Dow Jones Futures: Bank of Japan Surprises; Tesla jumped


Dow Jones futures were little changed early Wednesday, along with S&P 500 futures and Nasdaq futures after the Bank of Japan remained unexpectedly bearish. United Airlines and Moderna stock jumped on the news. Big Microsoft job cuts could be coming Wednesday.




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Despite a strong fall for the Dow Jones, the stock market rally had a relatively quiet session.

Tesla ( TSLA ) jumped 7.4% to 131.49, continuing its comeback from bear-market lows. Shares have moved slightly above the 21-day line, but remain below the 50-day and especially below the 200-day line. Tesla’s China EV registrations have surged in recent weeks after massive price cuts. But it may be some time before investors get a clear picture of Tesla’s impact on global price cuts and demand. Tesla’s earnings for Q4 are due on January 25th.

A pause of a few days allows additional stocks to be prepared. This includes stocks collected from initial entries and can use handles.

Chevron (CVX), Vertex Pharmaceuticals (VRTX) and TJX Cos. ( TJX ) are three stocks that could be actionable right now.

In general, however, investors should be patient.

The Bank of Japan remains stable

The Bank of Japan has not changed its monetary policy. The BoJ maintained its policy of keeping rates and Japan’s sovereign debt at 0%. In December, the BoJ effectively hiked the 10-year Japanese yield to 0.5%. That has fueled speculation that the Bank of Japan will end its zero rate policy altogether.

The BoJ’s decision on course swayed Dow futures, Treasury yields and the dollar.

Key income

United Airlines (UAL) and Interactive brokers (IBKR) reported on Tuesday night.

As United Airlines’ revenue comfortably beat Q4 views, the carrier also provided solid guidance. UAL stock edged higher after hours. Shares fell 0.9% to 51.20 on Tuesday, but after more than eight sessions of highs.

Interactive brokerage revenues also received high views. IBKR stock rose slightly in overnight action. Shares fell 2 cents to 77.19 on Tuesday, working on a double-bottom basis of an 80.95 buy point. Friday’s move above the 50-day line provided an early entry, but ahead of earnings.

Charles Schwab (SCHW) and trucking company JB Hunt Transport Services (JBHT) is early Wednesday. SCHW stock rose 0.6% to 83.49 on Tuesday, staying in a buy zone. JBHT stock fell 0.3% to 176.29 between the 50-day and 200-day lines.

UAL stock is on the IBD 50. VRTX stock is on the IBD Big Cap 20.

Modern RSV vaccine

Moderna reported strong results for its respiratory syncytial virus, or RSV, vaccine late Tuesday. Biotech’s RSV vaccine uses mRNA technology. The mRNA stock rose strongly in extended trading, showing strong growth near the 10-week line. The Moderna RSV vaccine follows positive RSV results Pfizer (PFE) and GlaxoSmithKline (GSK)

Microsoft Task Managers Lum

Meanwhile, Microsoft (MSFT) may announce new job cuts as early as Wednesday, Bloomberg reported, citing sources. The reductions may be “higher” than the previous layoffs. According to Sky News, the Dow Jones software company may cut up to 5% of its workforce, which will be 11,000 jobs. In October, Microsoft cut nearly 1,000 positions.

MSFT stock rose 0.5% to 240.35 on Tuesday, its seventh straight advance and below its 50-day line. Microsoft’s earnings are January 24.

The video in the article reviews CVX stock; Eli Lilly (LLY) and Free market (Melly)

The future of Dr. Jones today

Dow Jones futures were little changed relative to fair value. S&P 500 futures rose 0.1% and Nasdaq 100 futures rose 0.15%. Futures were slightly lower before the BoJ announcement.

The 10-year Treasury yield fell 5 basis points to 3.48%, lower on the Bank of Japan decision.

The dollar jumped against the Japanese yen.

Crude oil prices rose slightly.

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


Join IBD’s experts as they analyze potential stocks in the stock market rally on IBD Live


Stock market rally

The stock market rally had a mixed session on Tuesday, showing modest intraday swings overall.

The Dow Jones Industrial Average was down 1.1 percent in Tuesday’s stock market trading, but that was mostly due to Goldman Sachs (GS) and Travelers (TRV) weighing on blue chips. The S&P 500 index fell 0.2%, led by Tesla stock and Morgan Stanley (MS) High Performers. The Nasdaq composite rose 0.1 percent. The small-cap Russell 2000 was down 0.1%.

