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1/4/23 The Energy Is Gone, Investors Still Buying

News:

On Tuesday, the stock market had its first trading day of the new year.

Despite morning futures popping as much as 1.5%, the market failed to make any substantial rally intraday.

Photo by Luo Lei on Unsplash

All 4 indexes closed modestly lower…

  • Dow Jones -0.0%
  • Nasdaq -0.8%
  • S&P 500 -0.4%
  • Russell 2000 -0.6%

Beneath the surface, things weren’t so bad. 52% of stocks advanced, while 45% declined.

Sector Round Up

The sectors showed a clear division too. 4 were positive, 1 neutral, and 6 ended in the red.

At the top…

  • Communications (XLC) +1.3%

Flat…

  • Utilities (XLU) 0.0%

At the bottom…

  • Energy (XLE) -3.5%

The remaining sectors ended within 1% of their previous close.

Notable Names

Mashup created with images from Unsplash & Pexels

Tesla (TSLA^) plummeted 12% after missing delivery estimates.

  • August 2020 was the last time the stock traded at these levels
  • Multiple analysts slash their future expectations
  • Since TSLA’s November 2021 peak, it’s lost $950 billion in market cap
  • Elon Musk’s personal wealth has declined by more than $200 billion, a world record

Energy Sector drops with Oil & Gas. On Tuesday…

  • Oil dropped 4%
  • Natural Gas fell 10%
  • The surge of Covid infections in China is likely causing the repricing … at least in the short-term
  • A winter heat wave in Europe is hurting demand too

Technicals:

The Nasdaq’s triple bottom offered a second chance buying opportunity on Tuesday…

QQQ Daily Candles – Chart via thinkorswim

The risk to reward is phenomenal on this chart, and we remain long TQQQ in hopes of a rally.

If the market moves lower will exit for small losses

Our signals are more bearish than we’d prefer. So the trade above is not for the faint of heart…

Timing:

The FOMC minutes drop at 2 PM today. Watch for added volatility as the market digests the document.

Today is the final day of the “Santa Rally.” As of yesterday’s close, the S&P 500 is clinging to a gain of just 0.1%.

  • The average return for the Santa rally is +1.3%
  • A positive close today will mark a win for the bulls

Day 1 of 5 for the “Early Warning” is in the books. The S&P 500 is currently down 0.4% for this measure.

Watchlist:

*Low Float
^Open Position

*KALA support at $20
*TMBR support at $2
*EVER support at $13.50, resistance at $16
*NINE support at $12
PDSB support at $10
CABA resistance at $10
FREQ support at $3
SMMT support at $4, resistance at $5.50
TERN support at $8
ORMP resistance at $12
ORIC resistance at $6
ETNB support at $10
VATE support at $2
GLYC support at $2.50
^CROX support at $104
^PRQR support at $3
VKTX support at $8
WVE support at $6, resistance at $7
AQMS resistance at $1.20
ALLK support at $8
CPRX support at $18
TGTX support at $10
ARDX support at $2.50
WDH support at $3
IQ on watch

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