Dow Jones Futures: The Fed’s “rapid” shift has hit the rally market; Elon Musk steals Donald Trump’s Thunder

Dow Jones futures rose slightly overnight, along with the S&P 500 and Nasdaq futures. The rally in the stock market retreated, and the profitability of treasury jumps jumped on Tuesday, when the chief politician of the Fed called for a “rapid” reduction in the massive balance of the Federal Reserve.




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Solar energy firm SolarEdge Technology (SEDG) and uranium ETFs North Shore Global Uranium (URNM) and Global X Uranium (URA) on Tuesday morning flashed buy signals, but cut profits or declined as broad markets retreated.

UnitedHealth (UNH) and Eli Lily (LLY) grow in buying zones.

As for the megacap, Apple shares Tesla (TSLA), Microsoft (MSFT) and Parent Google Alphabet (GOOGL) all retreated on Tuesday, although the charts look normal. Tesla shares retreated from entering the trend line, but could use a decent pause after a quick run. Apple (AAPL) has technically sunk below the point of purchase, but now has a corresponding handle that offers a new operational point of purchase. Shares of Microsoft and Google also now have pens and new points of purchase on their daily charts.

Shares of Tesla, Microsoft and LLY are in the IBD leaderboard. Shares of Microsoft and Google are long-term leaders of IBD. Shares of TSLA, Microsoft and Google are on IBD 50. Uranium ETF URNM was the IBD fund of the day. Google was stocking IBD 50 for viewing.

The video attached to this article discusses the retreat of market rallies and analyzes the shares of URNM ETF, Google and LLY.

Musk joined the council on Twitter, kidnapping the Trump Thunder

Meanwhile, Twitter (TWTR) on Tuesday morning exceeded the 200-day line to 54.57 on news that Tesla CEO Elon Musk will join the social network board. TWTR reduced the gain to 2% to 50.98. Shares of Twitter rose 27% on Monday when Musk revealed a 9.2% stake.

Mask’s move on Twitter seems to steal Donald Trump’s thunder as his Truth Social website faces challenges. Digital World Acceptance Corp. (DWAC), a merger partner of SPAC with parent company Truth Social Trump Media and Entertainment, fell 16% to 48 on Tuesday, falling throughout the day to its lowest point since early December. DWAC shares fell 10% on Monday.

Trump’s Truth social network was engulfed in technical issues, and key technology executives left on Monday. Application downloads have dropped. In addition, former President Trump has not posted on his website, removing the key added value of Truth Social compared to Twitter and Facebook (FB).

Overall, DWAC shares lost more than half of their value after reaching a mark of 101.87 on March 2.

Brainard Fed wants a “quick” reduction in balance

Fed Governor Lael Brainard said on Tuesday that he wants the central bank to start a fast and “fast pace” to cut its huge balance sheet. Brainard, who was nominated for Fed vice chairman, added: “I expect the balance sheet to shrink much faster than during the previous recovery.”

Fed chief Jerome Powell has been signaling for some time that politicians will begin to reduce its balance sheet, but Brainard’s comments have signaled that this is likely to happen soon. Brainard was considered a little more pigeon than Powell, but in 2022 there were no pigeons. In addition to reducing the balance sheet, markets were waiting for a half-point increase at each of the next three meetings.

On Tuesday, Fed Governor Esther George said an increase of 50 basis points was an option for a meeting in early May.

Profitability of treasury facings rose on the latest signals of the Fed, with 10-year profitability returned above two-year.

On Wednesday, the Federal Reserve will publish the minutes of its March policy meeting.

Dow Jones Futures today

Dow Jones futures were up 0.1% from fair value. The S&P 500 and Nasdaq 100 futures rose.

U.S. crude oil prices fell overnight.

Remember that night stocks in Dow futures and elsewhere don’t necessarily turn into real trading in the next regular stock market session.


Join IBD experts as they analyze current stock market rallies on IBD Live


Stock Market Rally

The stock market rally retreated on Tuesday, closing near session lows. In the stock market on Tuesday, the Dow Jones Industrial Average fell 0.8%. The S&P 500 index fell 1.3%. The Nasdaq composite fell 2.3%. Russell 2000’s small capitalization also lost 2.3%.

U.S. crude oil prices opened higher but fell 1.3% to $ 101.96 a barrel. Natural gas futures jumped by almost 6%. The European Union is moving towards a ban on Russian coal imports, but is not pushing for Russian raw or natural gas.

Yields on 10-year Treasury bonds rose 14 basis points to 2.56%, according to Brainard’s comments on the current balance sheet. The two-year yield rose 10 basis points to 2.53%, but that means the yield curve is no longer inverted.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) was down 3.75% and the Innovator IBD Breakout Opportunities ETF (BOUT) was down 1.7%. IShares Expanded Tech-Software Sector ETF (IGV) has dropped 2.5%, and Microsoft shares are the main holding company of IGV. VanEck Vectors Semiconductor ETF (SMH) sold 4.3%.

