Stock indices reversed from an open spike and sold off by lunchtime on the first trading day of 2023. You’re here (TSLAfell nearly 13% to its lowest level in two years after the automaker missed delivery estimates. Gold hit a six-month high as the mantra of 2% inflation attracted a crowd of skeptics.
X
The end of the fiscal sell-off season and a clean slate encouraged investors to redeem depressed stocks early Tuesday, but bearish macro issues brought the bears strong.
The Dow Jones Industrial Average fell 0.6% in the first half, while the S&P 500 lost 0.9%. Small caps attracted early interest as positive seasonality took control, but the Russell 2000 matched the blue chip losses at lunchtime. The Nasdaq composite led the decline with a 1.3% decline.
Nasdaq and NYSE volume rose by high double digit percentages from the first half of Friday’s holiday session.
The yield on 10-year Treasury bills slipped about 2.3%, or 8 basis points, to 3.80%. Crude oil slid more than 3.4% to $77.60 a barrel. European markets rose in unison while Asian markets were mixed, weighed down by the Nikkei’s 1.3% loss.
In the crypto world, Bitcoin has been operating above November lows, trading around $16,600, while Coinbase (PIECE OF MONEY) traded just above last week’s all-time low at 31.83.
The S&P 500 and Nasdaq are trading below them 50-day moving averages. The Dow opened the session just above its 50-day line and broke support, but the index remains solidly above its 200-day line. IBD’s current outlook remains at “correcting market”. Investors are advised to keep their powder dry as early 2023 market trends are revealed.
Stock market: the week ahead
December jobs data will dominate economic reports this week, with Friday’s JOLT, ADP and Nonfarm Payrolls report also due. However, companies are likely to delay major job cuts until January or February to avoid backlash from workers and bad press over the holiday season. As a result, the February data could be much more illuminating. The Fed minutes and the ISM manufacturing mark the key events in Wednesday’s economic calendar.
Dow Jones component Walgreens Boot Alliance (WBA) publishes its results on Thursday. The drugstore chain recently failed in an attempt to break its 50- and 200-day moving averages. WBA stock has been stuck in a downtrend since its peak in 2015.
Retailer in difficulty Bed bath and beyond (BBBY) must also report that day.
Apple at 52-week low
Dow Jones component and technology icon Apple (AAPL) ended a double-top breakdown after a week-long test, falling to an 18-month low. AAPL stock traded down 4.2% at lunchtime.
A final intermediate support level could come into play near 120, perhaps in time for January 1st. 26 income report. However, it is not wise to think too much about declines in this dangerous market environment, as bear markets often do not care about technical support levels, at least during active declines.
Gold at six-month high
SPDR Gold Trust (gld) hit a six-month high on Tuesday morning, completing a successful test at the 200-week moving average. The yellow metal bottomed as the Federal Reserve completed the transition in the fourth quarter from 75 basis point hikes to 50 basis points.
Gold ended a four-year decline in early 2016, after testing the $2,000 level in 2011. It made a round trip to the previous peak in August 2020 and started a base pattern which collapsed last September. The contract and the fund have now moved up from the broken base support, signaling further growth and buying interest. However, there is still a ton of resistance above 180 on the fund and around $1,900 on the futures contract.
The rally suggests skepticism about the central bank’s obsession with a return to 2% inflation, which has characterized the past decade. At some point, bankers will admit that those days are over for now, and perhaps our lives, as core inflation returns to much higher long-term standards. This admission could trigger a rapid breakout in gold to all-time highs.
Stock market movers and shakers
Tesla sold at 108 last week and rebounded above 124 at the end of 2022. It was down nearly 13% at midday Tuesday after reporting fourth-quarter deliveries of 405,000 and 1.3 million vehicles for the full year. This marked a 40% year-over-year growth, which was below estimates.
The electric vehicle maker undercut the December price. 28 low around 108, but TSLA stock traded around 104 in pre-market that morning. More importantly, it looks like a classic test of “round number” support at 100, with sell stops and buy orders naturally congregating around these psychological levels.
The Innovator IBD 50 ETF (FFTY) matched blue-chip losses, down 1.1%.
IBD 50 Components Griffin (gff) pulled off the top of a six-week flat base that criss-crossed the buy zone from a buy point of 33.63. GFF stock is trading near an all-time high.
The building builder has posted double- to triple-digit profit growth in each of the past four quarters.
Wynn Resorts (WYNN) and Las Vegas Sands (LVS) both rose more than 3% after Wells Fargo’s upgrades, in response to China’s reopening of its economy and its impact on Macau casino revenue.
Meanwhile, Macau’s Gaming Inspection and Coordination Bureau just announced that December revenue fell 56% after an equally fierce drop in November.
These dire numbers, on top of already depressed revenues, highlight the difficult road ahead for both station operators.
Follow Alan Farley on Twitter at @mstrader.
YOU MIGHT ALSO LIKE:
What is CAN SLIM? If you want to find winning stocks, you better know
IBD Live: learn and analyze growth stocks with the pros
Looking for the next big winners in the stock market? Start with these 3 steps
Want more information on IBD? Subscribe to our investing podcast
Attempt to rally in progress; Tesla jumps amid EV credit rules
0 Comments