Stock market rally awaits Fed chief Powell, key economic data; Apple expands the slide

Dow Jones futures edged lower overnight, along with S&P 500 futures and Nasdaq futures, on Fed chief Jerome Powell and the start of key economic data.

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The stock market rally closed mixed on Tuesday with An apple (AAPL) once again dragging the main indexes along with Amazon.com (AMZN) and Tesla (TSLA). Meanwhile, Apple’s fellow Dow giants Boeing (B.A), Chevron (CVX) and Goldman Sachs (GS) are close buy points.

Hewlett Packard Enterprise (HPE) and NetApp (NTAP) topped earnings reports late Tuesday, with CrowdStrike (CRUD) and working day (WAY) launched major software reports this week.

HPE shares rose modestly in overnight trading afterward HPE earnings views from above. Shares of HP Enterprise, above its 200-day line, are running long. NTAP shares dipped in extended action on weak NetApp revenue and guidance. Availability on WDAY jump in the night on Q3 beat and repurchase of $500 million. Shares of CRWD fell despite beating Q3 views after subscriptions came in and the cybersecurity firm hinted that Q4 revenue would be missed.

On Wednesday morning, ADP will release its employment forecast for November on private payrolls. The Department of Labor will publish job vacancies in the October JOLTS report. Vacancies are being closely watched by Fed chief Jerome Powell, who will speak on Wednesday afternoon.

All of this bodes well for the Fed’s favorite gauge of inflation, the PCE price index, on Thursday morning, along with the November jobs report on Friday, as well as several other notable economic announcements.

Investors should be cautious about opening new positions until there is more clarity on the economy and the outlook for Fed rate hikes. If anything, they may want to lighten their positions in the very short term.

CVX stocks are included IBD ranking. BA shares included SwingTrader.

Speech by Fed boss Powell

Fed chief Jerome Powell will speak at the Brookings Institution at 1:30 pm ET on Wednesday. It is expected to reinforce expectations that the central bank will move to raise interest rates by 50 basis points on December 14. Markets see a 67.5% chance of a half-point move, but still a decent chance of a fifth consecutive Fed rate hike of 75 basis points. But he is also likely to indicate that rate hikes will continue into 2023.

Whatever Powell says will be quickly trumped by the economic data. If inflation begins to show significant cooling and labor markets ease, even the most hawkish Fed policymakers will favor slowing the pace of rate hikes and ending earlier than markets might expect. Hot data on prices and employment will harden the resolve of many Fed doves. Of course, economic data in the coming days may show mixed results or little improvement.

Dow Jones futures today

Dow Jones futures were down 0.1 percent at fair value, along with S&P 500 futures. Nasdaq 100 futures were down 0.2 percent.

Remember this night action in Dow futures and elsewhere does not necessarily become an actual trade in the next regular Stock Exchange session.

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Stock market rallies

After Monday’s sharp selloff, the stock market rally closed mixed on Tuesday.

The Dow Jones Industrial Average closed just above break-even on Tuesday Exchange Trading. The S&P 500 fell about 0.2%. The Nasdaq Composite was down 0.6%. The small-cap Russell 2000 rose 0.3%.

Shares in Apple fell 2.1%, a third consecutive significant decline, as Covid cases in China, lockdowns and protests weigh on the tech giant. Shares fell 2.6% on Tuesday, below their 50-day moving average. Above the 50-day line is 200-day resistance for AAPL stock. Apple has witnessed unrest at a huge Foxconn iPhone assembly factory in China.

Amazon shares fell 1.6 percent and Tesla shares fell 1.1 percent, both retreating near their 21-day lines. Both are relatively near the bottom of the bear market.

U.S. crude oil prices rose 2.4% to $79.62 a barrel. Crude oil futures hit their lowest levels of the year on Monday.

The yield on the 10-year Treasury note rose 5 basis points to 3.75%.

ETFs

Avg the best ETFsInnovator IBD 50 ETF (FFTY) fell 0.2%, while the Innovator IBD Breakout Opportunities ETF (BOOTH) grew by 0.5%. iShares Expanded Tech-Software Sector ETF (IGV) sank by 0.8%. VanEck Vectors Semiconductor ETF (SMH) fell by 0.3%.

SPDR S&P Metals & Mining ETF (XME) gained 2.3%, and the Global X US Infrastructure Development ETF (PAVING) 0.1%. US Global Jets ETF (STREAMS) rose 1.8%. The Financial Select SPDR ETF (45) rose 0.6%. Select Healthcare Sector SPDR Fund (XLV) fell 0.25%.

Reflecting the more speculative stocks of history, the ARK Innovation ETF (ARKK) was down 0.5% and the ARK Genomics ETF (ARKG) decreased by 0.4%. Tesla stock is a major holding in Ark Invest’s ETF.

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Dow Stocks Near Buy Points

Boeing shares rose 2% to 175.32 on Tuesday, again above 173.95 base cup point of purchase, acc MarketSmith analysis. Shares traded tight in light volume near a buy point after a big uptick in optimism for the aerospace giant. Analysts expect Boeing to return to profitability in 2023 after four years of losses. The recent break in BA stock is catching up to the 21-day line.

Chevron shares rose 1.45% to 180.94, just below a 182.50 buy point and just above the 21-day line. CVX shares have been trading around this official buy point throughout the month. An early entry near 167 on October 19 was probably the safer bet initially. But with Chevron shares right on the 21st day and no longer extended from the 50th day, it looks more interesting.

Shares of GS rose 0.35% on Tuesday to 383.71. The investment bank has a 389.68 buy point from a depth of 35%. cup-with-handle a base that goes back to November 2021. Investors could also view the recent break as a shelf just above the buy range from the bottom base that Goldman shares cleared in early November. The 21-day moving average is close to catching up, while the 50-day line is starting to gain ground. The line of relative strength is at a multi-year high, reflecting the outperformance of GS stock relative to the S&P 500.

Market Rally Analysis

Stock market rally pulls back on key technical tests and current economic data, along with uncertainty over China’s Covid policies.

The S&P 500 continued its retreat from just below its 200-day moving average, but still above its 21-day line. The Russell 2000, which fell back below the 200-day and 21-day lines on Monday, is back above the 21-day line.

Lagging Nasdaq fell below the 21-day line and is approaching its 50-day line.

Shares of Apple, Tesla and other megacaps weigh on the Nasdaq and the S&P 500.

Invesco S&P 500 Equal Weight ETF (RSP) is still above its 200-day moving average.

But don’t overstate Apple’s influence. Many leading stocks are testing or falling below buy points or decent earnings.

The upside is that the stock market doesn’t get caught up in Fed speeches and major economic data. This could mean markets can bounce back if there are no negative surprises, with the potential for bigger gains if the upcoming headlines are positive.

But the market rally will do what it will do.

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What should we do now

With markets pulling back, there aren’t many stocks flashing buy signals. Investors should probably wait for Powell’s speech and economic data to emerge before making significant new purchases. Investors may want to take at least some partial profits from winners, especially if winning stocks are pulled back to buy points.

If the market rally picks up soon, a large number of stocks will look viable. But many interesting stocks today will start to look damaged if the major indexes fall significantly from here.

So investors need to stay engaged and flexible. Keep your watch lists up to date, but also have exit strategies for your holdings.

Read it The big picture every day to stay in sync 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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