U.S. crude oil prices rose 0.4 percent to $80.18 a barrel, closing above $80 for the first time in two weeks. Crude futures hit $81.23 a day.

The 10-year Treasury yield rose 2 basis points to 3.53 percent.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF ( FFTY ) was down 0.2%. The iShares Expanded Tech-Software Sector ETF ( IGV ) rose 0.3%, a major holding of Microsoft stock. The VanEck Vectors Semiconductor ETF ( SMH ) rose 0.6 percent.

Reflecting more speculative historical stocks, the ARK Innovation ETF ( ARKK ) rose 2.9% and the ARK Genomics ETF ( ARKG ) rose 1.8%, both extending gains from the 50-day line and moving toward their 200-day moving averages. TSLA stock remains a top holding in the Arc Invest ETF, with Cathy Wood adding several more shares in recent weeks.

The SPDR S&P Metals & Mining ETF ( XME ) fell 1 percent. The US Global Jets ETF ( JETS ) rose 0.4%, with UAL stock the biggest holding. The SPDR S&P Homebuilders ETF ( XHB ) fell 0.8 percent. The Energy Select SPDR ETF ( XLE ) rose 0.2%, with CVX stock a top holding. Financial Choice SPDR ETF ( XLF ) retreated 0.7 percent. The Healthcare Select Sector SPDR Fund ( XLV ) fell 0.5 percent.


The five best Chinese stocks to watch now


Stocks in buy zones

Chevron rose above the 50-day line and short-term high of 180.23, up 1.65% to 180.49. CVX stock has a flat-base buy point of 189.78, according to MarketSmith analysis.

VRTX stock rose 3.7% to 311.58, moving above its 50-day line in above-average trading. That provides an early entry for Vertex, which has a 324.85 flat-base buy point. VRTX stock has retaken the previous buy point of 306.05. The biotech hit a record high of 324.75 on Dec. 8, but fell to its 200-day line by year-end. Vertex stock rebounded from there last week. Investors can wait to see if stocks hold up near the 50-day line.

TJX stock closed down 2 cents at 81.55, rebounding from an intraday test of the 81.29 flat-base buy point cleared on Jan. 6. Since then, stocks have been consolidating in a buy zone. The 5% depth of the flat base is higher than the long and 31%-deep cup reinforcement.

Market Rally Analysis

The stock market rally had a relatively quiet session after last week’s big gains.

The S&P 500 briefly retook the 4,000 level, but only held its 200-day high.

The Russell 2000, which broke past its 50-day and 200-day lines last week, retreated after coming within 1% of its November high.

The Nasdaq Composite is holding above its 50-day line, the December high and the 200-day line with large defensive areas on the horizon. Much of Tuesday’s strength came from Tesla, chips and beaten-down cloud software names.

The Dow Jones fell sharply, largely due to GS. Stock and on travelers. The blue-chip index is comfortably above its moving average, with only December highs to watch.

The market rally still looks healthy. Several trends have improved over the past several sessions, including the Nasdaq’s pre-decline line and new highs and lows.

A pause or a slight return here may be normal or healthy. A decisive breach below the 200-day line by the S&P 500, possibly the 50-day low, would be more worrisome. On the upside, the 2022 end highs are the next key level.

While Chevron, TJX and Vertex and a few other names are viable options, there’s not much to buy right now. A few stocks that looked promising on Tuesday morning, eg Monster drink (MNST), fell close.

Many stocks have moved up as in the past several sessions Medpass (MEDP) and MercadoLibre. Pause allows many of these nouns to form handles or shelves. Meanwhile, other stocks are coming into the picture.


Time with IBD’s ETF Market Strategy


What to do now

Patience is important. The market may be ready for a pause and when many stocks are flashing buy signals, resist the temptation to buy extended stocks. If this improvement works, you will have more reliable opportunities in the future. Includes recent hot stocks if the form holds or touches support levels.

Really scroll through your stock leader screens to find ones that show promising moves.

If the market offers many stocks flashing buy signals, you can gradually gain exposure over time. In addition to various economic and Fed currencies, earnings season is underway, with potentially heavy releases over the next couple of weeks.

Read The Big Picture daily to stay in tune 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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