Stock indices stalled after an attempted rally on Monday, settling into choppy action in the afternoon session.
Tech stocks received the bulk of interest from speculative buyers, while small-cap energy stocks shrugged off selling into futures wells. A basket of these games rallied to one- and two-month highs.
The Dow Jones Industrial Average is trading at this hour while the S&P 500 is down 0.1%. The Nasdaq composite once again led the rise, posting a 0.2% gain.
Volume from Friday is holding steady for a summer Monday, down 5% on the Nasdaq and up the same percentage on the NYSE.
Weak data weighed on crude oil prices, sending the West Texas Intermediate contract down more than 4% to 93.97. Bond yields fell across all maturities, with the 10-year Treasury yield dropping to 2.61%.
Investors bought shares of You’re here (TSLA) for the fourth straight day, lifting the electric vehicle maker to a three-month high at 935.63. Stocks erased much of their earlier gains as they tested the 200-day line.
China Wild Card in play
Nancy Pelosi (D-California) will travel to Taiwan within the next 24 hours. China has warned it will retaliate, increasing the chances of a military or logistical confrontation of some kind.
The market ignores this potential joker. High complacency is dangerous, given the potential impact on Chinese stocks, US business interests and multi-nationals exposed to billions of dollars.
As a reminder, the Russian-Ukrainian war was a “surprise” in the first quarter, forcing hundreds of American companies to withdraw from profitable Russian operations. It also aggravated supply chain issues, compounding the global crisis caused by the pandemic.
Stock market catalysts this week
The July nonfarm payrolls report arrives at 8:30 a.m. Friday. The consensus is now at 250,000. The United States added 372,000 jobs in June, which would therefore mark a deceleration in the labor market. However, summer data adjusts for all sorts of seasonal variations, so we may have to wait until the fourth quarter to accurately gauge the strength of the economy.
Hundreds of companies are releasing their second quarter results this week, but only a few stand out as market movers.
Advanced micro-systems (AMD) is a speculative favorite in the Nasdaq 100 reporting after Tuesday’s closing bell. The company is expected to post earnings of $1.04 per share on revenue of $6.5 billion in the second quarter.
The stock has rebounded almost 37% from its low in July and is more than halfway to the buying point of 109.67 of a potential base double bottom.
Monday Stock Market Highlights
Component no. 4 IBD 50 Enphase Energy (ENPH) stalled after last week’s powerful breakout. The stock broke a double bottom during a long consolidation and then hit a buy point of 282.56.
It is currently trading at this level as relative strength has spiked over several timeframes.
Even so, SEC filings just revealed that two Enphase directors sold 85,822 shares worth $23.4 million, using the rally to lighten positions. This could be a warning sign, as only 2.08% of the 135.46 million shares outstanding were held by insiders before the sale.
The S in CAN SLIM refers to the offer, which benefits from stock buybacks that reveal insider confidence. Insiders selling stocks may reveal otherwise, especially when a big selling opportunity arises.
Global Payments (GPN) rebounded almost 7% on strong results after agreeing to buy EVO Payments (EVOP) for $4 billion. The rally propelled GPN into resistance at the 200-day moving average, which closely aligned with the buy point at 132.37.
Celsius Fund (CELH) rose 11.4% after the company announced a long-term strategic distribution agreement with PepsiCo (PEP) which includes an investment from the drinks and snacks giant.
An IBD 50, Celsius stock breaks well above the 5% buy zone after clearing an aggressive entry with volume, and could form a big cup with a new buy point of 110.32.
Follow Alan Farley on Twitter @mstrader.
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