Dow Jones futures were little changed overnight, as were S&P 500 and Nasdaq futures. The stock market rally rebounded on Tuesday, with the S&P 500 resuming the 4,000 level.
Deere (DE) reports results early Wednesday, with DE shares in a buy zone. Deere’s profits and advice could be important for a variety of agricultural actions, 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), refiner CVR Energy (CVI), natural gas producer EQT Corp. (EQT) and LNG stock excel energy (EE) are all close to the points of purchase.
EE stock broke out on Wednesday, with Enphase moving back into a buy zone. Stock BTU, CVR Energy and EQT are workable.
The ENPH stock is on the IBD ranking. EQT stock is on SwingTrader. Deere stock is on the IBD 50. Peabody Energy is the IBD stock of the day on Tuesday.
Dow Jones Futures Today
Dow Jones futures were up 0.1% from fair value. S&P 500 futures were flat. Nasdaq 100 futures fell 0.1%.
Crude oil prices rose slightly. Natural gas futures rose 2%.
Remember that overnight action on futures contracts on Dow and elsewhere does not necessarily translate into actual trading in the next regular trading session.
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Stock market rally
The stock market rally opened mixed on Tuesday, but gained momentum for broad-based gains, closing near session highs.
The Dow Jones Industrial Average rose 1.2% in trading on Tuesday. The S&P 500 index and the Nasdaq composite both jumped nearly 1.4%. The small-cap Russell 2000 jumped 1.1%.
The 10-year Treasury yield fell 7 basis points to 3.76%. But the two-year Treasury yield, more closely tied to Fed policy, remained roughly flat at 4.53%.
The dollar, after recovering in the previous three sessions, fell back on Wednesday. The greenback has fallen sharply since late September, especially since early November.
U.S. crude oil prices rose 1.1% to $80.95 a barrel, continuing a rebound from Monday’s short-lived plunge. Gasoline futures jumped 4.3%, good news for refiners. Natural gas futures rose slightly after falling more than 2% during the day.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) jumped 3.4%, helped by a number of energy stocks and metals. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.8%. ETF VanEck Vectors Semiconductor (SMH) jumped 2.9%.
The SPDR S&P Metals & Mining ETF (XME) gained 3.2% and the Global X US Infrastructure Development ETF (PAVE) gained 1.3%. The SPDR S&P Homebuilders ETF (XHB) rebounded 1.9%. ETF Energy Select SPDR (XLE) climbed 3.1%. The SPDR healthcare sector fund (XLV) edged up 0.9% to a seven-month high.
Mirroring stocks with more speculative stories, ARK Innovation (ARKK) gained 0.3% and ARK Genomics (ARKG) fell 0.4%.
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Energy stocks close to buy points
Enphase stock rose 4% to 320.44, closing above a handle buy point of 316.97 for the first time. However, the last three times the ENPH stock has entered these areas, it has reversed lower. Enphase stock tends to have large daily fluctuations. Investors could therefore be looking to see if ENPH stock returns to its fast-growing 21-day moving average.
Some other LNG stocks are showing strength, with Flexible LNG (FLNG) burst and Energy Cheniere (GNL) recovers its 50-day line.
BTU stock jumped 6.7% to 29.62, just below a buy point of 30.15 handle in a seven-month consolidation. Tuesday’s move broke the handle’s trendline, offering early entry. However, BTU stock is 9.3% above its 21-day line and 17% above its 50-day line. The handle formed after strong gains from Peabody Energy.
CVR Energy stock rose 4.85% to 40.85, returning above a former buy point of 39.81 that could still be considered valid. Also, CVI stock has a tight three-week pattern with an entry at 42.31. Exceeding 41.31 could offer an early entry into this tight pattern.
EQT stock jumped nearly 6% to 43.79, crossing back above the 50-day line after rebounding from the 200-day mark on Monday. Stocks break a descending trendline. The official buy point is 52.07.
EE stock jumped 9.6% to 30, clearing a buy point of 28.49 cups with a handful of above-average volume, according to MarketSmith analysis. This move to a record close wiped out many trades that have taken place since Excelerate Energy’s IPO in April. EE stocks had posted early entries on Friday and Monday, although trading was below normal on those days. Excelerate is now slightly extended from the buy zone and well extended from the 21-day line.
Market rally analysis
The stock market rally continues to show constructive action, trading in a tight range after modest pullback and support last week. On Tuesday, major indexes rebounded from Monday’s losses.
The S&P 500 has rebounded from its 10-day line, just at the 4,000 level, as it heads towards its 200-day line. Although not above the November 15th intraday high, it is the index’s best close in more than two months.
The 50 day line is just starts to turn higher on the S&P 500.
The Russell 2000 is approaching 200 days. The S&P MidCap 400, which held its 200-day line last week, rose further.
The Dow Jones major broke above the 34,000 level for the first time in three months, just below the August 16 peak. The lagging Nasdaq found support at its 21-day line, just above its 50-day line, but did not recoup all of Monday’s losses.
All of these indices operate on handles, with the Dow sneaking above. Most stocks track the action of major indices, so many handles form on stocks near buy points. A slightly longer pause, perhaps until next week’s major economic reports, would allow the moving averages to start catching up.
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What to do now
Until the S&P 500 moves decisively above its 200-day line, investors may not want to add much exposure just yet. With the Thanksgiving holiday muted and critical economic data from the Fed next week, market rally may be limited in the near term.
This could help stocks in various sectors establish handles and push the moving averages higher. Investors should build their watchlists. Now is definitely the time to look beyond traditional tech growth stocks, which are mostly lagging at the moment.
Since many leaders are far from the moving averages, such as Excelerate Energy or BTU stock, it is all the more important to look for early entries and act quickly.
Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.
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