Dow futures rose strongly early Wednesday, along with S&P 500 futures and Nasdaq futures. A faltering stock market rally lost more steam on Tuesday, after Russian President Vladimir Putin recognized the independence of parts of Ukraine, and the West imposed targeted sanctions in response.
President Joe Biden, who called Putin’s actions “the beginning of a Russian invasion of Ukraine” limited Russia’s access to Western funding and targeted the Russian oligarchy. The United Kingdom and the European Union have also imposed modest sanctions. All indicated that they would be prepared to do more if Putin invaded Ukraine further. Biden would also move more US troops to the Baltic states, which were formerly part of the Soviet Union and are now part of NATO.
Putin, who clearly considers Ukraine’s independence to be illegitimate, continues to make ominous statements. Russian forces continue to nearly encircle Ukraine.
However, the stock market rally is almost non-stop, with major indexes approaching recent lows.
It was a bad retail day. Home Depot (HD) And the Tempur Seely (TPX) was lower Tuesday on earnings, with a large number of other retail stocks being sold. even in Messi (M) And the Dillard (tuck) staged negative reversals after strong initial gains on earnings.
Tesla stock sank 4.1% to 821.53. It is the first close below the 200-day moving average since last July. Tesla (TSLA) did not break its lowest level on January 28 at 792.01. but the Relative force line TSLA stock is at its lowest point since mid-October. The decisive breakout of the 200-day line may be a signal for long-term investors to take additional profits. However, Tesla stock rose modestly early Wednesday, indicating a return to the 200-day mark.
RS line for an Apple (AAPL) is still near a record level. But AAPL stock is a prime example of an “absolute loser” despite its relative strength. Apple shares fell 1.8 percent to 164.32 on Tuesday. While it still contains a file cup base with handle with 176.75 buy pointthe handle is starting to look ugly as stocks fall far from the 50-day line.
Palo Alto earnings topped the views, as the cybersecurity software company provided bullish guidance. PANW stock, which was heading towards the 200 day line, bounced overnight but is still below the 50 day line.
Profits and sales of mosaic missed views. MOS stock fell strongly early Wednesday despite a dividend hike and $1 billion buyback.
Diamondback earnings and Matador earnings topped the views. FANG stock is up slightly overnight while MTDR stock is down. Both rocky games fell on Tuesday amid a broad market sell-off, even as crude oil prices continued to rise.
Tesla stock is running IBD Leaderboard.
The video included in this article covered another difficult day for the market rally, while also reviewing HD stocks, Planet Fitness (PLNT) and Tesla.
Dow jones futures contracts today
Dow futures rose 0.4% against fair value. S&P 500 futures rose 0.5%. Nasdaq 100 futures rose 0.8%.
The 10-year Treasury yield rose 2 basis points to 1.97%. Crude oil futures fell slightly.
stock market rise
The stock market rally continued to head towards its January lows. Major indices pared losses for a while as President Biden announced modest sanctions against Russia, but they fizzled out again in the shutdown.
The Dow Jones Industrial Average is down 1.4% on Tuesday stock market tradingHD stock declined by 8.8%, significantly negative for the blue-chip index. The S&P 500 fell 1%. The Nasdaq Composite Index fell 1.2%. Small cap Russell 2000 fell 1.4%.
The 10-year Treasury yield rose 2 basis points to 1.95%. Crude oil futures for March rose 1.4 percent to $92.35 a barrel. April crude rose 1.9 percent to $91.91.
between the Best ETFsThe Innovator IBD 50 ETF (fifty) is down 1.5%, while the Innovator IBD Breakout Opportunities ETF (fit) sank 1.8%. iShares Expanded Technology and Software Fund (ETF)IGV) down 0.9%. VanEck Vectors Semiconductor Corporation (SMH) decreased 0.7%.
SPDR S&P Metals & Mining ETF (XME(Gives up 0.8% and the Global X US Infrastructure Development ETF)cradle) down 1.5%. US Global Gates Foundation (ETF)Planes2% went down. SPDR S&P Homebuilders ETF (XHB) down 3.2%, with HD stock the main driver. SPDR Specific Energy Fund (SPDR ETF)XLE) reversed lower against a 1.6% drop while the Financial Select SPDR ETF (XLF) decreased 0.5%. SPDR Healthcare Sector Selection Fund (XLV) decreased by 0.25%.
Shares reflect more speculative stories, the ARK Innovation ETF (see you) by 2.2%, hitting a 20-month low on the day. ARK Genomics ETF (ARKG) slipped 2.5%. Tesla stock continues to rank number one among Ark Invest’s ETFs.
Market Rise Analysis
The stock market rally continued to weaken on Tuesday. The S&P 500 and Nasdaq Composite indices turned positive for a brief period in morning trading, but quickly turned lower again.
Major indices have not yet broken intraday lows on January 24th, which will definitively end the market rally and signal a new stage of correction. But they keep moving towards that level. The S&P 500 had its worst close in months, joining the Dow Jones Industrial Average.
Is the stock market close to pricing in the conflict between Russia and Ukraine? It’s hard to do when investors don’t know its price. So will Putin stop his aggression, for now, with the West imposing modest sanctions? Or will Russian forces overrun much more of Ukraine, leading to massive economic sanctions that could disrupt global markets and supply chains. This wave of uncertainty may end quickly, or last for days or weeks.
Even if the market stops falling from here, this does not mean that it will be directly bullish. The Fed is about to embark on a major tightening cycle. On a technical basis, the major indicators are facing a lot of key resistance levels and could end up in choppy trading for an extended period.
This wouldn’t be the worst outcome, because very few stocks look attractive at the moment.
Commodity stocks remain an area of strength. But even as oil and natural gas prices continued to rise, energy stocks fell on Tuesday, including FANG and Matador shares.
Travel stocks are holding up better than most, but they’ve been falling over the past few sessions. The same is true for Apple stocks.
Growth names in general look terrible, with high-value plays like Tesla stock struggling.
But as Home Depot and other retailers have shown, lower P/E ratios are no panacea. O’Reilly Motors (Orly) Things should go well amid a shortage of new cars, and strong earnings reported recently. But ORLY stock is down 3.7% on Tuesday, down from its 50-day streak.
What are you doing now
The market is still technically bullish, but it is under heavy pressure. It is clear that the market needs to show real strength – not just a one-day bounce – before investors can be confident that the trend will continue.
The risks are strongly tilted to the downside. If the major indicators break below their January 24 lows, there is no obvious support. Any upward movement can quickly run out, for the broader market, sector or individual stocks.
If you have some stocks that are working, or you have huge long-term gains, you can hold them if you like. But there is no reason to be more than modestly exposed, and there are plenty of reasons to be critical.
Look for stocks with strong relative strength. These could be big winners on the next strong upside, so put them on your watch list. But in a weak market, winners with relative strength are usually absolute losers.
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