Dow Jones futures rose overnight along with S&P 500 futures and Nasdaq futures. The stock market closed lower on Thursday, with resilient growth leaders being sold as government bond yields skyrocketed.
Tesla (TSLA), Celsius Holdings (CELH), Shockwave Medical (SWAV), Enphase Energy (ENPH) and On semiconductor (ON) are five holdout stocks that are now coming under heavy pressure.
These shares have not yet broken down. It is possible that the recent action will culminate in bullish shakeouts and tests of key support. But anyone who bought these names in the previous few sessions is incurring significant losses, with the risk of these holdouts collapsing in the coming days.
CELH stock and Shockwave Medical are on the IBD Leaderboard watchlist. Tesla shares, Celsius, Shockwave, Enphase Energy are all on the IBD 50. ENPH shares and Onsemi are on the IBD Big Cap 20.
FedEx (FDX) released official first quarter results during Thursday’s session after announcing disastrous preliminary data last week and providing guidance amid global economic weakness. On Thursday, FedEx announced higher parcel rates and announced cost-cutting measures to save $2.2 billion to $2.27 billion in fiscal 2023. The shipping giant stuck to fiscal 2025 EPS and sales targets.
FDX stock recovered and rose 0.8% to 154.41 after hitting another two-year intraday low.
Costco Wholesale (COST) announced a profit late Thursday.
Costco revenue and sales narrowly surpassed the fiscal outlook for the fourth quarter. The warehouse giant said there are currently no plans to increase membership fees, despite some speculation that an announcement could be made on Thursday. The majority of Costco’s profits come from membership fees.
COST shares fell modestly overnight. Shares fell 1.2% to 487.17 during Thursday’s session, reaching a two-month low.
Dow Jones Futures Today
Dow Jones futures were up 0.15% from fair value. S&P 500 futures rose 0.1% and Nasdaq 100 futures rose higher.
Keep in mind that an overnight action in Dow futures and elsewhere does not necessarily lead to actual trading in the next regular trading session.
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The stock market fell sharply during the day, led by techs and small caps, while government bond yields rose. The Dow Jones turned positive in the afternoon, but sank again in the closing phase.
The Dow Jones Industrial Average fell 0.4% in Thursday’s trading. The S&P 500 index lost 0.85%. The Nasdaq composite lost 1.4%. The small-cap Russell 2000 slipped 2.3%.
US crude oil prices rose 0.7% to $83.49 a barrel, well beyond morning highs. US natural gas prices fell 8.9% to a two-month low.
Ten-year government bond yields rose 20 basis points to 3.71%, the highest point since February 2011.
One of the best ETFs, the Innovator IBD 50 ETF (FFTY) slipped just over 3%. The iShares Expanded Tech-Software Sector ETF (IGV) lost 1.5%. The VanEck Vectors Semiconductor ETF (SMH) lost 2.8%.
SPDR S&P Metals & Mining ETF (XME) fell 0.4%. SPDR S&P Homebuilders ETF (XHB) lost 2.1%. The Energy Select SPDR ETF (XLE) fell 0.4%. The Health Care Select Sector SPDR Fund (XLV) rose 0.5%.
As a result of more speculative story stocks, ARK Innovation ETF (ARKK) fell 4.3% and ARK Genomics ETF (ARKG) fell 2.8%. Tesla stocks are a major holding in Ark Invest’s ETFs.
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Celsius shares fell 8.5% to 89.90, falling below the 50-day mark for the first time in three months, undercutting the low of recent consolidation. That’s after CELH’s stock fell 3.9% on Wednesday. The leader in energy drinks is allowed to take a breather after a threefold increase from the beginning of May to the end of August. In a few weeks, CELH stock could be on a new footing, reaching a buy point of 118.29.
The relative strength line is just below the record highs. The risk is that this relative winner will become an absolute loser.
SWAV stock fell 9.1% to 258.84 on Thursday, falling towards the 50-day moving average. On Wednesday, shares of the medical products company fell 1.85% after falling from an intraday high of 300.96. Perhaps this is where Shockwave stocks can find support and recover bullish.
Enphase shares fell 6.9% to 283.63, crossing below the 21-day line and testing the 10-week line for the first time since July. On Wednesday, shares fell just 15 cents, but after an intraday of 318.49. This could be a place for Enphase stock to gain a foothold. The RS line for Enphase stocks just fell after hitting new highs for weeks.
Shares of On Semiconductor fell nearly 5% to 64.96, falling below the 50-day mark for the first time in two months and just below recent lows. On Wednesday intraday, ON stock rose to 71.77, briefly blinking several buy signals before falling for a 0.2% loss.
Tesla shares fell 4.1% to 288.59, below the 200-day line and found support near the 50-day line. On Wednesday, the shares were down 2.6%, falling lower from 313.80 intraday. This could be a healthy shakeout, assuming TSLA stocks can stay around current levels. By the close of Friday, the recent short-term consolidation will provide a good foundation within a much larger pattern. The buy point would be 314.74, but on a weekly chart it will hold a handle with a slightly lower entry of 313.90.
Meanwhile, Tesla appears demand problems in China, partly due to increased production in Shanghai. With deliveries of the BYD Seal just a few weeks in and the Nio ET5 launching on September 30, the Chinese EV market is keeping a close eye on TSLA equity investors.
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Stock market analysis
The stock market correction continues to deteriorate, with major indices moving closer to their June lows and losing track of their 50-day moving averages for good.
Could the stock market recover? Secure.
Treasury yields may need to cool slightly before equities can recover. It would not be surprising if the harvest stops for a few days or even weeks or even declines. But the underlying forces driving up government bond yields remain.
The Fed is raising rates aggressively and will continue to raise and keep rates high even as policymakers are sending stronger signals that the US is at risk of a clear recession in 2023.
That’s just a tough environment for stocks. Perhaps if inflation begins to cool quickly, the markets may begin to reverse forecasts for rate hikes. But that will take weeks. And inflation could cool as the economy weakens further.
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What to do now
The stock market correction is getting worse. There is a very real danger of major indices breaking to new lows. Holdout stocks such as Shockwave, Celsius, Tesla and Enphase are coming under increasing pressure.
Investors should not get excited about a strong open market, an intraday rally, or even just a day or two of solid gains. That can be difficult, as some of the stocks mentioned in this article are likely to make big moves when the market bounces.
Still, investors will have to wait for real signs of market strength through a follow-up day. Even then, there would be good reasons to be careful.
Keep working on watchlists. Focus on relative strength, even if the charts look damaged.
Eli Lilly (LLY) and other drug makers, along with some biotech companies, are showing some strength.
Read The Big Picture every day to stay up to date on market direction and leading stocks and sectors.
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