Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures. The stock market rally faded to slim losses Thursday, but remains in good shape.
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Tesla stock pared losses after finding key support at its 50-day line intraday. Meanwhile, EV rivals had a big day, led by China startups Nio (NIO), Xpeng (XPEV) and Li Auto (LI) shot up 10% to 15% as U.S.-listed Chinese stocks and hard-hit growth names rebounded broadly. China EV giant BYD (BYDDF) leapt 4.3%. Lucid Motors (LCID) and Rivian Automotive (RIVN) also had solid advances.
While Tesla (TSLA) lagged on Thursday, it led the EV charge in a powerful four-day rally after just undercutting a prior base. Tesla stock is close to a trend line buy point. XPEV stock and Li Auto arguably flashed aggressive entries in emerging consolidation.
Early next week, perhaps over the weekend, Tesla will report global fourth-quarter production and delivery data while Nio, Xpeng and Li Auto will release December delivery figures. BYD will likely release December sales later in the week.
Tesla stock is on IBD Leaderboard and the IBD 50.
Dow Jones Futures Today
Dow Jones futures edged lower vs. fair value. S&P 500 futures and Nasdaq 100 futures were unchanged.
U.S. stock markets are open for a full trading session on New Year’s Eve. Some exchanges around the world will be closed, including Germany’s, while others will have half-day sessions early. So trading volume, already light, could be downright anemic to close out 2021.
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 286.72 million. Covid-19 deaths topped 5.44 million.
Coronavirus cases in the U.S. have hit 55.2 million, with deaths above 845,000.
While new cases have exploded worldwide, the more-infectious omicron variant is having only a modest impact on hospitalizations with no pickup in deaths.
Stock Market Rally
The stock market rally traded modestly higher for much of Thursday’s session, but retreated in the final hour.
The Dow Jones Industrial Average dipped 0.25% in Thursday’s stock market trading. The S&P 500 index gave up 0.3%. The Nasdaq composite lost 0.2%. The small-cap Russell 2000 eked out a fractional gain.
The 10-year Treasury yield dipped 3 basis points to 1.51%. Crude oil futures rose 0.6% to $76.99 a barrel, extending its win streak to seven sessions. But natural gas prices fell sharply.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) dipped 0.3%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.1%. The VanEck Vectors Semiconductor ETF (SMH) sank 1.1%.
SPDR S&P Metals & Mining ETF (XME) and Global X U.S. Infrastructure Development ETF (PAVE) retreated 0.6%, along with the SPDR S&P Homebuilders ETF (XHB) and Energy Select SPDR ETF (XLE). The Financial Select SPDR ETF (XLF) dipped 0.1%. U.S. Global Jets ETF (JETS) closed just below breakeven. The Health Care Select Sector SPDR Fund (XLV) rose 0.2%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rose 3.1% and ARK Genomics ETF (ARKG) 3.5%, as beaten-down highly valued growth names had a strong session. Tesla is still the No. 1 holding across ARK Invest’s ETFs. ARK also owns some BYD and XPEV stock.
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Tesla Stock
Tesla stock fell to its 50-day line Thursday morning, on news that the EV giant was recalling nearly 500,000 vehicles. But shares bounced back, briefly turning positive before closing down 1.5% at 1,070.34. TSLA stock has traded tightly the past several days, working on a possible handle as it hits resistance at a trend line. Moving above Tuesday’s high of 1,119 would offer an early entry. Tesla stock has an official buy point of 1,202.05 from a double-bottom base, according to MarketSmith analysis.
TSLA stock hit a recent low of 886.12, more than wiping out a 38% advance, but then vaulted more than 23% to the Dec. 27 close.
Tesla will likely release Q4 delivery figures on Monday, Jan. 3, but they could come anytime from Jan. 1 to Jan. 5.
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Other EV Stocks
Meanwhile, Nio stock shot up 15% Thursday in its heaviest volume in nine months. But that’s after sinking to a 14-month low on Wednesday. Nio remains well below its 50-day and 200-day lines.
Xpeng stock leapt 10%, while LI stock popped 8.6%, both reclaiming their 50-day lines. Those could be seen as aggressive entries in emerging consolidations next to prior failed breakouts. But the risks are high with Xpeng and Li Auto likely to release December delivery figures before Monday’s open, along with Nio.
BYD stock rebounded 4.3%, just below a short trend line, and reclaimed its 21-day line. The 50-day line would be the next hurdle.
Lucid stock climbed 4.8%, but is also below its 21- and 50-day lines. Rivian stock, which doesn’t have a 50-day line yet, rallied 4.1%. RIVN remains below its 21-day.
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Market Rally Analysis
The market rally faded from modest gains to slim losses, but it’s hard to get too excited. The Dow Jones and S&P 500 are right at record highs.
The Nasdaq isn’t far off. On Thursday, the Nasdaq 100 fell 0.3%, slightly lagging the composite, as Tesla stock, Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA) and Google parent Alphabet (GOOGL) all edged lower. But these megacaps have been among the big winners in 2021, and all still look healthy
The Nasdaq and Nasdaq 100 are trading tightly near highs, with many other leading stocks following suit and carving handles. Setting up potential buys in low-volume year-end trading is close to ideal.
The Russell 2000 rose slightly, but once again was unable to close above its 200-day line. Continued improvement in breadth would bolster confidence in the current market rally.
Many of Thursday’s big winners, including EV plays such as Nio and Lucid stock as well as ARK-type story stocks, aren’t in position right now. But it’s good to see some signs of life in this area of the market.
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What To Do Now
The stock market rally is in relatively good condition as the year comes to a close. The coming days are a good time to review your 2021 trades, good and bad. Did you grab some big winners? Did you hold onto stocks too long, giving up gains or suffering deep losses? Even modest improvements in your trading — identifying one model book stock, cutting losses short — can significantly improve your performance in 2022.
Meanwhile, build your watchlists for the new year. Cast a wide net. Some winners from the past year will go on big runs, but many will not.
Remain flexible, stay alert and be decisive.
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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