Dow Jones futures rose slightly early Wednesday, along with S&P 500 futures and Nasdaq futures, with focus on the Federal Reserve meeting decision. Tesla has been in the spotlight with a flurry of headlines.
X
The stock market rose on Tuesday, with the Nasdaq hitting a 2023 high, joining the S&P 500 and Dow Jones. The CBOE Volatility Index, or VIX, fell again, hitting the lowest point since early January, a sign of excessive upside.
More leading stocks have been paid or set up. Nvidia (NVDA) regained a buy point, although volume remained weak.
Microsoft (MSFT), Amazon.com (Amzn), Netflix (NFLX), Datadog (DDOG) And Fresh Works (Brushes) are stocks that have found support around their 21-day EMAs.
Microsoft and AMZN shares are in official buy zones while FRSH shares are arguably playable within their range.
Tesla (TSLA) pulled back on Tuesday but found support at the 50-day moving average. TSLA stock was down a bit early Wednesday. The electric car giant said two variants of the Model 3 will lose all $7,500 US tax credits on January 1. Tesla will also recall more than two million vehicles due to Autopilot safety flaws.
Microsoft and DDOG stock are on a roll IBD Leaderboard And the Bahraini dinar 50. NFLX stock is on SwingTrader. MSFT stock is also on IBD Long-Term Leaders. Freshworks was IBD Stock of the Day on Tuesday.
The video embedded in the article analyzed market action as well as Amazon, Netflix, and Freshworks stocks.
Federal Reserve
The Fed’s two-day meeting ends on Wednesday, and a policy announcement is scheduled for 2 p.m. ET. Fed Chairman Jerome Powell will hold his press conference at 2:30 p.m. ET.
The central bank will not take any action on Wednesday. The big question is whether the Fed or Powell’s announcement will signal a shift toward lower Fed rates in 2024.
Currently, markets are anticipating a 42% probability of the Fed’s first rate cut at its March meeting, although this has dropped slightly over the past week. The odds rise to nearly 75% by the early May meeting. By the end of 2024, investors are betting on four interest rate cuts by the Fed, and perhaps five.
Powell will almost certainly not herald a wave of interest rate cuts, but if the Fed continues to postpone any easing until 2024, markets could react negatively.
Dow jones futures today
Dow Jones futures rose 0.1% versus fair value. S&P 500 futures rose. Nasdaq 100 futures rose 0.2%.
The yield on 10-year Treasury bonds fell to 4.18%.
Remember, an overnight move in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Stock market pool
The stock market rally started mixed after November’s CPI inflation data, but gradually improved during the session.
The Dow Jones Industrial Average rose 0.5% in stock market trading Tuesday. So did the S&P 500. The Nasdaq Composite rose 0.7%.
The Nasdaq has reached a 20-month high, finally surpassing its July peak. The S&P 500 did just that on Friday and continued to move higher. The Dow Jones surpassed its summer highs on November 30.
The small-cap Russell 2000 index fell 0.1% but trimmed its morning losses.
US crude oil prices fell 3.8 percent to $68.61 a barrel, their lowest close since late June.
The yield on the 10-year Treasury note fell by 3 basis points to 4.205%.
The VIX index fell on Tuesday, again hitting its lowest level since January 2020. When the market’s fear gauge is unusually low, it’s a sign of excessive bullishness or complacency. This increases the risk of a market decline. But it doesn’t have to happen immediately, nor does it have to be deep or long-lasting.
ETFs
Among the growth ETFs is the iShares Expanded Technology Software Sector ETF (IGV) by 0.2%. Microsoft stock is one of IGV’s top holdings, with Datadog and FRSH shares also in the group. VanEck Vectors Semiconductor ETF (Trait) by 1.1%. Nvidia stock is the No. 1 SMH component.
Reflecting more speculative stocks, the ARK Innovation ETF (Ark(down 0.3% and ARK Genomics ETF)Arkj) decreased by 0.6%. Tesla stock remains a huge holding across Ark Invest’s ETFs.
