S&P 500 Tops Key Level In Market Rally; Riots Hit Apple iPhone Factory In China

Dow Jones futures edged higher early Wednesday, along with S&P 500 futures and Nasdaq futures. The stock market rally resumed on Tuesday, with the S&P 500 regaining the 4,000 level. A huge Apple iPhone factory in China faced unrest overnight under Covid restrictions.




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Deere (DE) reported better than expected earnings early Wednesday. DE shares jumped in premarket trading, signaling a move out of the buy zone.

Deere’s earnings and guidance are important to a variety of agriculture stocks, including CF Industries (CF) and Archer Daniels Midland (ADM), as well as machinery manufacturers such as Caterpillars (CAT).

Energy stocks continue to do well. Solar leader Enphase energy (ENPH), coal producer Peabody Energy (BTU), Refiner CVR Energy (CVI), natural gas producer EQT Corp. (EQT) and LNG stocks Excelling energy (EE) are all close to buy points.

EE stock broke out on Wednesday, with Enphase returning to a buy zone. BTU stock, CVR Energy and EQT are manageable.

ENPH stock is on IBD’s leaderboard. EQT is on SwingTrader shares. Deere stock is on the IBD 50. Peabody Energy is Tuesday’s IBD Stock Of The Day.

Apple iPhone Factory Riots

Riots broke out overnight at one of Apple’s biggest iPhone factories in China, as hundreds of workers battled security. Over 100,000 workers were forced to live at the Foxconn campus in Zhengzhou for weeks due to Covid concerns, with many reportedly not being paid during that time.

Protests are also being recorded elsewhere amid renewed lockdowns and severe restrictions across much of China as Covid cases rise.

Apple recently warned that Apple iPhone 14 Pro models were in short supply due to the Foxconn factory in Zhengzhou.

Apple stock fell a fraction early Wednesday. AAPL rose 1.5% to 150.18 on Tuesday, finding support near its 50-day line but still below its 200-day moving average.

Dow Jones futures today

Dow Jones futures were down 0.1% vs. S&P 500 futures rose 0.1%. Nasdaq 100 futures rose 0.1%.

The 10-year Treasury yield rose 1 basis point to 3.77%.

Crude oil futures fell 2%. US natural gas prices jumped 7%. On Tuesday, Europe released details of a natural price cap, to start one year from January 1, that is more than double current levels.

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New Zealand’s central bank raised interest rates by a record 75 basis points, as expected.

Fed minutes from the November meeting will be released on Wednesday.

Keep in mind that overnight action in Dow futures and elsewhere does not 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 opened mixed Tuesday, but gained momentum for broad-based gains, closing near session highs.

The Dow Jones Industrial Average rose 1.2% in Tuesday’s stock market trading. The S&P 500 Index and the Nasdaq Composite both jumped nearly 1.4%. The small-cap Russell 2000 rose 1.1%.

The 10-year Treasury yield fell 7 basis points to 3.76%. But the two-year Treasury yield, more closely linked to Fed policy, was roughly flat at 4.53%.

The dollar, after rallying for the previous three sessions, fell back on Wednesday. The greenback has fallen significantly since the end of September, especially since the beginning of November.

U.S. crude oil prices rose 1.1% to $80.95 a barrel, continuing a rebound from Monday’s short-lived dip. Gasoline futures jumped 4.3%, good news for refiners. Natural gas futures edged higher after falling more than 2% intraday.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF ( FFTY ) jumped 3.4%, helped by a number of energy and metals stocks. The quotes of the shares of the iShares Expanded Tech-Software Sector ETF in 2019 changed to +1.8%. VanEck Vectors Semiconductor ETF stock price

SPDR S&P Metals & Mining ETF (XME) rose 3.2%, and Global X US Infrastructure Development ETF (PAVE) rose 1.3%. The quotes of the shares of the SPDR S&P Homebuilders ETF in 2019 changed to +1.92%. The quotes of the shares of the Energy Select SPDR ETF in 2019 changed to +3.11%. The Health Care Select Sector SPDR Fund ( XLV ) rose 0.9% to a seven-month high.

Reflecting stocks with more speculative stories, ARK Innovation ( ARKK ) posted a gain of 0.3% and ARK Genomics ( ARKG ) dropped 0.4%.

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Five Best Chinese Stocks To Watch Now


Energy shares near buy points

Enphase shares rose 4% to 320.44, closing above a 316.97 cup-with-handle buy point for the first time. However, the last three times ENPH stock has risen to these ranges, it has returned lower. Enphase stock tends to have large daily swings. So investors could be watching to see if ENPH stock pulls back to its rapidly rising 21-day moving average.

Some other LNG stocks are showing strength, with Flex LNG (FLNG) break out and Chenière Energy (LNG) to retrace its 50-day line.

BTU stock jumped 6.7% to 29.62, just below a 30.15 handle buy point in a seven-month consolidation. Tuesday’s move broke the trend line of the handle, providing an early entry. However, BTU stock is 9.3% above its 21-day line and 17% above its 50-day. The deal formed after strong Peabody Energy earnings.

CVR Energy stock rose 4.85% to 40.85, back above an old 39.81 buy point that can still be considered valid. Also, CVI stock has a three-week closing pattern with a 42.31 entry. Getting above 41.31 could provide an early entry into the tight pattern.

EQT stock jumped nearly 6% to 43.79, breaking back above the 50-day line after rebounding from the 200-day on Monday. The shares are breaking a downward trendline. The official buy point is 52.07.

EE stock rose 9.6% to 30, clearing a 28.49 cup-with-handle buy point on above-average volume, according to MarketSmith analysis. That move to a record close erased a lot of trading that took place going back to Excelerate Energy’s April IPO. EE stock had flashed early entries on Friday and Monday, although trading on those days was below normal. Excelerate is now slightly extended out of the buy zone and well extended out of the 21-day line.

Market Rally Analysis

The stock market rally continues to show constructive action, trading in a narrow range after a modest pullback and support last week. On Tuesday, the main indexes recovered from Monday’s losses.

The S&P 500 pulled back from its 10-day line, right at the 4,000 level, as it moves toward its 200-day line. While not above the November 15 intraday high, it was the index’s best close in more than two months.

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The 50-day line is just starts higher on the S&P 500.

The Russell 2000 is getting very close to its 200-day mark. The S&P MidCap 400, which held its 200-day line last week, continued to make gains.

The leading Dow Jones topped the 34,000 level for the first time in three months, just below the Aug. 16 high. The laggard Nasdaq found support at its 21-day line, just above its 50-day, but did not retrace all of Monday’s losses.

All of these indices are working on handles, with the Dow cutting on top. Most stocks follow the action of the major indexes, so many handles form on stocks near buy points. A slightly longer break, perhaps until key economic reports late next week, will see moving averages begin to pick up.


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What to do now

Until the S&P 500 moves decisively above its 200-day line, investors may not want to add much exposure right now. With the Thanksgiving holiday muting trade and Fed-critical economic data next week, the market rally could be rangebound in the short term.

That could help stocks from different sectors set up handles and win moving averages. Investors should build their watch list. It’s definitely a time to look beyond traditional tech growth stocks, which are mostly at the moment.

Given that many leaders of moving averages are extended, such as Excelerate Energy or BTU stock, it is all the more important to look for early entries and act quickly.

Read The Big Picture daily to stay in sync with market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter @IBD_ECarson for stock market updates and more.

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