Dow Jones futures rose strongly early Wednesday morning, along with S&P 500 futures and Nasdaq futures. Bitcoin soared on friendly signals from the Biden administration while crude oil and gold pulled back after soaring in recent days and weeks.
Those gains suggest that a follow-through day could be in play to confirm the struggling stock market rally. But not all FTDs work, and it's a long way before Wednesday's closing bell.
The stock market rally attempt whipsawed Tuesday on Russia-Ukraine headlines, swinging from significant losses to big gains before closing lower.
President Joe Biden announced a U.S. ban on Russia crude oil imports on Tuesday, trying to increase the economic pain vs. Russia for its Ukraine invasion. Not long after, Russian President Vladimir Putin signed a decree announcing a halt to many exports and imports, but with the actual goods to be determined later.
The U.S. appeared to nix a proposed Poland-to-U.S.-to-Ukraine fighter jet swap.
Apple unveiled a lower-cost 5G-enabled iPhone at its spring product event. It also said it will stream Major League Baseball on Apple+. Apple stock fell modestly.
Zim Integrated Shipping reported fourth-quarter earnings surged 366% vs. a year earlier early Wednesday. The container shipping specialist sees 2022 EBITDA of $7.1 billion to $7.5 billion, up from 2021's $6.6 billion. Zim will pay out a dividend of $17 a share.
ZIM stock leapt 9% early Wednesday, signaling a new high. Shares climbed 2.5% to 70.69 on Tuesday, rising off support at the 21-day moving average.
Meanwhile, Quanta Services jumped 8.1% to 116.76, flashing an early entry from a trendline. Quanta provides heavy construction services to the energy sector, from oil and gas to electrical grids to renewables. The relative strength line for PWR stock hit a record high. The RS line, the blue line in the charts provided, tracks a stock's performance vs. the S&P 500 index.
Finally, a number of hard-hit giants rebounded Tuesday, including Tesla and Nvidia. But they remain far from any kind of buy points.
The video embedded in this article covers the wild market action and analyzes Callon Petroleum, Apple stock and PWR stock.
Tesla stock and Nvidia are on IBD Leaderboard. ZIM stock and Callon are on the IBD 50. PWR stock was Tuesday's IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures rose 1.7% vs. fair value. S&P 500 futures popped 1.8%. Nasdaq 100 futures leapt 2.3%.
Crude oil futures fell more than 3% early Wednesday, reversing overnight gains. The American Petroleum Institute reported a modest build in U.S. crude stockpiles, with gasoline supplies down modestly and distillates down solidly.
The 10-year Treasury yield rose 3 basis points to 1.9%.
Gold fell 1% after spiking to just short of a record high on Tuesday. Wheat futures pulled back solidly after going vertical during Russia's Ukraine invasion.
Bitcoin jumped 9% overnight after a Treasury Secretary Janet Yellen statement appeared to show a more-positive view of cryptocurrencies and for regulators to coordinate their work. The statement, which was quickly pulled from online, is in response to an upcoming Biden executive order.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Russia Crude Oil Ban
President Biden banned U.S. imports of Russian oil, natural gas and coal, in the latest response to the Ukraine invasion. U.S. imports of Russian energy are relatively low. With gasoline prices already at record highs, Biden said they're going to keep rising, blaming Russia.
The U.K. said it will ban Russian crude, but over several months. The European Union, which uses a lot more Russian energy, isn't announcing a ban, but said it aims to cut two-thirds of Russian gas imports by year-end. That could be ambitious, with many member nations reluctant to take steps that would push energy costs even higher.
Still, these moves, and public outcry, may spur more "self-sanctioning" by potential buyers, traders and shippers. Russian crude has struggled to find buyers. Oil major Shell apologized Tuesday for buying some Russian crude last week at a deep discount, saying it'll end all spot buys of Russian oil.
Meanwhile, Putin said Russia would ban imports and exports of many goods through Dec. 31, but no actual items were named yet. In addition to oil and natural gas, Russia is a significant supplier of nickel, palladium and some other key raw materials.
Crude oil prices spiked above $129 a barrel intraday in anticipation of the Russia crude oil ban, slashed gains after Biden's actual announcement, then ran up again on Putin's export decree. U.S. crude closed up 3.6% to $123.70 a barrel.
It was a wild day for many shale operators too. CPE stock shot up to a record 66.12, then tumbled to 56.81. Callon Petroleum finally settled with a 0.5% gain to 60.98.
Russia's Ukraine Invasion
Russia continues to shell major Ukrainian cities, with barrages once again halting civilian evacuations along designated humanitarian corridors.
In another move countering Russia's Ukraine invasion, Poland says it's ready to turn over its Soviet-era MiG-29 fighter jets to the U.S. at its Ramstein Air Base in Germany. The idea would that the U.S. would turn those jets over to Ukraine, whose pilots are familiar with MiGs, and give F-16s or other jets to Poland in return.
