Dow Jones futures will open on Monday evening, as well as S&P 500 futures and Nasdaq futures. Tesla (TSLA) and China’s EV makers such as Nio, Li Auto and BYD will report year-end and 2022 deliveries over the New Year holiday weekend.
Investors will be looking for a brighter stock market, especially for growth, in 2023 after a “stay away” year. The Dow, S&P 500 and Nasdaq all had their biggest annual declines in 14 years. The stock market rally is under way, but has a long way to prove itself.
The Dow Jones closed below its 50-day moving average on Friday. The S&P 500, and especially the Nasdaq, has some distance to go to reach its 50-day lines, with several other key resistance areas along the way.
Celsius Holdings (CELH), Deere (day), BioMarin Pharmaceutical (BMRN), exxon mobil (XOM) and medspace (MEDP) five shares are close to buy. What follows is a diverse list that shows potential areas of market leadership in the new year.
DE Stock and MedSpace are on the IBD leaderboard. Celsius Stock, MEDP Stock are at IBD 50. Deere and BMRN stocks are on IBD Big Cap 20.
Deere was Friday’s IBD Stock of the Day.
But whether these stocks work or not depends on the uptrend in the market. It is not there now. Investors should be very cautious.
The video embedded in the article delves deeper into recent market action and discusses what investors should be doing as the stock market heads into 2023. CELH stock, Deere and BioMarin are also analyzed in the video.
faltering china economy
China’s economic activity is faltering due to the sudden end of strict Covid rules, leading to a massive spread of infections. The official manufacturing index fell 1 point to 47 in December, the government said on Saturday. The non-manufacturing PMI, which covers services-sector and construction activity, fell 6.1 points to 41.6. Both are the lowest since February 2020, when Kovid-19 first knocked in the country. A reading below 50 indicates contraction.
China EV Delivery
nio (NIO), Lee Auto (li) and XPeng (XPEV) is on tap to report December, fourth quarter and full year EV deliveries on Sunday, January 1. Li Auto said on Friday that December deliveries of its hybrid SUV will top 20,000, breaking November’s record of 15,034. Nio recently lowered its Q4 delivery guidance citing COVID-related issues. The guidance includes December deliveries of 14,263-15,263 EV, which would be slightly above November’s record of 14,178. Xpeng should see a rise in deliveries after several month-over-month declines, but its model lineup is struggling.
BYD will report its December sales on Jan. 3 before the US market opens on Tuesday. The EV and battery giant recently said that Covid infections among workers are reducing production by at least 2,000 vehicles per day. BYD recently said that full-year deliveries of all-electric BEVs and plug-in hybrids should be around 1.88 million. This means December deliveries are around 247,000-250,000, which would still be a record.
Nio stocks, Li Auto, Xpeng and BYD all had a tough 2022, like other EV makers and growth stocks in general. They all came down in October or early November, but have come back up in recent weeks.
Tesla Vs. BYD: Which EV Giant Is Better?
Tesla EV Delivery
Tesla is expected to release fourth-quarter EV production and delivery figures on January 2. Analysts expect Q4 Tesla deliveries of 418,000, though consensus has been slipping in recent days amid weakness in China. Tesla offered big year-end incentives to boost sales, especially in China and the US. This didn’t lead to much growth in China, but it appears to have cleared stocks in the US.
In 2023, Tesla will benefit from a new US tax credit of up to $7,500, although year-end incentives of $7,500 for the Model 3 or Model Y — added on December 30 with the Model S and X vehicles — may offset that demand. Some of them have been exploited. The $55,000 price cap on most Model Y vehicles could limit Tesla’s EV credit boost.
Meanwhile, China is phasing out EV subsidies. With a massive Covid wave, that could further reduce sales for EV makers out there including Tesla. Tesla may need significant new price cuts in China, where competition from BYD, Nio, Li Auto, Xpeng and others continues. Tesla has already renewed year-end incentives for Jan. 1-Feb. 28.
In Europe, several countries are cutting or eliminating EV subsidies, providing another headwind for Tesla as the backlog there fades.
Tesla stock fell 65% in 2022, its worst annual decline ever. Shares fell 37% in December to their lowest level since September 2022. The EV giant rebounded from midweek bear market lows and ended the week nearly flat. TSLA stock volume has been very high over the past several weeks.
dow jones futures today
Dow Jones futures open on Monday at 6 PM ET, along with S&P 500 futures and Nasdaq 100 futures.
US stock and bond markets will be closed on Monday, January 2, for the New Year.
On Tuesday, investors will get the December ISM Manufacturing Index. On Friday, the December jobs report looms large as the Federal Reserve looks for signs of a weakening job market.
Remember that overnight action in Dow futures and elsewhere does not translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in Stock Market Rally on IBD Live
stock market end 2022
The stock market corrected on Wednesday, but a new rally attempt began on Thursday. Major indexes slipped on Friday, closing the week slightly negative.
