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Market Rally: S&P 500 Tops Key Level As 5 Stocks Flash Buy Signals

Dow Jones futures changed little overnight along with S&P 500 futures and Nasdaq futures. The stock market rally recovered on Tuesday, with the S&P 500 retaking the 4,000 level.




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Deere (THE) reports earnings early Wednesday, with DE shares in a buy zone. Deere earnings and guidelines can be important to a variety of farm stocks, including CF Industries (CF) and Archer Daniels Midland (ADM), as well as machine builders such as Caterpillar (CAT).

Energy stocks continue to do well. Solar leader Enphase energy (ENPH), coal producer Peabody energy (BTU), refiner CVR energy (CVI), natural gas producer EQT Corp. (EQT) and LNG stock Excel energy (EE) are all nearby buy points.

EE shares broke up on Wednesday, with Enphase returning to a buy zone. BTU shares, CVR Energy and EQT are usable.

ENPH stock is depleted IBD ranking. EQT stock is depleted Swing Trader. Deere stock is on its way IBD 50. Peabody Energy is from Tuesday IBD stock of the day.

Dow Jones Futures Today

Dow Jones futures were little changed from fair value. S&P 500 futures fell lower. Nasdaq 100 futures fell 0.2%.

The price of crude oil skyrocketed. Natural gas futures were up 2%.

The New Zealand central bank raised interest rates by a record 75 basis points, as expected.

Fed minutes from the November meeting will be released Wednesday.

Remember that nighttime action Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.


Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live


Stock market rally

The stock market rally opened mixed on Tuesday, but gained momentum for broad gains and closed near session highs.

The Dow Jones Industrial Average rose 1.2% on Tuesday trading on the stock exchange. The S&P 500 index and the Nasdaq composite both rose nearly 1.4%. The small-cap Russell 2000 popped 1.1%.

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The yield on 10-year Treasury bills fell 7 basis points to 3.76%. But the yield on two-year Treasury bills, which is more closely related to Fed policy, remained about the same at 4.53%.

The dollar, after rallying in the previous three sessions, fell back on Wednesday. The greenback has fallen significantly since late September, especially since early November.

US crude oil prices rose 1.1% to $80.95 a barrel, continuing the recovery from Monday’s short-lived plunge. Gasoline futures were up 4.3%, good news for refiners. Natural gas futures rallied higher after falling more than 2% intraday.

ETFs

Below the best ETFsthe Innovator IBD 50 ETF (FFTY) rose 3.4%, helped by a number of energy and metals stocks. The iShares Expanded Tech-Software Sector ETF (IGV) increased by 1.8%. The VanEck Vectors Semiconductor ETF (SMH) popped 2.9%.

SPDR S&P Metals & Mining ETF (XME) gained 3.2% and the Global X US Infrastructure Development ETF (PAVE) stuck at 1.3%. SPDR S&P Homebuilders ETF (XHB) recovered by 1.9%. The Energy Select SPDR ETF (XLE) climbed 3.1%. The Care Select Sector SPDR Fund (XLV) rose 0.9% to a seven-month high.

Reflecting stocks with more speculative narratives, ARK Innovation (ARKK) gained 0.3% and ARK Genomics (ARKG) decreased by 0.4%.


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Energy supplies near points of sale

Enphase shares rose 4% to 320.44 and closed above 316.97 cup-with-handle point of sale for the first time. However, the last three times the ENPH stock reached these areas, it returned lower. Enphase stocks often have large daily swings. So, investors might want to watch to see if ENPH stock pulls back to its rapidly rising 21-day moving average.

Some other LNG stocks are showing strength, with Flex LNG (FLNG) break out and Cheniere Energy (LNG) to reclaim his 50-day line.

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BTU shares rose 6.7% to 29.62, just below a buy point of 30.15 in a seven-month consolidation period. Tuesday’s move broke the handle trendline and provided early entry. However, the BTU share is 9.3% above the 21-day line and 17% above the 50-day line. The handle formed after strong Peabody Energy earnings.

CVR Energy shares rose 4.85% to 40.85, back above an old buy point of 39.81 that can still be considered valid. CVI shares also has a tight for three weeks pattern with an entry of 42.31. Moving above 41.31 could provide early access to that tight pattern.

The EQT share rose nearly 6% to 43.79, breaking back above the 50-day line after recovering from the 200-day mark on Monday. Stocks break through a falling trendline. The official buy point is 52.07.

EE shares rose 9.6% to 30, erasing a buy mark of 28.49 cups with handle in above-average volume MarketSmith Analysis. That move to a record close cleared a lot of trading that took place from Excelerate Energy’s IPO in April. EE shares had come in early on Friday and Monday, though trading was below normal on those days. Excelerate is now slightly expanded from the buy zone and well expanded from the 21-day line.

Analysis of the market rally

The stock market rally continues to show constructive action and is trading within a narrow range after a modest pullback and support last week. On Tuesday, major indices recovered from Monday’s losses.

The S&P 500 recovered from its 10-day line right at the 4,000 level as it moves toward its 200-day line. While not above the intraday high of Nov. 15, it was the index’s best close in more than two months.

The 50-day line is only starts moving higher on the S&P 500.

The Russell 2000 is almost approaching its 200 days. The S&P MidCap 400, which held its 200-day line last week, made further gains.

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The leading Dow Jones hit the 34,000 mark for the first time in three months, just short of its Aug. 16 peak. The trailing Nasdaq found support at its 21-day line, just above its 50-day mark, but failed to recoup all of Monday’s losses.

All of these indexes operate on handles, with the Dow creeping above. Most stocks track the action of the major indices, so many handles are forming on stocks near buying points. A slightly longer pause, perhaps until the main economic reports late next week, could allow the moving averages to catch up.


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What to do now

Until the S&P 500 moves decisively above the 200-day mark, investors may not want to add much exposure at this point. With the Thanksgiving holidays dampening trading and Fed-critical economic data next week, the near-term market rally could be range-bound.

That could help stocks from different sectors to set up handles and allow moving averages to gain ground. Investors should build their watchlists. It’s definitely a time to look beyond traditional technology growth stocks, which currently tend to underperform.

Given that many leaders are being extended from moving averages, such as Excelerate Energy or BTU stock, it’s all the more important to look for early entries and act quickly.

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 updates and more.

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