Trying to accelerate in the stock market; Tesla jumps between EV credit guidelines

S&P 500 futures and Nasdaq futures as well as Dow Jones futures were lower after hours, heading into the last trading day of 2022. Key indexes rose strongly on Thursday on jobs data, Apple (AAPL) iPhone news and more. Tesla (TSLA) continues to rally.




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But the market is in a correction after breaking key levels on Wednesday. Thursday marked just one day of a fresh attempt at a stock market rally. Investors should be very cautious while taking new positions.

medspace (MEDP) gave a buy signal on Thursday, while KLA Corporation (KLAC), starbucks (sbux), joint rent (URI), Mobileye (MBLY), super microcomputer (SMCI) and Floor (FLR) are installed. But these stocks will rise or fall with the market.

MEDP Stock, Floor and United Rentals are on the IBD leaderboard. KLAC stock is among the IBD Long-Term Leaders. MBLY stock is on the IBD 50. KLA Corp. And URI stock is on the IBD Big Cap 20.

Meanwhile, new guidelines from the Treasury Department say that many Model Y vehicles will not be eligible for the US tax credit starting Jan. 1 without a sharp cut in prices. But there’s a loophole that could allow all Tesla vehicles — and any EVs — to qualify for the hefty tax credit at no cost.

dow jones futures today

Dow Jones futures declined 0.1% versus fair value. S&P 500 futures fell 0.2%. Nasdaq 100 futures slipped 0.15%.

Remember that overnight action in Dow futures and elsewhere does not translate into actual trading in the next regular stock market session.


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market rally attempt

The stock market had a strong rebound, moving through the morning and then maintaining those gains in the afternoon.

The Dow Jones Industrial Average rose just 1% in Thursday’s stock market trading. The S&P 500 index rose 1.75%. The Nasdaq Composite and Small-Cap Russell 2000 jumped 2.6%.

Initial jobless claims rose slightly more than expected in the week ending December 24, but remained low at 225,000. Continuing claims climbed by 41,000 to 1.71 million in the latest week, the most since early February.

AAPL stock rose 2.8% to 129.61 after closing 3.1% lower in a bearish market on Wednesday. Apple is ramping up iPhone production again, according to The Wall Street Journal, following another report of recent iPhone production problems.

US crude oil prices fell 0.7% to $78.40 per barrel.

The 10-year Treasury yield fell 5 basis points to 3.83%.

ETF

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 0.9%. The iShares Extended Tech-Software Sector ETF (IGV) jumped 3%. The VanEck Vectors Semiconductor ETF (SMH) rose 3.3%. Reflecting more-speculative story stocks, the ARK Innovations ETF (ARKK) jumped 5.2% and the ARK Genomics ETF (ARKG) jumped 4.1%. Tesla stock is a major holding in Arc Invest’s ETF.

The SPDR S&P Metals & Mining ETF (XME) climbed 1.9%. The US Global Jets ETF (JETS) climbed 2.65%. The SPDR S&P Homebuilders ETF (XHB) climbed 2.4%. The Energy Select SPDR ETF (XLE) was up just 1% and the Financials Select SPDR ETF (XLF) climbed 1.4%. The Health Care Select Sector SPDR Fund (XLV) rose 1.1%.


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Tesla stock

Tesla stock jumped 8.1% to 121.82, following Wednesday’s 3.3% jump. TSLA stock is still down slightly for the week and is up 37% on December. After such a massive selloff, Tesla’s stock was bound to rally, but it remains well below key levels.

Tesla Model Y tax credit

The Tesla bull case for 2023 hinges heavily on new US tax credits of up to $7,500 under the Inflation Reduction Act, which should boost higher-margin domestic sales while offsetting weaker demand and prices in China and possibly Europe. gives.

On Thursday, the Treasury Department listed the vehicles that qualify for the US EV credit. Most versions of the Model Y will have a $55,000 price limit to receive the EV credit, versus the $80,000 limit for SUVs, pickup trucks and vans.

But seven-seat Model Y vehicles, which haven’t been big sellers, will be eligible for up to $80,000.

With the current base Model Y starting at $65,990 in the US, Tesla will need to lower the price, perhaps by reintroducing the lower-range Model Y SR+, to get the tax credit – as long as it’s a seven-seater. Do not be a version.