The Dow Jones Industrial Average fell 0.2% in last week’s stock market trading. The S&P 500 index closed down 0.1 percent. The Nasdaq Composite fell 0.3%. The small-cap Russell 2000 lost a fraction.
For the full year, the Dow Jones retreated 8.8%, the S&P 500 fell 19.4% and the Nasdaq 33.1%. It was their worst annual performance since 2008.
The 10-year Treasury yield rose 13 basis points to 3.88% last week, after rising 27 basis points the previous week. The 10-year yield expires in 2021 at 1.51%.
US crude futures rose 0.9% last week to $80.26 a barrel, its third straight weekly gain. Crude oil prices climbed 6.7% for the year, but ended well above their peaks above $130 a barrel.
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) dropped 0.3%. VanEck Vectors Semiconductor ETF (SMH) climbed 1%.
Reflecting more speculative story stocks, the ARK Innovations ETF (ARKK) rose 0.9% last week, but after hitting a five-year low on Wednesday. The ARK Genomics ETF (ARKG) declined 0.7%. TSLA stock is a major holding in Ark Invest’s ETF, with Cathy Wood increasing holdings in recent weeks. Ark also has a small position in BYD stock.
The SPDR S&P Metals & Mining ETF (XME) fell 1.9% last week. The Global X US Infrastructure Development ETF (PAVE) declined 1.2%. The US Global Jets ETF (JETS) dropped 0.9%. The SPDR S&P Homebuilders ETF (XHB) slipped 0.8%. The Energy Select SPDR ETF (XLE) rose 0.5% and the Financials Select SPDR ETF (XLF) rose 0.7%. The Health Care Select Sector SPDR Fund (XLV) dropped 0.2%.
Five Best Chinese Stocks to Watch Now
Stock market 2023: 5 stocks to watch
BioMarin stock fell 0.8% last week to 103.49, retracing its second-half December lows but holding support around its 21-day line. A strong rise from the current levels may offer an aggressive entry. But investors can wait for BMRN stock to form a new base, or find support at the 10-week line. BioMarin’s earnings are expected to triple in 2023.
Deere stock fell 1.9% over the past week to 428.76, reverting to its 10-week moving average, with a now flat base on the weekly chart. The official buy point is 448.50. Investors could perhaps use the 10-week line bounce as an initial entry for DE stock, after retracing the 21-day line.
CELH stock retreated from record highs in December, sliding over the past four weeks, but closed Friday at 104.04 above its 50-day line. Celsius stock could offer an early entry if it clears the 21-day line decisively, with a move above its December 27 high of 109.31 as a specific trigger.
XOM stock climbed 1.5% last week to $110.30, which is slightly above its 50-day moving average. A move above the December 27 high of 110.47 would offer an early entry. According to MarketSmith analysis, Exxon stock has a flat base with a 114.76 buy point.
MEDP stock rose marginally above its 50-day moving average on Thursday, breaking above a downtrend line in recent consolidation. It offered an early entry within its consolidation. On Friday, with the major indices retreating again, MedSpace stock fell back to its 50-day low, but closed well.
MedSpace’s move may still be in the works, but it shows how difficult it has been for stocks to move up.
stock market analysis
Despite Thursday’s strong rally, the stock market closed last week lower, capping a difficult year.
Major indices are down from their October bear market lows but well below December’s short-term highs. Technically a rally attempt is underway as the 2023 stock market closes, but it needs a follow-through day to confirm a new uptrend.
Still, with the S&P 500, Nasdaq and Russell 2000 all some distance below their 50-day and 200-day lines, the market will face several technical headwinds. The Dow Jones, the relative leader in recent months, fell below its 50-day line to end 2022 but is above the 200-day.
Markets could remain range-bound in volatile, sideways action until there is clarity on the Fed rate endgame and the economy.
The December jobs report on Friday, January 6, will be important. The significant reduction in hiring and wage gains will strengthen expectations of a further slow in Fed rate hikes, and raise hopes that peak rates are imminent. But strong or bullish job and wage growth could trigger a bigger selloff.
Tim the market with IBD’s ETF market strategy
What do I do now
On Friday’s year-end IBD Live, O’Neill Global Advisors portfolio manager Charles Harris said it was a market to “stay away from” in 2022. There will be great opportunities ahead, including innovative companies and trends, but not yet.
Several stocks are setting up well, including Deere, BioMarin and Medpace. The problem is that over the past few months, a lot of stock setups have taken place, but those setups have generally not worked out.
But investors must be engaged and ready to act. If there is a definite rally in early 2023, many stocks have the potential to move sharply solid or even sharply higher.
So work on your to do list but enjoy the long weekend. Come back refreshed in the new year, look forward to the next bull market.
Read The Big Picture every day to keep up with market direction and the leading stocks and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson For stock market updates and much more.
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