Dow Jones futures were little changed overnight, along with S&P 500 futures and Nasdaq futures. The struggling stock market rally got a lift from Micron Technology (MU) and some Covid headlines from President Joe Biden and more. Travel names such as Hilton Worldwide (HLT) and Expedia (EXPE) leading the way.
Tesla stock, Nvidia (NVDA) and Advanced Micro Devices (AMD) rebounded from key levels, but will this bounce stick? Microsoft stock reclaimed its 50-day line while Google parent Alphabet (GOOGL) nearly did so as both megacaps work on fresh shallow bases.
The market rally remains under pressure, making any new buys risky.
Still, the action of travel stocks suggests that investors, for the moment, are less fearful about the omicron impact. HLT stock, Hyatt (H), Expedia and arguably Marriott (MAR) flashed early buy signals amid strong, high-volume gains. All four stocks broke above 50-day lines
Tesla (TSLA), Microsoft (MSFT), Google, AMD and Nvidia stock are on IBD Leaderboard. EXPE stock is on SwingTrader. Microsoft and Google stock are on IBD Long-Term Leaders. Micron was IBD Stock Of The Day.
The video embedded in this article discussed the market rally bounce analyzed MU stock, Hilton and Lam Research (LRCX).
Dow Jones Futures Today
Dow Jones futures were just above fair value. S&P 500 futures and Nasdaq 100 futures were little changed.
Coronavirus cases worldwide reached 276.51 million. Covid-19 deaths topped 5.38 million.
Coronavirus cases in the U.S. have hit 52.21 million, with deaths above 830,000.
Covid cases are rising rapidly in the U.S. and worldwide, reflecting the more-infectious omicron variant and more people being inside for the winter in the Northern Hemisphere. Deaths have remained relatively low due to vaccinations, prior infections and omicron apparently often resulting in milder cases than earlier variants. Hospitalizations and deaths could pick up somewhat in a lagged response to spiking caseloads.
President Biden urged Americans to get vaccinated, including booster shots — a day after former President Trump told supporters he has gotten a booster shot. Biden also announced that the U.S. would mail free Covid testing kits to any household that wants one, just two weeks after the White House press secretary mocked the idea. At-home Covid tests have been expensive and in short supply, with the FDA only approving a few tests.
The president also will direct military medical personnel to hospitals to help ease any staffing shortages.
Notably, U.K. Prime Minister Boris Johnson said there’s not enough evidence to justify tougher Covid measures, at least before Christmas. U.K. government officials in recent days had warned of hundreds of thousands of daily cases and stressed that it wasn’t proven that omicron cases were typically mild vs. other Covid variants.
New York City is offering $100 for residents to get a booster shot by Dec. 31.
Stock Market Rally
The stock market rally had a solid rebound. The Dow Jones Industrial Average rose 1.6% in Tuesday’s stock market trading, with Nike (NKE) jumping on better-than-expected earnings. The S&P 500 index gained 1.8%. The Nasdaq composite jumped 2.4%. The small-cap Russell 2000 popped 2.95%.
The 10-year Treasury yield jumped 7 basis points to 1.49%. U.S. crude oil prices climbed 3.7% to $71.12 a barrel, recouping Monday’s losses.
AMD and Nvidia stock rebounded from their 50-day lines, rising 6.2% and 4.9% respectively. Those could be early entries, but they made even-better moves on Dec. 15 that didn’t last. MSFT and Google stock climbed 2.3% and 1.3%, respectively. Tesla stock, which round tripped a 38% rally with Monday’s dip before the 900.50 cup-base buy point, rose 4.3% to 938.53 on Tuesday.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rallied 3.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 1.4%. The iShares Expanded Tech-Software Sector ETF (IGV) advanced 2.8%. Microsoft stock is a major IGV holding. The VanEck Vectors Semiconductor ETF (SMH) popped 3.6%%. AMD stock and Nvidia are major SMH components.
SPDR S&P Metals & Mining ETF (XME) leapt 4% and Global X U.S. Infrastructure Development ETF (PAVE) rose 2.2%. U.S. Global Jets ETF (JETS) jumped 5.25%. SPDR S&P Homebuilders ETF (XHB) advanced 2.6%. The Energy Select SPDR ETF (XLE) climbed 2.85% and the Financial Select SPDR ETF (XLF) 2.1%. The Health Care Select Sector SPDR Fund (XLV), which has outperforming in recent weeks, edged up 0.4%
Market Rally Analysis
The stock market rally got a much-needed bounce once again, but remains weak.
Monday’s action pushed the market into “uptrend under pressure.” The Nasdaq undercut its early December lows, ending the composite’s rally. The market power trend also ended, with the Nasdaq’s 21-day line undercutting the 50-day line. The S&P 500 index did not undercut its early December lows, so its rally is still intact.
On Tuesday, the Nasdaq and Dow Jones rebounded toward their 50-day lines, while the S&P 500 reclaimed that level. The Russell 2000 is still noticeably below its 50-day and 200-day lines.
Winners easily beat losers on Tuesday, but the advance/decline line has been woeful for several months. New lows trumped new highs once again.
The Nasdaq is in the midst of a new rally attempt. The market doesn’t not need a Nasdaq follow-through day, because it’s officially in a confirmed rally thanks to the S&P 500. But a Nasdaq FTD would definitely be a positive signal.
Travel stocks such as Hilton and Expedia leading Tuesday’s charge is a positive sign about how the market is responding to omicron Covid news, though new headlines could certainly
What To Do Now
Big one-day gains are common in bad markets. The Nasdaq shot up 2.15% on Nov. 15 on the Fed meeting announcement, then gave it all back the next day. Rushing aggressively into stocks after one good day is a recipe for significant losses. See whether or not the stock market rally can build real momentum. For now, investors should be extremely cautious about adding any new exposure.
This is an important time to build up your watchlists. Look for stocks with strong relative strength lines. Leading trucking firms such as J.B. Hunt (JBHT) undercut their 50-day lines before Tuesday’s bounce but their RS lines are close to all-time highs. Nvidia stock and AMD could be just one bad day from a big sell signal, but their RS lines look strong. So do Microsoft and Google stock, which should have new flat bases after this week. The RS line for Fortinet (FTNT) is just below highs as the Long-Term Leader flirts with an early entry with a new base about to form.
All of these groups and stocks could still break down if the market heads lower once again. Relative winners in bad markets are usually still absolute losers. That’s why it’s generally better to wait for further strength before committing serious capital to markets.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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