Dow Jones futures rose slightly Tuesday morning, along with S&P 500 futures and Nasdaq futures, after the long Christmas weekend. China's government announced further big Covid policy easings even amid a massive outbreak.
Tesla Shanghai halted production on Christmas Eve while China rival Nio unveiled new models. Nio cut Q4 delivery guidance, citing Covid disruptions, after EV giant BYD warned of weaker production due to Covid among staff.
BYD still reported huge, higher weekly EV deliveries last week, while Tesla and Nio saw week-to-week declines.
The stock market rally just finished another difficult week, but did bounce from Thursday's lows. The major indexes were mixed, but many leading stocks came under further pressure. The uptrend is looking shaky but isn't finished yet.
It's not a good time to be buying stocks, especially growth names. But investors should always be looking for potential growth leaders for the next sustained market rally. Shift4Payments, Celsius, Impinj, Enphase Energy and Box are holding up relatively well in the current weak market. FOUR stock and Box are consolidating near recent highs, while Impinj, Celsius and ENPH stock are trading around the 50-day or 10-week lines. None are actionable right now, and all could buckle if the market continues to weaken. But keep an eye on them.
ENPH stock is on IBD Leaderboard, with PI stock on the Leaderboard watchlist. Enphase, Shift4Payments, Box and CELH stock are on the IBD 50. ENPH stock also is on the IBD Big Cap 20. Shift4Payments was Friday's IBD Stock Of The Day.
But growth megacaps had a rough outing, notably Apple, Nvidia and Tesla.
Tesla Shanghai Production Halted
Tesla Shanghai halted production on Dec. 24, with workers set to return Jan. 1, 2023. Shanghai production will remain light in January, with an extended Lunar New Year shutdown from Jan. 20-Jan. 31, Reuters reported.
A year-end production halt had been widely reported in recent weeks. Shanghai had already slowed output earlier in the month, with inventories building up rapidly despite a late October price cut and substantial year-end incentives. Some workers for Tesla and suppliers have come down with Covid as well.
Tesla, which had previously denied output would be suspended, said the shutdown was for annual planned maintenance.
Last week, Tesla stock dived 18% to 123.15 after plunging 16.1% in the prior week. Those are the worst weekly losses since the March 2020 Covid crash. TSLA stock is at a 27-month low, down 70% from the November 2021 peak.
Tesla stock fell 5% early Tuesday.
China EV Registrations
In the week ended Dec. 25, some 51,636 BYD vehicles were registered, up from 50,462 and 44,817 in the prior two weeks. BYD said last week that Covid cases among workers is cutting production by 2,000-3,000 vehicles per day.
Despite final incentives, Tesla registrations fell to 8,915, down from 10,254 and 12,977.
Nio registrations slipped to 2,690 from 3,464. The EV startup now expects to deliver 38,500-39,500 vehicles in Q4, well off prior guidance of 43,000-48,000. That implied December sales of 14,263-15,263, which would still be a record high.
Li Auto registrations improved to 5,155 from 4,558 and 3,013. XPeng had 2,536 vs. 3,257 in the prior week.
Nio stock retreated 5% before the open. LI stock and XPeng fell slightly. BYD stock, which trades over the counter in the U.S., was not yet trading.
Nio, Li Auto and XPeng will likely release December, Q4 and 2022 deliveries data on Sunday, Jan. 1. Tesla will likely release global Q4 and full-year deliveries on Jan. 2, with BYD also reporting early January.
Nio Day 2022
Nio, at Saturday's Nio Day 2022, unveiled the EC7 coupe SUV, a likely Tesla Model Y competitor on the high end. EC7 deliveries will start in May 2023. Nio also unveiled a revamped ES8 SUV, now on the NT 2.0 platform like its all-new models. Deliveries begin in June.
Nio also announced next-generation battery swap stations and charging options.
Nio production is ramping up with strong demand for its newer ET5 sedan and ES7 crossover SUV.
Dow Jones Futures Today
Dow Jones futures rose 0.4%. S&P 500 futures climbed 0.4%. Nasdaq 100 futures advanced 0.2%, with TSLA stock curbing gains.
Futures are off premarket highs.
The 10-year Treasury yield rose 4 basis points to 3.79%.
Crude oil futures rose slightly, right at $80 a barrel. Copper popped 2%.
Commodities are rising on China optimism. China announced further Covid policy easing, downgrading the coronavirus emergency to a lower level. It's also scrapping Covid quarantine rules for inbound travelers on Jan. 8. But there is a massive infection wave underway, with most people in China with little or no natural immunity and mediocre vaccines.
U.S. holiday sales rose 7.6% from Nov. 1-Dec. 24 vs. a year earlier, according to Mastercard SpendingPulse. E-commerce sales climbed 10.6%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock Market Rally
The stock market rally fell solidly during the week, but did finish off the worst levels of the week.
The Dow Jones Industrial Average rose 0.9% in last week's stock market trading. The S&P 500 index dipped 0.2%. The Nasdaq composite sank 1.9%. The small-cap Russell 2000 finished just above break-even.
Apple stock fell 2% to 131.86 in the past week. It's testing its June bear-market low of 129.04, sliding to 129.64 Friday morning.
Nvidia stock tumbled 8.2% to 152.06, following a nasty reversal back below the 200-day line in the prior week, amid a broad chip sell-off. NVDA stock did find support at the 50-day line on Friday.
The 10-year Treasury yield jumped 27 basis points to 3.75%. The inverse relationship between Treasury yields and stock prices has faded in the past several weeks.
