Dow Jones futures rallied higher early Wednesday, along with S&P 500 futures and Nasdaq futures. The stock market rally recovered on Tuesday, with the S&P 500 retaking the 4,000 level.
Deere (DE) reported better-than-expected results on Wednesday. DE shares rose modestly in premarket trading, signaling a possible move out of a buy zone.
Deere earnings and guidelines are important to a variety of farm stocks including CF Industries (CF) and Archer Daniels Midland (ADM), as well as machine builders such as Caterpillar (CAT).
Energy stocks continue to do well. Solar leader Enphase energy (ENPH), coal producer Peabody energy (BTU), refinery CVR energy (CVI), natural gas producer EQT Corp. (EQT) and LNG supply Excel energy (EE) are all near points of sale.
EE shares broke up on Wednesday, with Enphase returning to a buy zone. BTU shares, CVR Energy and EQT are usable.
DE shares and Enphase Energy are on the IBD Leaderboard. EQT shares are listed on SwingTrader. Deere stock is at the IBD 50. ENPH stock is at the IBD Big Cap 20. Peabody Energy is Tuesday’s IBD stock.
Apple iPhone factory riots
Riots broke out overnight at Apple’s largest iPhone factory in China as hundreds of workers clashed with security. More than 100,000 workers have been forced to live on the Foxconn campus in Zhengzhou for weeks over Covid concerns, with many reportedly unpaid during that time.
Protests are also rising elsewhere amid renewed lockdowns and tight restrictions across much of China as Covid cases rise.
Apple recently warned that Apple iPhone 14 Pro models would be scarce due to the Foxconn factory in Zhengzhou.
Apple shares fell a fraction early Wednesday. AAPL rose 1.5% to 150.18 on Tuesday, finding support near the 50-day line, but still below the 200-day moving average.
Dow Jones Futures Today
Dow Jones futures rose about 0.1% from fair value. S&P 500 futures rose 0.2%. Nasdaq 100 futures rose 0.3% helped by Citigroup’s upgrade from Tesla (TSLA).
The yield on 10-year Treasury bills rose 1 basis point to 3.77%.
Crude oil futures fell more than 2%. US natural gas prices rose 7%. On Tuesday, Europe released details of a natural price cap, starting for a year from January 1, that is more than double current levels.
The New Zealand central bank raised interest rates by a record 75 basis points, as expected.
Fed minutes from the November meeting will be released Wednesday.
Before the opening, investors will get weekly unemployment claims, durable goods orders in October and more.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally opened mixed on Tuesday, but gained momentum for broad gains and closed near session highs.
The Dow Jones Industrial Average rose 1.2% during Tuesday’s stock trading. The S&P 500 index and the Nasdaq composite both rose nearly 1.4%. The small-cap Russell 2000 popped 1.1%.
The yield on 10-year Treasury bills fell 7 basis points to 3.76%. But the yield on two-year Treasury bills, which is more closely related to Fed policy, remained about the same at 4.53%.
The dollar, after rallying in the previous three sessions, fell back on Wednesday. The greenback has fallen significantly since late September, especially since early November.
US crude oil prices rose 1.1% to $80.95 a barrel, continuing the recovery from Monday’s short-lived plunge. Gasoline futures were up 4.3%, good news for refiners. Natural gas futures rallied higher after falling more than 2% intraday.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) was up 3.4%, helped by a number of energy and metals stocks. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.8%. The VanEck Vectors Semiconductor ETF (SMH) soared 2.9%.
SPDR S&P Metals & Mining ETF (XME) gained 3.2% and the Global X US Infrastructure Development ETF (PAVE) gained 1.3%. SPDR S&P Homebuilders ETF (XHB) rallied 1.9%. The Energy Select SPDR ETF (XLE) climbed 3.1%. The Health Care Select Sector SPDR Fund (XLV) rose 0.9% to a seven-month high.
Reflecting stocks with more speculative narratives, ARK Innovation (ARKK) posted a gain of 0.3% and ARK Genomics (ARKG) fell 0.4%.
Five best Chinese stocks to watch right now
Energy supplies near points of sale
Enphase shares rose 4% to 320.44, closing above a handle buy point of 316.97 cups for the first time. However, the last three times the ENPH stock reached these areas, it returned lower. Enphase stocks often have large daily swings. So, investors might want to watch to see if ENPH stock pulls back to its rapidly rising 21-day moving average.
Some other LNG stocks are showing strength, with Flex LNG (FLNG) breaking out and Cheniere Energy (LNG) regaining its 50-day line.
BTU shares rose 6.7% to 29.62, just below a buy point of 30.15 in a seven-month consolidation period. Tuesday’s move broke the handle trendline and provided early entry. However, the BTU share is 9.3% above the 21-day line and 17% above the 50-day line. The handle formed after strong Peabody Energy earnings.
CVR Energy shares rose 4.85% to 40.85, back above an old buy point of 39.81 that can still be considered valid. Also, CVI stock has a tight three-week pattern with an entry of 42.31. Moving above 41.31 could provide early access to that tight pattern.
The EQT share rose nearly 6% to 43.79, breaking back above the 50-day line after recovering from the 200-day mark on Monday. Stocks break through a falling trendline. The official buy point is 52.07.
EE shares rose 9.6% to 30, clearing a buy mark of 28.49 cups of handle in above-average volume, according to MarketSmith’s analysis. That move to a record close cleared a lot of trading that took place from Excelerate Energy’s IPO in April. EE shares had come in early on Friday and Monday, though trading was below normal on those days. Excelerate is now slightly expanded from the buy zone and well expanded from the 21-day line.
Analysis of the market rally
The stock market rally continues to show constructive action and is trading within a narrow range after a modest pullback and support last week. On Tuesday, major indices recovered from Monday’s losses.
The S&P 500 recovered from its 10-day line right at the 4,000 level as it moves toward its 200-day line. While not above the intraday high of Nov. 15, it was the index’s best close in more than two months.
The 50-day line is only starts moving higher on the S&P 500.
The Russell 2000 is almost approaching its 200 days. The S&P MidCap 400, which held its 200-day line last week, made further gains.
The leading Dow Jones hit the 34,000 mark for the first time in three months, just short of its Aug. 16 peak. The trailing Nasdaq found support at its 21-day line, just above its 50-day mark, but failed to recoup all of Monday’s losses.
All of these indexes operate on handles, with the Dow creeping above. Most stocks track the action of the major indices, so many handles are forming on stocks near buying points. A slightly longer pause, perhaps until the main economic reports late next week, could allow the moving averages to catch up.
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What to do now
Until the S&P 500 moves decisively above the 200-day mark, investors may not want to add much exposure at this point. With the Thanksgiving holidays dampening trading and Fed-critical economic data next week, the near-term market rally could be range-bound.
That could help stocks from different sectors to set up handles and allow moving averages to gain ground. Investors should build their watchlists. It’s definitely a time to look beyond traditional technology growth stocks, which currently tend to underperform.
Given that many leaders are being extended from moving averages, such as Excelerate Energy or BTU stock, it’s all the more important to look for early entries and act quickly.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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