Stock Market Looks Ahead to January Effect; Tesla, Apple, Disney applaud battered investors – Investor’s Business Daily

Stock Market Looks Ahead to January Effect;  Tesla, Apple, Disney applaud battered investors - Investor's Business Daily

Stock market indices contributed to early Thursday afternoon gains, lifting deep lows. Oversold technical readings and the end of tax-selling sessions could grow buying interest into Friday’s year-end finale.


The tax-loss sales season of the year is drawing to a close ahead of next week’s clean sheet. Hopefully, the January effect will then kick into gear and take this year’s biggest losers from the 52-week and multi-year lows.

The Dow Jones Industrial Average rose 1.2% in the lunch break, while the S&P 500 added nearly 2%. Small caps attracted a lot of interest as positive seasonality approached, driving the Russell 2000 up nearly 2.8%. The Nasdaq composite was in line with small cap gains.

Nasdaq and NYSE volume nearly matched the first half of Wednesday’s session as we approach the long holiday weekend. On New Year’s Day, the US stock markets are closed on Monday.

The 10-year Treasury yield fell nearly 0.7%, or 5 basis points, to 3.84%. Crude oil fell about 1% to $78.10 a barrel. Asian and European markets were mixed in quiet holiday trading.

In the crypto world, Bitcoin slumped near November lows, trading around $16,600 Coin base (MINT) bounced off an all-time low on Wednesday at 31.83.

The S&P 500 and Nasdaq are below their level 50-day moving averages. The Dow is holding just above its 50-day and 200-day moving averages, unlike other benchmarks, but trading too close for comfort.

Stock market: Apple rises low in the bear market

Dow component Apple (AAPL) cut double top support around 130 on Wednesday, falling to an 18-month low of 125.87. It reached that broken level again Thursday morning, triggering small-scale buy signals. To be Relative power rating has dropped to a miserable 25, while the relative strength line is at its lowest level since November 2021.

However, extended support at and below the 120 could limit downward pressure in the coming weeks. AAPL shares traded 3.4% higher on Thursday.

The technology icon is expected to close out the September-ending fiscal year 2023 with minuscule 1% earnings growth. However, growth is expected to increase by 10% in fiscal year 2024. Mutual funds continue to be heavily invested, with ownership increasing in each of the last three quarters.

Also in the Dow Jones, Walter Disney (DIS) rose 4.5%, leading all other Dow index performers.

The second Avatar movie just passed $1 billion in worldwide box office receipts. The film needs just $120 million to pass Doctor Strange in the Multiverse of Madness and Black Panther: Wakanda Forever for the top-grossing Disney film of 2022.

Tesla Short Squeeze thrills battered shareholders

Tesla (TSLA) sold to about 104 in Wednesday’s premarket and rebounded strongly on news that fund manager Cathie Wood bought 17,000 shares for her troubled ARK innovation ETF (ARKK).

The EV automaker rose more than 122 points during Thursday’s stock market action, continuing an oversold rally. Selling pressure for tax loss is coming to an end as short sellers become too aggressive. This could pave the way for a scorching short squeeze in January that takes Tesla back above 160 or 170.

The best Tesla news so far this week? Elon Musk keeps his mouth shut and avoids more brand-destroying tweets about his Twitter adventures.

Stock Exchange Movers And Shakers

The Innovator IBD 50 ETF (FFTY) sold 1.3%, ignoring the broad rally wave. Growth stocks are often ignored when investors chase backward opportunities.

Former IBD 50 component and market leader Cal-Maine Foods (CALM) fell nearly 15% and failed to breakout during a three-month consolidation pattern. It put the 7% sales rule.

The egg producer reported earnings of $4.07 per share, beating estimates by 17 cents. Investors sold the stock aggressively even though sales 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 during an outbreak of highly pathogenic avian flu.

IBD 50 ingredient DR Horton (DHI) forms the handle of a 262-day-old cup-with-handle base and is trading just 5% below the buy point of 92.55. DHI shares rose 1.8% in the first half of the Thursday session.

Surprise – Homebuilders are back

Homebuilders have made a surprise appearance on the IBD 50 in recent weeks, suggesting that many investors expect the group to bottom out. It could be wishful thinking as monthly home sales continue to disappoint, with 10 consecutive months of negative numbers.

However, low supply should keep a bottom under homebuilders in the coming months as positive demographics gain momentum. In particular, millions of millennials have entered their breeding phase, with husbands and babies demanding larger living spaces. And eventually many of these people will have no trouble paying 6% or 7% 30-year mortgages.

Also in the IBD50, Box (BOX) continues to build constructively bull flag pattern that has slipped back into the buy zone. For IBD readers, the pattern also becomes one three weeks of training. This follows a breakout on Dec. 12 above a buy point of 29.55 of a handle cup. The pullback is about to test support on the 21-day exponential moving average. BOX shares rose 2.7% on the afternoon.

Follow Alan Farley on Twitter at @msttrader.


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Market regains key level; Tesla doubles US discount

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