But, there is yet another twist! Treasury also said that EVs leased by consumers may qualify for the commercial EV tax credit. This makes EVs collectable outside North America, including the Hyundai Ioniq 5 and Kia EV6. Foreign automakers and American allies in Europe and Asia strongly objected to the North American assembly requirement. But the lease rules also allow any EV to qualify without income limits at any cost.

It will be interesting to see what Tesla and other automakers do with regards to variants and pricing to maximize profit from the new tax credits.

But investors seemed happy with the overall picture.

Shares of TSLA continued to rise.


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Stocks near Buy Points

Medpace stock rose 3.4% to 215.62, breaking a downtrend line as it rebounded from the 21-day and 50-day lines. MEDP stock has consolidated well, setting up a 16%-deep consolidation next to the top of a long, deep base. The official buy point is 235, but early entry was offered on Thursday.

KLAC stock jumped from its 10-week line to climb 3.3% to 379.86. A move above the 21-day line could provide an opportunity to buy KLAC stock as a long-term leader.

SBUX stock rose 1.2% to 99.77, rebounding from its 10-week high and crossing over to its 21-day high. This could be a brief not-quite-premise initial foray into the premise. This in turn can be viewed as one handle of another 17 months of intense consolidation for Starbucks stock.

URI stock rose 1.2% to 356.21, rebounding from the 21-day line. The 368.04 handle on United Rentals’ 13-month consolidation is close to the buy point, which was topped earlier this month. Under its handle, the stock of URI has traded strongly. The relative strength line is at a new high, reflecting United Rental stock’s outperformance compared to the S&P 500 Index.

MBLY stock rose 2.8% to 34.51, rebounding from the intraday undercut of its 21-day moving average. The Mobileye IPO went public in late October at 21 shares. MBLY stock has shown strength in a weak market, but like many new IPOs there are big whipsaw moves. Shares are starting to calm down. An aggressive investor might look for a trendline break for an entry, but ideally Mobileye stock would form a new base.

FLR stock rose 0.8% to 34.95, trading on a possible flat base in what would be a base-on-base pattern. Floor income is set to see an 80% rise in 2023, as infrastructure stocks show strength in public and private projects.

SMCI stock climbed 1.6% to 81.91, rebounding from the 50-day line but found resistance at the 21-day. A strong move above the 21-day high, surpassing Wednesday’s high of 84.35, could offer an early entry. One of the strongest growth stocks of 2022, Super Micro Computer stock has been consolidating for several weeks after its Nov. 2 earnings gap breakout, continuing to advance to 95.22 on Nov. 25. SMCI could be the new base for the stock. end of next week.

market analysis

After Wednesday’s sell-off, there was a strong rally in the stock market. After falling since the intraday highs of December 13, the major indices were certainly “due” for a bounce.

The question is whether they will follow through in the days and weeks ahead.

The market went into a correction on Wednesday as the Dow Jones broke below its 50-day moving average and the Nasdaq closed at a two-year low.

So Thursday was just day one of a new bull run in the market. It’s going to take a lot longer than this to feel more confident.

The Dow Jones is back above its 50-day line, but still below its 21-day line.

The S&P 500 is still below its 50-day, with further resistance at its 200-day line and December peaks.

While Tesla stock, Apple and several beaten-down chip and software names led Thursday’s surge, some key stocks posted buy signals or moved into positions like MEDP stock.


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What do I do now

When the indexes are up sharply and there is a sea of ​​green among the dominant and notable stocks, it is tempting to go back into the market.

But since the bear market bottom on October 13, breakouts and buy signals have largely failed.

Some sectors, including industrials, metals and medical, had outperformed in recent weeks, so it’s easy to justify nibbling with sector-specific stocks or sector ETFs. But keep any risk small and be quick to take profits and cut losses.

Bottom line: This is a market correction. Don’t operate under the rules of a bull market, especially the 2020-esque Mad Bull Rules.

Invest as if you were driving on an icy, winding road, not the open highway. Proceed with caution, or wait on the side of the road.

It’s more time to plan your trip versus exit. Work on watchlist. The stocks of many sectors are showing strength.

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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