The SPDR S&P Metals & Mining ETF (XME) was down 2.4%. The Global X US Infrastructure Development ETF (PAVE) dropped 1.8%. The US Global Jets ETF (JETS) was down 1.1%. The SPDR S&P Homebuilders ETF (XHB) lost 2.1%. The Energy Select SPDR ETF (XLE) was down 1.6%. The Financial Select SPDR ETF (XLF) was down 0.6%. The Select Sector SPDR Fund (XLV) grew 0.2%.

Reflecting more speculative stock plots, the ARK Innovation ETF (ARKK) fell 5.6%, below the 50-day line. The ARK Genomics ETF (ARKG) sold out 5.3% in just 50 days. Tesla shares remain holding № 1 in Ark Invest ETFs.


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Apple Stock

Shares of Apple fell 1.9% to 175.06, falling below the buying point with a double bottom of 176.75. But AAPL shares have now formed a pen on the daily chart, giving it a buying point of 179.71. As a matter of fact, the iPhone giant had a pen on the weekly chart after last week, but it was slim. With the daily pen cut out, investors should probably focus on that record.

Apple’s relative strength line is at a new high.

Microsoft Stock

Shares of MSFT fell 1.3% to 310.88. The cloud computing software and giant now has a pen with a buying point of 316.05. The middle point of the handle is just above the middle of the base, so there is some resistance at the top.

Google Stock

Shares of Google fell 1.7% to 2,811.82. This gives GOOGL shares a handle on its cup-based daily chart with a buying point of 2875.95. The internet giant did have a pen on its weekly chart with the same record as Apple, although Google was a little more substantial. The RS line for Google stocks is close to highs, but has been moving sideways since late July.

SEDG shares

Shares of SolarEdge rose to 344.61, but turned around, falling 2% to 328.69. According to MarketSmith, SEDG shares during the day again cleared the buying point of 335.67 cups with a handle. There is no doubt that the solar company has some big intraday fluctuations. Investors could consider creating a position in SEDG shares if it finds support again on the 21-day moving average.

Tesla shares

Shares of TSLA fell 4.7% to 1,091.26 on Tuesday after jumping 5.6% on Monday after record first-quarter delivery. Tesla shares have a buying point of 1208.10 cup base. Within the day, stocks reached 1,152.87, a three-month high and are just crossing a shallow trend line. After a sharp rise since March 14, Tesla shares could use a real pause with a substantial handle that actually shakes out some weak holders.

Market Rally Analysis

Tuesday’s stock market rally moved away from significant losses among tech and small companies.

It seems that the main indexes form the handles after a big overclocking. So far, the Dow, S&P 500 and Nasdaq seem to be operating normally. If the S&P 500 and Nasdaq fall below their 21-day moving averages, it will be more worrying.

But there is a noticeable weakness beneath the surface.

Technical stocks look weak. Yes, Apple shares are approaching record highs. Shares of Microsoft and GOOGL are close to buying points, although both have made no progress in recent months.

Meanwhile, chip inventories are declining amid reports of weak demand for PCs and consumer electronics. Software and other highly regarded growth names are becoming hammers due to rising Treasury bond yields. Tesla is one of the few three-digit PE stocks to thrive, and this estimate is impressive and alarming.

Stocks are also weak. Trucks, trains and other “land” shippers continue to sell out, while ocean container and bulk trucks are also now also losing ground.

Strong sectors

On the other hand, energy and commodities are still developing well, be it oil and gas fields, coal mining, solar reserves or uranium ETFs. But they are prone to large intraday fluctuations and reversals from highs, as shares of URNM and SEDG showed on Tuesday.

Protective stocks such as Lockheed Martin (LMT) are consolidating after the Russian invasion of Ukraine intensified.

Medical stocks are quietly going very well, offering defensive growth, often with a low and modest PE ratio. These include health insurers such as UNH shares as well as drug manufacturers such as LLY shares. Edwards Lifesciences (EW) and Shockwave Medical (SWAV) operate on the right side of the bases. AbbVie (ABBV) has been steadily advancing for several months, albeit well extended.

Insurance stocks such as AIG (AIG) hang around buying items. Insurers can work well in the face of rising rates and are not particularly worried about the yield curve.

REIT property custody is working well despite rising rates. Warehouse operator Prologue (PLD) is in the buying area. Extra storage space (EXR) is one of those who can cut handles on new bases.


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What to do now

The stock market rally shows no concern on major indexes. But investors need to focus on what works, not on the areas they find particularly attractive. The spaces of energy and commodities still work well. Doctors from different groups are doing well.

If you already have a significant impact on these areas, you can just sit back.

If you are in a series of stocks that are rising, you should probably cut back. A simple reduction of losers, or the exit of winners who give up profits, can reduce your growth without any open portfolio management.

Overall, investors should probably be wary. See how the market rolls back before taking new big positions. Keep improving your watchlists. When the market rally gains momentum again, you can take advantage of the best stocks. If the rally in the market starts to fluctuate seriously, you will be ready to further reduce your modest exposure.

Read the Big Picture every day to stay in sync with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock market upgrades and more.

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