Treasuries race toward key level as S&P 500 undercuts bear market; What to do now

Dow Jones futures were slightly higher overnight, along with S&P 500 futures and Nasdaq futures. The stock market saw another early rebound on Tuesday as the 10-year Treasury yield rose to 4%. The S&P 500 index slipped below a bear market, but the major indexes were mixed.




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Even if quality stocks show bullish action, investors should exercise caution in making any moves.

On Tuesday, Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) briefly illuminated what would have been aggressive buy signals in a decent market. But they pulled back from early highs as the indices reversed course. Enphase energy (ENPH), after a one-day pullback, regained key support even after consolidating intraday gains. Tesla (D.S.L.A) and Shock wave medicine (Swat) hit resistance at their 50-day lines.

Meanwhile, Tesla CEO Elon Musk’s lawyers and Twitter (TWTR) faced Tuesday in another preliminary court hearing ahead of their takeover hearing in October. Musk is trying to get out of his $44 billion, $54.20-a-share takeover deal to buy Twitter. Legal experts say Musk has a strong case to go along with the Twitter deal, and Tuesday’s hearing reinforced that.

Twitter shares rose 1.4% to 42.11 on Tuesday. TWTR climbed modestly in late trading as the investigation continued.

After hatching, the egg is giant Quarter-mine foods (peace) reported stronger-than-expected earnings. Cal-Maine Revenue Revenue growth increased to 103% in the fifth quarter. CALM stock fell overnight. Shares rose 1.4% to 60.53 on Tuesday, on the edge of a buy zone.

ENPH Stock and Vertex are available IBD 50 And this IBD Big Cap 20. The video embedded in this article analyzes bear market action on Tuesday and Vertex, WWE and SWAV stocks.

Dow Jones Futures Today

Dow Jones futures rose 0.2% versus fair value, while S&P 500 futures rose 0.1%. Nasdaq 100 futures advanced 0.2%.

Remember that it is an overnight operation Dow futures The next routine elsewhere doesn’t necessarily translate into actual trading stock market session.


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Stock Market Tuesday

With stronger, broader gains on Tuesday morning than Monday, the stock market tried to rebound near the open. But the 10-year Treasury yield rose to a new 12-year high at 10 a.m. ET, spurred by several stronger-than-expected economic reports, while major indexes reversed lower, with the S&P 500 breaking below its June low. However, the indexes ended up with a narrower mix.

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The Dow Jones industrial average fell 0.4% on Tuesday Stock market trading. The S&P 500 index lost 0.2%. The Nasdaq composite rose 0.25%. The small-cap Russell 2000 rose 0.3%.

The 10-year Treasury yield rose 9 basis points to 3.96%, having touched 3.99% intraday. Since April 2010, the 10-year yield has not touched 4%. The two-year Treasury yield is at 4.3%, the lowest in the session.

The 30-year UK gilt yield hit 5% on Tuesday. The new UK government plans to borrow heavily to pay for tax cuts, while investors are betting that the Bank of England will raise rates sharply to support the pound. The pound rose on Tuesday but gave up most of its gains. That’s after a record plunge against the dollar on Monday.

U.S. crude oil prices rose 2.3% to $78.50 a barrel, up from their lowest level since January.

ETFs

in the middle Best ETFsInnovator IBD 50 ETF (FFTYrose 1.1%. iShares Expanded Technology-Software Sector ETF (VATUp 0.7%. VanEck Vectors Semiconductor ETF (SMH0.8% improved.

SPDR S&P Metals & Mining (XME) gained 2.8%. US Global Jets (JETS) rose 1.6%. SPDR S&P Home Builders (XHBrose 0.4%. Energy Select SPDR ETF (XLE) advanced 1.1% and Fund Choice SPDR ETF (45decreased by 0.4%. Health Care Select Sector SPDR Fund (XLVdecreased by 0.3%.

Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) and ARK Genomics (ARKG) both rose 2.1%. Tesla stock is the number one holding in Arc Invest’s ETFs.


