Why a market rally can use a holiday; Tesla Rebound, 5 Stocks Near Buy Points

Dow Jones futures were up slightly overnight heading into the Thanksgiving holiday, along with S&P 500 futures and Nasdaq futures.


The stock market rally was positive for the second consecutive session. According to the minutes of the November meeting released on Wednesday afternoon, Fed officials see rate hikes to be slower.

The Nasdaq surged Tesla (TSLA). Major indexes have risen solidly so far this holiday-shortened week. But a longer break for the market rally could be constructive.

Investors should be cautious about adding risk given key technical resistance and noteworthy economic reports.

However, Dexcom (DXCM), UnitedHealth (UNH), Neurocrine biosciences (NBIX), Medpace Holdings (MEDP) and Shockwave Medical (SWAV) are five health stocks with interesting performance.

The DXCM stock and Neurocrine Biosciences are on the IBD Leaderboard, and the MEDP stock is on the Leaderboard watchlist. NBIX shares and Medpace are in the IBD 50.

Dow Jones Futures today

Dow Jones futures were up 0.1% at fair value. S&P 500 futures were up 0.2%, while Nasdaq 100 futures were up 0.2%.

The 10-year Treasury yield fell 2 basis points to 3.69%.

US stock markets will be closed on Thursday for the Thanksgiving holiday. US markets will close early on Friday at 1:00 PM ET. But other stock exchanges around the world will be open as normal on Thursday and Friday.

Remember that an overnight move in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.

Join IBD’s experts as they analyze the stocks that made the most of the stock rally on IBD Live

Stock market rally

There was some volatility in the stock market rally on Wednesday, but gains were led by tech stocks.

Initial jobless claims rose to a three-month high, while ongoing claims hit an eight-month high. S&P Global’s purchasing managers’ indexes for U.S. manufacturing and services both signaled contraction.

Fed minutes reinforced expectations for a 50 basis point rate hike at the December 14 meeting. Markets still favor another half-point move in February, but there’s a decent chance for a quarter-point gain.

The Dow Jones Industrial Average rose 0.3% on Wednesday. The S&P 500 rose 0.6%, led by TSLA shares. The Nasdaq composite gained 1%. The small-cap Russell 2000 rose 0.1%.

The price of crude oil in the United States fell by 3.7% to $77.94 per barrel. Natural gas futures rose 7.2%.

The 10-year Treasury yield fell 5 basis points to 3.71%. The two-year Treasury yield, which is more closely tied to the Fed’s rate hike forecast, fell below 4.5%.

The US dollar fell significantly for the second straight session, near recent lows.

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The iShares Expanded Tech-Software Sector ETF ( IGV ) rose 1.5%. VanEck Vectors Semiconductor ETF (SMH) gained 0.9%.

The SPDR S&P Metals & Mining ETF ( XME ) rose 0.3%. US Global Jets ETF (JETS) rose 0.1%. The SPDR S&P Homebuilders ETF ( XHB ) rose 0.5%. The Energy Select SPDR ETF ( XLE ) fell 1.1%. The Healthcare Select Sector SPDR Fund ( XLV ) rose 0.4%. Dow Jones giant UNH shares are the top holding in XLV.

Reflecting more speculative story stocks, the ARK Innovation ETF ( ARKK ) gained 2.9% and the ARK Genomics ETF ( ARKG ) gained 0.9%. TSLA stock is a core holding among Ark Invest’s ETFs

Tesla shares rose 7.8% to 183.20 on Wednesday, rebounding from Tuesday’s bear market lows as Citigroup upgraded the EV giant from sell to hold. TSLA shares are still down 19.5% this month and are on track to nearly double in 2022.

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Stocks to Watch

Dexcom shares advanced 1.7% to 112.92, finding support at the 21-day moving average. DXCM stock took a break this month after paring gains on Oct. 28. Dexcom shares have a long run with a 123.46 buy point from a seven-month consolidation. Investors can buy DXCM shares from an early entry above the 21-day line, perhaps using Tuesday’s high of 113.88 as a special buy point.

Medpace shares fell 1.3% to 218.81 on Wednesday. Shares are nearing record highs after surging 38% after earnings on Oct. 25. Since then, MEDP stock has made a mixed thread on a deep, year-round cup base. While shares have seen big swings over the course of several days, MEDP shares are currently on track to form a tight three-week pattern to Friday’s close. Investors can use the November 15 close of 226.57 as an early entry, above much of the recent trade.

NBIX shares fell 1.5% to 118.97. Stocks are consolidating near multi-year highs since October. Despite falling to the 50-day line last week, the Neurocrine stock has a tight three-week pattern that is on track to enter the fourth week. Technically, this has a buy point at 126.09, although investors may want to wait for a quieter move.

Shares of Shockwave rose 4.7% to 264.06 on Wednesday, breaching its 21-day line but facing resistance at the 50-day line. After a lackluster performance in late October and continued sharp selling with gains, SWAV stock bounced back last week. A new base will take longer, but aggressive investors can use a strong move above the 50-day as an early entry.

Shares of UNH rose 1.3% to 529.71, climbing above the 50-day and 21-day lines after briefly undercutting the 200-day line last week. UnitedHealth stock used to be the IBD Long-Term Leader and still shares many of those characteristics. Investors can use a break above the 50-day line as either an early entry or a Long-Term Leader entry. The UNH fund must establish a new base after a breakout from a grab-and-go stand base failed quickly last month.

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Market Rally Analysis

A stock market rally extended Tuesday’s gains. The S&P 500 topped its intraday high on Nov. 15 and closed within 1% of its 200-day line.

The Russell 2000 reached its 200-day line.

The Nasdaq extended Tuesday’s rebound from its 21-day moving average, although it is still well below its Nov. 15 short-term high and its 200-day high.

The Dow Jones closed 20 points above its intraday high on August 16.

With the S&P 500 firmly moving above its 200-day line — which coincides with a nearly year-long downtrend line — it’s a big test for a market rally.

A series of economic data can change the Fed’s interest rate expectations and thus the stock market. On Wednesday, November 30, the October JOLTS report will show jobs, Fed chief Jerome Powell will speak later in the day. On Thursday, the Fed’s favorite inflation gauge, the PCE price index, will be released, along with jobless claims and the ISM manufacturing index. The November business report is due Friday, November 2.

Ideally, the market will move sideways for a few days, allowing at least the 21-day line to enter those economic reports.

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What to do now

The market rally has seen some nice gains this week, brightened by more stock buy signals over the past few days. Investors could add a bit more exposure as a result.

But they may want to be cautious about making significant new purchases with the S&P 500 below its 200-day line and the Fed’s critical economic stance expected next week.

Also consider taking partial profits in stocks that are quickly accumulating. Stocks are making short-term gains amid sharp uptrends and sector rotation.

However, investors should work hard on their investment shopping lists, looking for setups and performing names across various sectors.

Read The Big Picture daily to stay in sync with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.


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