Dow Jones Futures: Stock Market Recovery Leads Technicians; Investors see end to Fed rate hikes


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Dow Jones futures were little changed overnight, as were S&P 500 futures and Nasdaq futures. The stock market closed mixed on Tuesday, but tech companies posted a strong recovery, even as recession fears slammed Treasury bond yields and commodity prices.


The Dow Jones closed lower, but far from the lows, while the S&P 500 posted a slight gain. The Nasdaq had strong growth with aggressive growth names such as Roblox (RBLX) and datadog (DDOG) bounced above their 50-day lines. Apple (AAPL), (AMZN) and Google parent Alphabet (GOOGL) recovered a key near-term level.

Meanwhile, crude oil prices fell below $100 a barrel. Futures for gasoline, copper and wheat fell sharply, continuing significant losses over the past few weeks.

The Treasury yield curve has flipped between 2-year and 10-year bonds, a notable signal of a recession. Markets continue to see aggressive Federal Reserve tightening in the next two meetings, but also expect interest rate hikes later this year.

dollar tree (DLTR), Halozyme Therapy (HALO) and PRVA shares were bullish on Tuesday. Meanwhile, Northrop Grumman (NOC) and UnitedHealth (UNH) fell but found key support.

NOC and UnitedHealth shares are on the IBD leaderboard. DLTR shares are on SwingTrader. Google shares are on the long-term IBD leaderboard. The UNH stock is at IBD 50. Privia Health (PRVA) was IBD’s stock of the day on Tuesday.

The video embedded in this article focuses on interesting market action on Tuesday and analysis of Dollar Tree, Halozyme Therapeutics and DDOG stocks.

Dow Jones futures today

Dow Jones futures fell compared to fair value. Futures on the S&P 500 and Nasdaq 100 rose.

U.S. crude oil futures rose 1%, back above $100 a barrel.

Remember that overnight action in Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.

Join IBD experts as they analyze valuable stocks in the stock market rally in IBD Live.

stock market rally

The stock market rally occurred on Tuesday morning but recovered and ended mixed at session highs.

The Dow Jones Industrial Average fell 0.4% on Tuesday in stock trading. The S&P 500 rose 0.2%. The Nasdaq composite index jumped 1.75%. Small-cap Russell 2000 jumped 0.8%.

Shares of Apple, the giant Dow Jones, S&P 500 and Nasdaq, rose 1.9%, breaking the 21-day moving average. Shares of Google rose 4.2% and Amazon rose 3.6%, also retracing the 21-day line and approaching the long-running 50-day line. All three megacapital technologies are far from working.

Fear of recession worries financial markets, especially commodities and bonds.

U.S. crude oil prices fell 8.2% to $99.50 a barrel after already well off their early June peaks. Gasoline futures fell 9%, continuing their rapid decline. Pump prices have been falling for 20 straight days and this trend should continue.

Copper futures fell more than 4%, extending a long sell-off. Harvest futures plummet.

The 10-year Treasury yield fell 16 basis points to 2.81%. The two-year yield fell 2 basis points to 2.82%, which means the yield curve is now slightly inverted. The yield on one-year Treasuries rose 4 basis points to 2.76%.

Ed Yardeni of Yardeni Research raised his chances of a recession, albeit a shallow and short-lived one, from 45% to 55%.

The last batch of leading economic indicators suggests weaker coincident indicators. As a result, we raise our chances of a shallow, short-term recession in the US economy to 55% (up from 45%). This makes recession our base case from which we base our earnings and stock market forecasts. …

Despite rising recession risks and the prospect of a significant decline in inflation in the coming months, the Fed is expected to raise rates by 75 basis points at the end of July meeting and by 50 basis points at the September meetings. However, at the last two Fed meetings this year, markets see only a quarter of a point gain, and there is no change at the February 2023 meeting.

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Among the top ETFs, the Innovator IBD 50 ETF (FFTY) was up 0.15%, while the Innovator IBD Breakout Opportunities (BOUT) ETF was up 1 cent. The iShares Advanced Technology & Software (IGV) ETF added 2.6%. The VanEck Vectors Semiconductor (SMH) ETF rose 0.6%.