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Stocks to watch

Vertex shares rose 2.9% to 284.74. Intraday, the stock touched 289.52, clearing the 50-day line and reaching a downtrend line. In an ideal environment, it would have a buy signal, but VRTX faded along with the stock market. The Relative strength line Another new peak was reached. Officer Point to buy 306.05 from a Flat base It is only 10% deep.

Apex and partner Crispr treatment (CRSP) said Tuesday that they will begin seeking FDA approval for the first approved treatment using the CRISPR gene-editing technique. Sickle cell disease and beta thalassemia are treated.

WWE stock reached as high as 69.95 intraday, breaching the 50-day mark and reclaiming an old, 68.83 buy point. It flirted with an early entry, but WWE stock edged lower before rebounding to 68.20 for a 0.75% gain. Wrestling Media has a flat base with a buy point of 75.33 Market Smith.

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ENPH stock rose 3.6% to 284.81, retrieving a 50-day line. Intraday, the stock touched 294.80, but hit resistance at the 21-day moving average.

SWAV stock rose modestly for the second straight session, rising 2.4% to 260.83. But the stock hit resistance at the 50-day line. So far this week, Shockwave stock is up slightly to moderate after falling 11.7% last week.

Tesla shares rose 2.5% to 282.94 on Tuesday. But shares hit resistance at the 50-day line, gaining slightly from 288.67 intraday. TSLA stock has a 314.74 buy point from a short base into a very large consolidation. Tesla hosts AI Day On Friday, Q3 global deliveries will be released at the end of the week.

Stock market analysis

For the second session in a row, the Bulls tried to fight back in the open. The Nasdaq rose as much as 2.2% within minutes of Tuesday’s session, surpassing Monday’s peak.

But as Treasury yields rose again, the major indexes corrected, erased, and reversed those gains.

The S&P 500, meanwhile, hit a June 17 low. The benchmark index joined the Dow Jones, which broke below its June 17 low on Friday. The Nasdaq has yet to end its June bear market low or Friday intraday.

Even as yields hit intraday highs, major indices returned to mixed levels.

The Cboe volatility index, or VIX, rose to a fresh three-month high, giving back intraday highs as stocks rallied late. The market fear gauge is at a level that at least represents a short-term bottom, but the past few days may have been telling. The VIX is not necessarily at a level that represents the bottom of a long-term bear market.

The inability of the market to last more than a few minutes is not encouraging. But even if the major indices rise solidly for a full day or two, it doesn’t mean much. The best market days in history have been in bear markets.

Some leading stocks tried to bounce back on Tuesday, but they pared gains with the market, including shares of WWE, Shockwave and Tesla.

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A bear market could be at the top starting a new leg down. It is still possible for the market to bottom around the June low, although this does not indicate a quick transition to a powerful rally. There is a possibility that the market will come close to the limit for weeks or months.

It’s hard to see the S&P 500 and the overall stock market having a sustained rally with Treasury yields and the dollar rising. Perhaps the 10-year yield will hit resistance at the 4% level. A pullback can trigger a stock market rally.

Still, Treasury yields won’t break their gains unless the Fed signals slower rate hikes. Policymakers haven’t given such a hint, and likely won’t until inflation drops significantly and labor markets weaken. The 10-year yield may have topped earlier, but that could reflect expectations of a clear U.S. recession. Going into a recession is not a recipe for a stock market boom.

However, markets are now leaning slightly toward a fourth straight 75-basis-point rate hike in November. Markets are now divided between the year-end fed funds rate of 4%-4.25% vs. 4.25%-4.5%, which has modestly declined since Monday.


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What to do now

A strong open in a bear market over the past two days has shown the dangers of buying stocks.

Investors should be patient and wait for real signs of strength, not just a few strong minutes or a good day. Even if a market rally takes place a Day after day Going forward, there may be reasons to be cautious. While at the mercy of the Federal Reserve and the bond market, the major indices have several resistance levels.

Work with lots of money on your watch lists. Relative strength is paramount. But many relative leaders are struggling and below their 50-day mark.

According to Big picture Each day should be in sync with the direction of the market and the leading stocks and sectors.

Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.

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