SPDR S&P Metals and Mining Fund (XME) decreased by 2%. US Global Jets ETF (Planes) rose 1%. SPDR S&P Homebuilders ETF (XHB) Step down by 0.3%. Energy Select SPDR ETF (XLE(Down by 1.4% and Healthcare Sector SPDR Fund)Forty-fifth) by 0.4%.
Selected Industrial Sector SPDR Fund (forty-firstAdvanced 0.45%
Financial Select SPDR ETF (XLF) rose 0.7%. SPDR S&P Regional Banking Fund (Cree) decreased 0.7%
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Stocks near buy points
Microsoft stock rose 0.8% to 374.38 on Tuesday, continuing to find support around the 21-day line. The Dow Jones tech giant has been trading in a Cuban-based buy zone since November 10. Clearly, the one-month sideways stop allowed the 21-day line to catch up, while the 50-day line has closed the gap significantly with MSFT stock.
Amazon stock rose 1.1% to 147.48, continuing Monday’s modest move from a 21-day line, where it found support. Shares are just above a consensus buy point of 145.86, according to MarketSmith. AMZN stock has been at an entry point over the past month. As with Microsoft, the 50-day streak is catching up with the e-commerce and cloud giant.
NFLX stock rose 0.7% to 463. The streaming media giant has a buy point at 482.70. On Monday, Netflix stock moved above its 21-day line, though it closed at its lows. Investors can use Monday’s high of 470.65 as an early entry point after the handle’s downtrend breaks.
DDOG stock fell 7 cents to 114.66 on Tuesday. Two weeks ago, Datadog just crossed a 118.02 buy point either from a giant cup-with-handle base or from just treating the handle as its own consolidation. But Datadog stock has pulled back in the past few sessions, approaching a rapid 21-day rally line. An actual 21-day test can be healthy. Cloud Application Monitoring Platform is still well above its 50-day line, which is moving sharply higher.
FRSH stock rose 3.5% to 21.24 on Tuesday, heading toward a 21.50 cup-with-handle buy point. Stocks broke the downtrend in the handle, providing an early entry. This is after finding support just above the 21-day line.
Nvidia stock
Nvidia stock rose 2.2% to 476.57, just back above its double-bottom buy point of 476.09. Trading volume has been below average, which has been a problem for NVDA stock over the past few months. For most of 2023, Nvidia has been the leading stock. But it doesn’t currently lead the market or even the chip sector.
Tesla Model 3 tax credits
Meanwhile, Tesla’s website tells customers that the Real Wheel Drive and Long Range Model 3 variants will lose all $7,500 of the IRA tax credit in 2024, not just $3,750. The electric vehicle giant cited updated regulatory guidelines. These two types use either Chinese batteries or Korean batteries with Chinese materials.
The news could prompt some potential buyers to make a move before December 31, but it will likely have a major impact on 2024 financials.
Other Tesla news
Tesla will recall just over 2 million vehicles, essentially all of its vehicles, after the National Highway Traffic Safety Administration determined that the electric car giant’s Autopilot system was vulnerable to abuse. It’s part of NHTSA’s ongoing investigation of Tesla’s driver assistance system. Tesla will begin the over-the-air “recall” soon.
Tesla also released a new video of its updated Optimus humanoid robot, showing that it’s lighter and faster than before.
Tesla shares
Tesla stock fell 1.1% on Tuesday to 237.01, but broke out of a test of the 50-day line. Shares also closed just above the 21-day line, a key support area over the past few weeks. TSLA stock has a double bottom buy point of 278.98. Investors can use the November 29 high of 252.75 or even the downtrend line around 248.
Tesla stock’s relative strength line has been trending lower since July.
Shares fell slightly early Wednesday amid Model 3 tax news, suggesting a potential test of the 50-day line.
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What are you doing now
The Nasdaq and S&P 500 have moved to their 2023 highs, but not decisively. It’s a bit like letting the cat out, but it’s just a few steps out the door. Yes, he’s out there, but he’s not on a big adventure yet and could come back again.
At the same time, the lack of fear of the market is something to worry about, or at least notice.
The market’s bullish trend still looks strong. Many leading stocks were extended, but some paused higher, like Microsoft and Amazon.
Investors can make some adjustments to the portfolio that add or subtract overall exposure, but a rising market doesn’t give much reason to make big changes.
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