[ad_1]
Dow Jones futures were higher early Wednesday, along with S&P 500 futures and Nasdaq futures, with the Federal Reserve decision in focus. Tesla Model 3 tax rate is in focus.
X
The stock market rallied on Tuesday, with the Nasdaq reaching a 2023 high, along with the S&P 500 and the Dow Jones. The CBOE Volatility Index, or VIX, fell again, reaching its lowest level since early January, a sign of extreme volatility.
Many popular brands have been pushed out or discontinued. Nvidia (NVDA) recovered a selloff, although volume remained negative.
Microsoft (MSFT), Amazon.com (AMZN), Netflix (NFLX), Datadog (DDOG) and new work (FRSH) are stocks that have found support around their 21-day moving averages.
Microsoft and AMZN stocks are in official oversold zones while FRSH stock is performing in its trough.
Tesla (TSLA) retreated on Tuesday but found support at its 50-day moving average. TSLA’s stock fell slightly early Wednesday as the EV giant said two Model 3 models will lose all of their $7,500 US tax credit on January 1.
Microsoft and DDOG products are available IBD Leaderboard and the IBD 50. NFLX stock is on SwingTrader. MSFT stocks are also among the IBD Long-Term Leaders. Freshworks is Tuesday’s IBD Stock Of The Day.
The video embedded in the article analyzed the activity of the market as well as Amazon stock, Netflix and Freshworks.
Federal Reserve
The Fed’s two-day meeting ends on Wednesday, with a policy announcement due at 2 pm ET. Fed chairman Jerome Powell will hold his news conference at 2:30 pm ET.
The central bank took no action on Wednesday. The big question is whether the Fed’s or Powell’s announcement will signal a shift toward a Fed rate hike in 2024.
Currently, the market is buying a 42% chance of the first reduction of the Fed until the meeting in March, although it is falling down in the last week. The odds climb to 75% at the start of the May meeting. By the end of 2024, investors are selling on four Fed rate cuts, maybe five.
Powell certainly won’t announce a wave of rate cuts, but if the Fed continues to scale back any distant easing in 2024, markets could react.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. reasonable price. S&P 500 futures rose 0.1%. Nasdaq 100 futures advanced 0.2%.
The 10-year Treasury yield fell to 4.19%.
Note that overnight activity in the Dow futures and elsewhere does not translate into actual trading in the next regular market session.
Join IBD experts as they analyze stocks and the market on IBD Live
Stock Market Share
The retail stock market started mixed after the November CPI price data but gradually improved during the session.
The Dow Jones Industrial Average rose 0.5% in the market on Tuesday. So is the S&P 500 index. The Nasdaq composite rose 0.7%.
The Nasdaq hit a 20-month high, finally surpassing its July high. The S&P 500 did so on Friday and continues to move higher. The Dow Jones cleared its summer highs back on November 30th.
The small-cap Russell 2000 was down 0.1% in early morning trading.
US oil prices fell 3.8% to $68.61 a barrel, their lowest since late June.
The 10-year Treasury yield fell 3 basis points to 4.205%.
The VIX fell on Tuesday, falling again to the lowest level since January 2020. When the fear market is low, it is a sign of excessive fear or complacency. This increases the risk of a market pullback. But it doesn’t have to happen quickly and it doesn’t have to be deep or long.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) rose 0.2%. Microsoft stock is a major IGV holding, along with shares of Datadog and FRSH in the group. The VanEck Vectors Semiconductor ETF (SMH) gained 1.1%. Nvidia stock is the No. 1 SMH group.
Taking stock of the stock market, ARK Innovation ETF (ARKK) fell 0.3% and the ARK Genomics ETF (ARKG) decreased by 0.6%. The majority of Tesla stocks remain on Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) down 2%. US Global Jets ETF (JETS) rose over 1%. SPDR S&P Homebuilders ETF (XHB) was down 0.3%. The Energy Select SPDR ETF (XLE) fell 1.4% and the Health Care Select Sector SPDR Fund (XLV) rose 0.4%.