The SPDR S&P Metals & Mining ETF (XME) fell 4.9% and the Global X US Infrastructure Development ETF (PAVE) fell 1.1%. The US Global Jets ETF (JETS) edged up 0.2%. The SPDR S&P Homebuilders ETF (XHB) gained 2.5%. The Energy Select SPDR (XLE) ETF fell 4% and the Financial Select SPDR (XLF) ETF fell 0.3%. The Health Care Select Sector SPDR Fund (XLV) slipped 0.6%, led by UNH shares.

Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) surged 9.1% above its 50-day level. The ARK Genomics (ARKG) ETF, which closed just above its 50-day period on Friday, rose 8.2% to a two-month high. Ark Invest owns some RBLX shares in its ETFs.

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Dollar Tree shares rose 5.5% to 164.84 on above-average volume, rebounding from the 50-day line and breaking the trendline from a peak in late April, suggesting an early entry. DLTR shares are on a cup-and-handle basis with an official buy point of 166.45. The relative strength line has already reached a new high, reflecting the strength of the Dollar Tree over the S&P 500. Main Rival Common dollar (DG) is a series of purchases from your own cup with a handle.

Shares of Privia Health opened lower, then rebounded from the 21-day line and went higher. Shares of PRVA jumped 7.4% to 31.04 in huge volume, briefly hitting an 11-month high of 33.88. The self-proclaimed Uber of doctor’s offices has now expanded slightly from the base glass buying point of 07/29. But investors may view its recent pause above the buy point as a high handle with the 30.25 buy point. This high level can be seen as a normal level for a longer consolidation since last November.

Shares of Halozyme rose 4.2% to 46.33, rebounding from the 50-day line and breaking a short but very steep downtrend. This could suggest an early entry into HALO stock, which has a flat base with a buy point of 48.68 on MarketSmith’s weekly chart. This flat bottom can be seen as a handle in the bottom going back to February 2021. The RS line for Halozyme stock is at a new high.

Meanwhile, Northrop shares fell 4.5% to 464.36, although it rebounded from below the 50-day line during the day. However, NOC stock almost wiped out last week’s 4.9% gain that triggered buy signals.

UnitedHealth fell 2.35% to 505.24 but closed in the upper half of its range as it found support on its 50-day line. Below its base double bottom buy point of 507.35, UNH shares are not giving any sell signals yet. UnitedHealth may be working on a pen now.

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Market Rally Analysis

The major indexes fell sharply shortly after Tuesday’s open but recovered to varying degrees.

The Dow Jones closed lower, though far from its worst levels. The S&P 500 turned positive shortly before the close of trading. Nasdaq surged, with Apple shares rising, while DDOG, Roblox and Ark stocks surged, with falling Treasury yields likely a big factor.

Datadog jumped 7.25% to break the 50-day mark. Roblox stock jumped 14% in high volume to its best level since the end of April. But these stocks are far from the highs.

The stock market rally is still going strong, although it was under pressure last week.

Shares of Apple, Google and Amazon regained their 21-day lines on Tuesday. All major indexes are still below it, although the Nasdaq is close. The 50-day line, early June peaks, and many other resistance points lie above this short-term level.

Aside from the risks of another dip in the 2022 bear market, it would seem that good stocks will signal a buy and then quickly turn lower.

Stocks of Northrop and UNH fall into this camp, although they may not be finished yet. Of course, it was not the best day for defense companies and insurance companies.

Despite a difficult day for health insurers, medicine remains a leading sector.

Ideally, the stock market will move sideways for a long time. This would create a base for more stocks and give investors more clarity on the Federal Reserve and the economy. But the market is going to do what it is going to do.

What to do now

Stock market action on Tuesday was relatively positive given recession fears raging in the stock and commodity pits. But the market rally is under pressure. There are some good stocks to buy or tune in, and active stocks are prone to sudden reversals.

Investors who buy, say, a biotech company should keep their position small and be prepared to make quick profits and keep any losses to a minimum.

Once a sustained market rally takes hold, there will be many opportunities for investors to increase exposure and let the winners walk away. For now, the focus should be on preparing for the next bull market.

Read The Big Picture every day to stay up to date with market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson to update the stock market and much more.


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