Stock Market Shakes Off Gloom; Tesla Short Squeeze; Apple Bear Market Low


Stock market indexes rose in Thursday’s premarket and added to gains through the first hour of trading. Oversold technical readings and the end of tax-selling sessions could keep buying interest growing into Friday’s year-end finale.




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The year’s tax-loss selling season is coming to an end, ahead of next week’s clean slate. Hopefully, the January Effect will then kick into gear, lifting this year’s biggest losers off 52-week and multiyear lows.

The Dow Jones Industrial Average rallied 1% in the first hour while the S&P 500 added 1.6%. Small caps attracted strong interest as positive seasonality approaches, lifting the Russell 2000 nearly 2%. The Nasdaq composite outdid small-cap gains, up 2.1%.

Nasdaq and NYSE volume rose modestly compared with the first hour of Wednesday’s session, as we creep closer to the long holiday weekend. U.S. stock exchanges will be closed on Monday for New Year’s Day.

The 10-year Treasury note yield slid nearly 0.5%, or 3 basis points, to 3.86%. Crude oil slipped more than 1.5% to $77.60 per barrel. Asian and European markets were mixed in quiet holiday trading.

In the crypto world, Bitcoin slumped near November lows, trading around $16,600, while Coinbase (COIN) bounced off Wednesday’s all-time low at 31.83.

The S&P 500 and Nasdaq are trading below their 50-day moving averages. The Dow is holding just above its 50-day and 200-day moving averages, unlike other benchmarks, but trading too close for comfort.

Stock Market: Apple Hits Bear Market Low

Dow component Apple (AAPL) sliced through double-top support around 130 on Wednesday, dropping to an 18-month low at 125.87, and is trying to recover. Its Relative Strength Rating has declined to a miserable 24, the lowest reading since November 2021. However, long-term support at and below 120 could limit downside pressure in coming weeks. AAPL shares are trading 2.7% higher Thursday morning.

The tech icon is expected to close out its September-ending fiscal year 2023 with minuscule 1% earnings growth. However, growth is expect to surge 10% in fiscal 2024. Mutual funds are still heavily invested, with ownership rising in each of the last three quarters.

Has Tesla Bottomed Out?

Tesla (TSLA) sold off to around 104 in Wednesday’s premarket and bounced strongly after news that fund manager Cathie Wood bought 17,000 shares for her troubled ARK innovation ETF (ARKK).

The EV automaker surged over 120 in Thursday’s early stock market action, continuing an oversold bounce. Tax-loss selling pressure is coming to an end while short sellers are getting too aggressive. This may set the stage for a torrid January short squeeze that lifts Tesla back above 160 or 170.

The best Tesla news so far this week? Elon Musk is keeping his mouth shut and avoiding more brand-killing tweets about his Twitter adventures.

Stock Market Movers And Shakers

The Innovator IBD 50 ETF (FFTY) sold off 1.4%, ignoring the broad-based rally wave.

IBD 50 component D.R. Horton (DHI) is forming the handle of a 262-day-old cup-with-handle base and is trading just 5% below the 92.55 buy point. DHI shares rose 1.2% in the first hour.

Homebuilders have made a surprising appearance on the IBD 50 in recent weeks, suggesting many investors expect the group to bottom. It could be wishful thinking because monthly home sales data continues to disappoint, with 10 consecutive months of negative numbers.

However, low supply should keep a floor under homebuilders in coming months while positive demographics kick into gear. Specifically, millions of millennials have entered their nesting phases, with spouses and babies demanding larger living quarters. And, in the end, many of these folks will have no trouble paying 6% or 7% 30-year mortgages.

Also in the IBD 50, Box (BOX) continues to build a constructive bull flag pattern that’s slipped back into the buy zone. For IBD readers, the pattern is also shaping up to be a three-weeks-tight formation. This follows a Dec. 12 breakout above a 29.55 buy point of a cup with handle. The pullback is about to test support at the 21-day exponential moving average. BOX shares rose 2% in early trading.

Follow Alan Farley on Twitter at @msttrader.

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Market Regains Key Level; Tesla Doubles U.S. Discount

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