Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures. The stock market rally was mixed on Wednesday as the Dow Jones just hit a record high while rising Treasury yields weighed somewhat on growth names.
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Tesla (TSLA), Meta Platforms (FB) (nee Facebook) and Datadog stock are all setting up, but hitting some resistance. Breaking above these resistance levels would offer early entries. FB stock and Datadog (DDOG) had already cleared trend line entries, but recent short-term highs are proving important.
Meanwhile, AMD stock and Nvidia (NVDA) pulled back for a second straight day, losing 3.2% and 1.1%, respectively. That largely erased Monday’s bullish moves. Much like Facebook and DDOG stock, Monday’s moves offered early entries for AMD and Nvidia stock, but investors may want to use Tuesday’s intraday highs or simply wait for proper bases to form before taking new positions.
Tesla, Advanced Micro Devices (AMD) and Nvidia stock are on IBD Leaderboard. Tesla stock and AMD are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures were steady vs. fair value. S&P 500 futures edged lower and Nasdaq 100 futures lost 0.1%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Coronavirus News
Coronavirus cases worldwide reached 284.8 million. Covid-19 deaths topped 5.43 million.
Coronavirus cases in the U.S. have hit 54.63 million, with deaths above 844,000.
New Covid cases continue to spike, setting fresh highs worldwide and in the U.S. Omicron is far more infectious than previous Covid variants, but also far-less likely to cause serious illness, especially among the vaccinated.
Stock Market Rally Wednesday
The stock market rally had another quiet session. The Dow Jones Industrial Average rose 0.25% in Wednesday’s stock market trading. The S&P 500 index climbed 0.1%. The Nasdaq composite dipped 0.1%. The small-cap Russell 2000 edged up 0.1%.
The 10-year Treasury yield rose six basis points to 1.54%, reclaiming its 50-day line. U.S. crude oil futures climbed 0.8% to $76.56 a barrel as domestic stockpiles fell last week.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) advanced 0.9%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.7%. The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.2%. DDOG stock is an IGV holding. The VanEck Vectors Semiconductor ETF (SMH) was just below breakeven. AMD and NVDA stock are key SMH holdings.
SPDR S&P Metals & Mining ETF (XME) dipped 0.6% and Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.4%. U.S. Global Jets ETF (JETS) descended 1.5%. SPDR S&P Homebuilders ETF (XHB) climbed 0.9%. The Energy Select SPDR ETF (XLE) pulled back 0.6% and the Financial Select SPDR ETF (XLF) gave up 0.1%. The Health Care Select Sector SPDR Fund (XLV) rose 0.6%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) retreated 1.1% and ARK Genomics ETF (ARKG) 0.85%. Tesla stock remains the No. 1 holding across ARK Invest’s ETFs, but Cathie Wood has significantly cut its stake in recent months.
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Tesla Stock
Tesla stock dipped 0.2% to 1,086.19 on Wednesday. Shares continue to hold right around a declining trend line after surging from recent lows. Tuesday’s high of 1,119 could serve as an early entry for TSLA stock. Ideally, the EV giant would form a handle here, creating a lower official buy point. The current buy point for the double-bottom base is 1,202.05, according to MarketSmith analysis.
In early January, Tesla will release its fourth-quarter production and delivery figures, with Monday, Jan. 3 the likeliest date. Analysts expect another record quarter of Tesla deliveries, with a lot of buzz that sales could be a blowout. One way or the other, the data will likely be a TSLA stock catalyst.
Meta Platforms Stock
Meta Platforms stock fell nearly 1% on Wednesday to 342.94. While FB stock is still above a trend line entry cleared on Monday, investors looking to start a position now might wait until Meta stock clears the Nov. 22 high of 353.83. That would act as an early entry, and could be seen as a double-bottom base. The reversal from Tuesday’s intraday high of 352.71 suggests that this area is key resistance. Officially, FB stock has a cup base with a 384.43 buy point.
Datadog Stock
Datadog stock rose 1.3% to 179.71 on Wednesday, after finding support at its 50-day line. Shares cleared a trend line entry on Dec. 22, but then hit resistance on Tuesday, reversing lower from an intraday high of 186.28. DDOG stock had short-term highs of 185.95 on Dec. 9 and 187.70 on Nov. 29. A strong move above Tuesday’s high would offer a new early entry. Datadog stock has an official buy point of 199.78.
One concern is that Datadog is almost a lone wolf in these dog days for the software sector.
Market Rally Analysis
The stock market rally continues to consolidate after a solid stretch. If the major indexes pause through year-end in this low-volume environment, leading stocks can carve out handles or finish up bases, including Tesla and AMD. That would leave investors in good position heading into 2022, as institutional traders return.
The Dow Jones hit record levels Wednesday after the S&P 500 hit an all-time high on Monday. The Nasdaq composite isn’t far off.
The Russell 2000 is still stuck below its 200-day line. Market breadth is off its December lows, but remains relatively weak.
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What To Do Now
With the end of the year coming and trading activity subdued, there’s just no need to get super intense. On New Year’s Eve, young revelers might have a raucous time, but 5 a.m. on New Year’s Day is not the time to suddenly start going manic.
Riding into 2022 with your current holdings, whether it’s all cash, a couple token positions or solid exposure, is a sensible strategy.
Over the next several days, investors should build up their watchlists. Make sure you are keeping an eye on a wide range of sectors. Market leadership is relatively broad.
Meanwhile, review your 2021 trading. Look over your big winners and losers. Try to discover how you traded these stocks and how you could have improved, from the selection to the buys and sells.
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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