The SPDR Sector Select Industry Fund (XLI) up 0.45%
The Financial Select SPDR ETF (XLF) climbed 0.7%. The SPDR S&P Regional Banking ETF (CRE) retreated 0.7%
China’s Top Five Markets to Watch Now
Stocks Close to Buy Points
Microsoft shares rose 0.8% to 374.38 on Tuesday, continuing to find support in the 21-day range. The Dow Jones tech titan has been trading in the overbought zone since November 10. The month-long freeze has given the 21-day line a shot, obviously, while the 50-day line has really closed the gap with MSFT shares. .
Amazon’s stock climbed 1.1% to 147.48, continuing Monday’s slow move from the 21-day line, which provided support. The stock is above the 145.86 price target, according to MarketSmith. AMZN stock has been right on target for the past month. Like Microsoft, the 50-day line is available on the e-commerce and cloud giant.
NFLX’s stock rose 0.7% to 463. The widely traded stock has 482.70 shares. On Monday, Netflix stock rose above its 21-day line, although it closed lower. Traders can use Monday’s high of 470.65 as an early warning from breaking the bearish trend.
DDOG shares were down 7 cents at 114.66 on Tuesday. Two weeks ago, Datadog only topped 118.02 buying from a large plate-and-hold base or just using the handle as its reinforcement. But Datadog’s stock has pulled back in the past few sessions, near a 21-day high. The real 21 day test can be healthy. The daily base is above the 50-day line, which is trending higher.
Shares of FRSH jumped 3.5% to 21.24 on Tuesday, moving to the 21.50 plate along with the stock market. The shares broke a dip in the stock, offering an early entry. That was after finding support above the 21-day line.
Nvidia Stock
Nvidia rose 2.2% to 476.57, only to return to the 476.09 trading low. Most were below average, a problem for the NVDA stock for the past few months. For most of 2023, Nvidia is the best seller. But it is not leading the market right now or in 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 both lose $7,500 of the IRA tax credit in 2024, but not only $3,750. EV cited several regulatory guidelines. Both of those variations use Chinese or Korean stones and Chinese materials.
The news may prompt some investors to act before December 31, but it may have a major impact on the 2024 budget.
Tesla Stock
Tesla stock fell 1.1% on Tuesday to 237.01, but it came from a test of its 50-day line. Shares also closed above the 21-day line, a key support area for the past few weeks. TSLA stock has a 278.98 double bottom buy. Investors can use the November 29 high of 252.75 or a trend line down to 248.
The strong line estimate for Tesla sales has been down since July.
Shares fell slightly early Wednesday amid news of the Model 3 tax bill, marking another test of the 50-day line.
Time The Market with IBD’s ETF Market Strategy
What To Do Now
The Nasdaq and the S&P 500 have moved to 2023 highs, but not in earnest. It’s like letting the cat out, only a few steps behind the door. Yes, it’s out, but it hasn’t traveled too far and can come back in.
Now, the lack of fear in the market is something to worry about, or at least the explanation.
The strength of the market’s momentum continues to be seen. Many popular retailers have expanded, but some are holding firm, such as Microsoft and Amazon.
Investors can make some incremental tweaks to add or subtract the general exposure, but the market announcement does not provide much reason for major changes.
Continue to work on watch lists.
Read the Big Picture every day to stay in tune with the direction of marketing and sales products and categories.
Please follow Ed Carson on X/Twitter at @IBD_ECarsonthread c @edcarson1971 and Bluesky i @edcarson.bsky.social for sales updates and more.
YOU MAY ALSO LIKE:
Do You Want to Earn Fast and Avoid Big Mistakes? Try SwingTrader
Best Stocks to Buy and Watch
IBD Digital: Access IBD’s Best Selling Lists, Tools and Research Today
Tesla Vs. BYD: EV Giants Vie Mo Paris, But which is the best seller?