U.S. crude oil futures jumped 6.9% to $79.56 a barrel during the week, briefly topping $80 on Friday.
Tesla Buckles Up For A Very Interesting 2023
ETFs
Among the best ETFs, the Innovator IBD 50 ETF edged down 0.3% last week, while the Innovator IBD Breakout Opportunities ETF rose 0.7%. The iShares Expanded Tech-Software Sector ETF fell 1.8%. The VanEck Vectors Semiconductor ETF tumbled 4.7%, with NVDA stock a major SMH holding.
SPDR S&P Metals & Mining ETF rose 1.6% last week. The Global X U.S. Infrastructure Development ETF edged up 0.75%. U.S. Global Jets ETF descended 1.3%. SPDR S&P Homebuilders ETF declined 1.25%. The Energy Select SPDR ETF bounced 3.2% and the Financial Select SPDR ETF edged up 0.8%. The Health Care Select Sector SPDR Fund nudged 0.4% higher.
Reflecting more-speculative story stocks, ARK Innovation ETF tumbled 6.9%, hitting a new five-year low on Thursday. ARK Genomics ETF skidded 5.6% last week. Tesla stock remains a top holding across Ark Invest's ETFs.
Five Best Chinese Stocks To Watch Now
Growth Stocks To Watch
Shift4Payments stock rose 4.1% to 54.06 last week. FOUR stock has had wild swings, but has tightened up in the past couple of weeks near seven-month highs. The relative strength line is at its highest level in eight months, reflecting Shift4's outperformance vs. the S&P 500 index. Still, FOUR stock doesn't have a clear buy point right now.
Shift4 earnings and sales growth accelerated in the latest quarter, with the company significantly expanding its target markets.
CELH stock fell 1.85% to 106.79 last week, consolidating just below the 21-day line and approaching the 10-week line. Celsius stock briefly topped a 118.29 cup-base buy point earlier this month before pulling back. But that's let the 10-week line catch up, while the RS line has held near highs. A strong rebound from the 10-week line and above the 21-day line would also break a short downtrend, offering an early entry for CELH stock.
Celsius has booming sales growth and should see strong earnings in 2023, but the energy-drink maker has a caffeinated valuation.
Impinj stock rose 4 cents to 111.87, with Friday's 2.9% decline bringing it down to the 50-day and 10-week lines for the first time since a powerful earnings gap-up breakout on Oct. 27. PI stock has pulled back modestly for four straight weeks from record highs, but its RS line has barely fallen. A bullish bounce from the 50-day line would offer an early buy point.
Impinj earnings have soared in 2022, with robust gains seen next year.
Enphase stock slumped 3.1% to 293.95 last week, below the 50-day line. A 316.97 buy point from a cup-with-handle buy point is no longer valid. The always-volatile ENPH stock may be a few weeks into a new consolidation. A bullish move from the 50-day line — perhaps retaking the old buy point — could offer an aggressive entry.
Enphase earnings and revenue growth is ramping up fast, with solid growth seen in 2023 and beyond with solar incentives in place for years to come.
Box stock traded tightly the past couple of weeks, dipping 0.7% to 31.01. The cloud-based data storage firm is at the edge of a buy zone from a 29.57 cup-with-handle buy point, according to MarketSmith analysis, following a Dec. 12 breakout. The recent pause could be seen as a handle to an eight-month consolidation. That buy point is 31.10, but investors could look for an early entry. Ideally, the 21-day line would catch up and the 50-day line would narrow the gap with Box stock.
Box earnings growth has accelerated for the past two quarters.
Market Rally Analysis
The stock market rally remains under heavy pressure. The major indexes were mixed for the week, not bouncing back after the prior week's big, ugly outside week.
The Dow Jones rose modestly for the week after testing its 50-day line multiple times.
The S&P 500 fell modestly, but that masked some big swings during the week. The benchmark index just reclaimed its 50-day moving average on Wednesday. On Thursday, the S&P 500 and other major indexes fell to their worst levels in weeks, but did close off lows.
On Friday, the S&P 500 rose slightly, but below its 50-day line. The Invesco S&P 500 Equal Weight ETF, with less weight to tech titans such as Apple, rallied Friday to just reclaim its 50-day.
The Nasdaq was the big laggard, with Tesla stock and Nvidia among the notable laggards. But there was broad weakness for growth stocks, especially among chip names following weak results and guidance from memory-chip maker Micron Technology.
The S&P 500 needs to regain the 50-day line, but that would be just a first step.
It's unclear if the market will rebound, tumble toward bear lows or move sideways in a choppy fashion for an extended period. The latter may be more likely until there is some clarity over when and where the Fed will stop hiking rates, and whether the economy will slip into a clear-cut recession.
While growth stocks such as Enphase and Celsius are worth watching, many medical stocks and other defensive growth plays are holding up. Metal and mining, industrial, housing and some energy plays are doing relatively well.
Time The Market With IBD's ETF Market Strategy
What To Do Now
The stock market feinted higher and lower during the week, with the technical picture not changing dramatically. Aside from the Dow Jones, the major indexes are below key moving averages. Leading stocks have been hard to hold, at best.
Investors should have minimal exposure and be wary of adding new positions. Don't get excited by a strong open or even a bullish session or two.
Keep your watchlists fresh. A lot of stocks from a variety of sectors are setting up or setting up to set up. Some names are showing strong relative strength but don't have a clear buy point. That's OK right now.
Meanwhile, spend some time reviewing your trades over the past year, including your big winners and losers, and the trades you didn't make but wish you had. Were you following your rules, and were your rules sound?
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.