The Defense Department, however, said Tuesday night that flying planes from a U.S. base in Germany into Ukraine, raises "serious concerns from NATO," apparently worrying that this might cross a red line with Russia. The U.S. would likely prefer a land transfer from Poland into Ukraine. Members of Congress are already objecting to the Pentagon's stance.
Ukraine President Volodymyr Zelenskyy urged NATO countries to resolve the details and make fighter jets available to Ukraine.
The U.S. could sanction Chinese companies that aid Russia, defying sanctions, Commerce Secretary Gina Raimondo.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally tumbled, rebounded and closed modestly lower. The Dow Jones Industrial Average fell 0.6% in Tuesday's stock market trading. The S&P 500 index lost 0.7%. The Nasdaq composite dipped 0.3% after falling more than 1% and rising over 2% intraday. The small-cap Russell 2000 rose 0.6%, though it finished near session lows.
The 10-year Treasury yield jumped 12 basis points to 1.87%, while the 2-year yield only rose 6 basis points to 1.61%.
Among the best ETFs, the Innovator IBD 50 ETF fell 1.2%, while the Innovator IBD Breakout Opportunities ETF edged down 0.1%. The iShares Expanded Tech-Software Sector ETF slipped 1%. The VanEck Vectors Semiconductor ETF gained 1.5%. Nvidia stock is a major SMH component.
SPDR S&P Metals & Mining ETF gave up 0.9% and Global X U.S. Infrastructure Development ETF dipped 0.5%. U.S. Global Jets ETF ascended 4.7%. SPDR S&P Homebuilders ETF edged up 0.1%. The Energy Select SPDR ETF climbed 1.6% and the Financial Select SPDR ETF sank 0.6%. The Health Care Select Sector SPDR Fund skidded 2%
Reflecting more-speculative story stocks, ARK Innovation ETF rose 1%, after hitting a fresh 20-month low intraday. ARK Genomics ETF picked up 1.3%. Tesla stock remains the No. 1 holding across Ark Invest's ETFs.
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Apple iPhone Event
The Dow Jones giant unveiled a new Apple iPhone SE with 5G capability. It'll go on sale on March 18. The new iPhone SE price, $429, is higher than the older version at $399. The current cheapest 5G iPhone, the iPhone 12 Mini, costs $599. The new iPhone SE is expected to do well in China and India.
Apple also unveiled new Mac computers and its latest in-house processor, the high-end M1 Ultra chip.
Apple+ will stream MLB games on Fridays.
Apple Stock
Apple stock fell 1.2% to 157.44, starting to approach its 200-day line once again. While above their Feb. 24 lows, shares had their worst close since late November. AAPL stock has a 176.75 double-bottom base buy point. Investors could use a trendline from the Jan. 4 peak to find an early entry modestly above the 50-day moving average.
Apple stock has held up better than the vast majority of techs. It's only 13% off its all-time high. The RS line for AAPL stock is just below record levels, according to MarketSmith analysis.
Market Rally Analysis
The stock market rally attempt came close to failing Tuesday, then signaled a possible follow-through day before closing down moderately.
The rebound came with the major indexes, especially the Nasdaq, coming very close to their Feb. 24 lows. In many ways, Tuesday's action felt like another bottoming day, like Jan. 28 or Feb. 24.
The major indexes remain well below where they closed on Feb. 24, and under their 10-day moving average.
A follow-through day at the current levels would seem somewhat suspect. At the very least, a truly powerful FTD would suggest that the action is more-meaningful that just the latest big market swing.
Still, even a confirmed uptrend would face a number of hurdles. First up: retaking the 21-day moving average, which has served as resistance for the past several months. Just above the 21-day line are the March 3 intraday highs. Beyond that are several more key levels.
On the downside, the major indexes don't have far to fall before breaking below Feb. 24 lows. All of them set fresh multimonth lows on Tuesday. The Nasdaq composite remains in bear-market territory.
The market remains extremely news driven. Regardless of the technical picture for the major indexes and stocks, positive or negative headlines related to Russia's Ukraine invasion have the potential to trigger immediate positive and negative reversals. Biden's Russia crude oil ban and Putin's export ban decree are just the latest examples.
Key Sectors, Stocks
Energy stocks were up and down while fertilizer and steel stocks retreated. Rail operators sold off, after looking so promising to start the week. Health insurers are still holding up reasonably well.
A lot of beaten-down techs had strong sessions, but as with the general market it's hard to know if this is more than a one-day bounce. Tesla stock rose 2.5% to 824.40, but hit resistance near the 200-day line. While holding up better that almost all other EV plays or ARK-type stocks, TSLA stock remains below its 21-day line and significantly below its short-term February highs.
Nvidia stock edged up 0.8% to 215.14, but off session highs and after hitting a five-month low intraday. Shares remain well below their 200-day line.
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What To Do Now
Given the weak, volatile market action in recent days and months, investors should be extremely wary of having anything more than modest exposure.
Limit your exposure to strong sectors of the market. Even then, investors should watch out for big volatility in those sectors, and consider taking partial profits.
The next clear market uptrend could come tomorrow, next week or months from now. But don't predict, prepare. Keep working on those watchlists.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
