Stock indices added to early gains at midday Thursday, raising deep lows. Oversold technical readings and the end of fiscal selling sessions may continue to increase buyer interest through Friday’s year-end finale.
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The year’s tax-loss sales season is coming to an end, before next week’s clean slate. Hopefully January’s effect will then kick into high gear, knocking out this year’s biggest losers from the 52-week and multi-year lows.
The Dow Jones Industrial Average was up 1.2% at lunchtime while the S&P 500 added nearly 2%. Small caps attracted strong interest as positive seasonality approached, pushing the Russell 2000 up almost 2.8%. The Nasdaq composite matched small cap gains.
Nasdaq and NYSE volume nearly matched the first half of Wednesday’s session as we head into the holiday long weekend. US stock exchanges will be closed on Monday for New Year’s Day.
The yield on 10-year Treasury bills slipped almost 0.7%, or 5 basis points, to 3.84%. Crude oil slid about 1% to $78.10 a barrel. Asian and European markets were mixed in quiet holiday trading.
In the crypto world, Bitcoin fell near November lows, trading around $16,600, while Coinbase (COIN) bounced off Wednesday’s all-time low at 31.83.
The S&P 500 and Nasdaq are trading below their 50-day moving averages. The Dow Jones is holding just above its 50- and 200-day moving averages, unlike other benchmarks, but is trading too close to be comfortable.
Stock market: Apple emerges from the trough of the bear market
Dow component Apple (AAPL) broke through double-top support around 130 on Wednesday, falling to an 18-month low at 125.87. It rallied from that broken level on Thursday morning, triggering small-scale buy signals. Its relative strength index has fallen to a miserable 25, while the relative strength line is at its lowest since November 2021.
However, long-term support at 120 and below may limit downward pressure in the coming weeks. AAPL shares are trading up 3.4% on Thursday.
The tech icon is expected to close its 2023 fiscal year ending in September with a tiny 1% profit growth. However, growth is expected to jump 10% in fiscal 2024. Mutual funds are still heavily invested, with ownership increasing in each of the past three quarters.
Still in the Dow Jones, waltz disney (DIS) gained 4.5%, outperforming all other Dow indices.
The second Avatar film has just surpassed $1 billion in worldwide box office revenue. The movie only needs $120 million to pass Doctor Strange in the Multiverse of Madness and Black Panther: Wakanda Forever for the highest-grossing Disney movie of 2022.
Tesla Short Squeeze delights battered shareholders
You’re here (TSLA) sold around 104 in Wednesday’s premarket and rebounded strongly after news that fund manager Cathie Wood bought 17,000 shares for her struggling ARK innovation ETF (ARKK).
Automaker EV jumped more than 122 in Thursday’s stock action, continuing an oversold rebound. The tax squeeze on selling at a loss is coming to an end as short sellers get too aggressive. That could pave the way for a steamy short January squeeze that takes Tesla back above 160 or 170.
The best Tesla news so far this week? Elon Musk is keeping his mouth shut and avoiding more brand-killing tweets about his Twitter adventures.
Stock market movers and shakers
The Innovator IBD 50 (FFTY) ETF sold 1.3%, shrugging off the broad-based rally wave. Growth stocks are often overlooked when investors look for unbeaten opportunities.
Former IBD 50 component and market leader Cal Maine Foods (CALM) fell almost 15%, failing to break out of a three-month consolidation pattern. He triggered the 7% sell rule.
The egg producer reported earnings of $4.07 per share, missing estimates by 17 cents. Investors sold the stock aggressively, even as revenue rose 110% year-over-year to $801.7 million, beating consensus by nearly $3 million.
The company is benefiting from record average selling prices for eggs in the context of the highly pathogenic avian flu epidemic.
IBD 50 component DR Horton (DHI) forms the handle of a 262 day old handle cup base and is trading just 5% below the buy point of 92.55. DHI stock rose 1.8% in the first half.
Surprise – The home builders are back
Homebuilders have made a surprising appearance on the IBD 50 in recent weeks, suggesting that many investors expect the group to bottom. That could be wishful thinking, as the monthly home sales data continues to disappoint, with 10 consecutive months of negative numbers.
However, weak supply should keep a floor under homebuilders over the next few months as positive demographics kick in. Specifically, millions of millennials have entered their nesting phase, with spouses and babies demanding larger homes. And in the end, many of these people will have no trouble paying 6% or 7% mortgages over 30 years.
Also in IBD 50, Box (BOX) continues to build a constructive bullish flag pattern which has fallen back into the buy zone. For IBD readers, the pattern is also shaping up to be a tight three-week training. This follows a December 12 break above a buy point of 29.55 a cup with handle. The pullback is about to test support at the 21-day exponential moving average. BOX shares were up 2.7% at midday.
Follow Alan Farley on Twitter at @mstrader.
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The market is back at a key level; Tesla doubles the discount in the United States
