.5% to 1,088.47 after hitting 1,119 intraday. That follows a four-day, 22% surge to 1,093.24, retaking the 50-day line and stopping right around a trend line. Ideally, TSLA stock would take a breather, forming a handle. But a convincing move above Tuesday’s intraday high would offer a clear trend line break. Tesla stock has a double-bottom base with a 1,202.05 buy point.
Market Rally Analysis
The stock market rally paused on Tuesday, with the Nasdaq down slightly after surging 1,000 points from the Dec. 20 low to Monday’s close. The S&P 500 is at record highs while the Nasdaq and Dow Jones are close.
The Russell 2000 reclaimed its 200-day line Tuesday morning but then fell back. That’s a reflection of overall market breadth — improving over the past week but still with a long way to go.
Losers trumped winners, by nearly 2-to-1 on the Nasdaq.
A market pause to end the year would let stocks consolidate recent gains, perhaps set up new entries for 2022 as big institutions and overall volume return. Stocks like Tesla or Google stock would look even more impressive breaking through a trend line after hitting resistance for a few days. Of course, just because a stock runs up to resistance doesn’t mean it will punch through.
Travel and trucking-led shipping stocks are leading sectors, an especially positive sign as the market rally weathers the omicron Covid wave well. Chips, home building names also are strong. The medical sector has quietly been a leading sector over the past several weeks. Energy stocks are shaping up again. Software still seems damaged overall, but a few are performing well.
What To Do Now
In the recent four-day run-up a number of stocks cleared buy points in the past few sessions, offering a chance to add exposure. A few more did in Tuesday’s mixed action.
If you already added significant exposure in the last few days, you may want to stand pat until the new year. There’s no need to make massive new bets in a light-volume environment. The start of a new year can be bullish. But a steep retreat, fueled by tax selling, wouldn’t be surprising either.
Work on your watch lists. Build up a diverse list of potential winners. The new year will offer far more opportunities for big gains than the last three days of 2021.
Read The Big Picture every day to stay in sync with the 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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