Dow Jones futures were slightly higher early Wednesday, along with S&P 500 futures and Nasdaq futures. Tesla reportedly plans to revamp the Model Y by mid-2024.
The stock market rally enjoyed modest gains Tuesday with the S&P 500 in sight of all-time highs. Small caps had a strong advance.
While a Santa Claus rally is underway, there are reasons to be cautious about new buys before the new year. Still, Netflix, Monday.com, Microsoft and Datadog are holding in buy zones while MongoDB reclaimed a buy point.
Tesla will update the Model Y, Bloomberg reported Tuesday night, citing sources, with mass production from its Shanghai.
DDOG stock, Tesla and Microsoft are on IBD Leaderboard. Microsoft stock is on IBD Long-Term Leaders. Datadog, MongoDB and MNDY stock are on the IBD 50. Datadog stock is on the IBD Big Cap 20.
The video embedded in the article reviewed Tuesday's market action and analyzed AppLovin, CBOE Global Markets and NFLX stock.
Dow Jones Futures Today
Dow Jones futures were slightly above fair value. S&P 500 futures climbed 0.1% and Nasdaq 100 futures rose 0.2%.
The 10-year Treasury yield dipped to 3.86%.
Crude oil futures fell slightly.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally had another positive session, with small caps leading a broad advance.
The Dow Jones Industrial Average climbed 0.4% in Tuesday's stock market trading. The S&P 500 index rose 0.4%. The Nasdaq composite advanced 0.5%. The small-cap Russell 2000 jumped 1.2%.
The Nasdaq and S&P 500 hit fresh 52-week highs, recouping all the losses from Wednesday's tumble. The S&P 500 is 1% off its January 2022 all-time high, while the Nasdaq is back above the 15,000 level. The Russell 2000 is now decisively above resistance going back to April 2022.
However, the market rally looks overbought by various measures. Also, the Nasdaq is 8.1% above its 50-day line. Those indicators suggest a pause or pullback could be in offing, but perhaps not this year. It's likely that some investors are holding off on selling stocks until January for tax reasons.
The 10-year Treasury yield fell 2 basis points to 3.885%.
U.S. crude oil prices rose 2.7% to $75.57 a barrel, the highest close since the end of November.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF edged up 0.3%. MSFT stock is a major IGV holding, with Datadog also a component. The VanEck Vectors Semiconductor ETF popped 1.4%.
Reflecting more-speculative story stocks, ARK Innovation ETF rallied 1.5% and ARK Genomics ETF ran up 2.6%. Tesla stock is still a major holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF climbed 0.8% and SPDR S&P Homebuilders ETF rose 0.6%. The Energy Select SPDR ETF added 0.4% and the Health Care Select Sector SPDR Fund inched 0.2% higher.
The Industrial Select Sector SPDR Fund climbed 0.7% and the Financial Select SPDR ETF was up 0.4%.
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Stocks In Buy Zones
Netflix stock climbed 0.9% to 491.19. Shares are holding just above a 482.70 handle buy point in a five-month consolidation cleared on Dec. 18. The brief pause is letting the 21-day and 50-day lines close the gap somewhat with NFLX stock.
Microsoft stock edged up 8 cents to 374.66, continuing to trade around the 21-day line as the 50-day line closes the gap. Shares are still in range from a 366.78 cup-base buy point, first cleared on Nov. 10. Investors could buy MSFT stock here or use the Dec. 13 high of 377.64 as a trigger. Microsoft also has a five-weeks-tight pattern with a 384.30 buy point. That's on track to be a flat base, base-on-base pattern at the end of this week.
MNDY stock dipped 0.2% to 189.07. Shares are still in range of a 185.81 handle buy point cleared on Dec. 14. Investors could buy Monday.com here or with a little more strength.
DDOG stock gained 0.9% to 123.56 on Tuesday. Shares are trading tightly after clearing a 120.26 high-handle entry on Dec. 14. A longer pause would let the 21-day and 50-day close the gap further.
MDB stock rose 2.3% to 416.90. That's back above a 412.67 cup-with-handle buy point that's arguably still valid. Shares also broke a short downtrend as they rebounded from the 21-day line. One could view the past few weeks — which included an ugly earnings sell-off — as a big handle on a weekly MongoDB stock chart, or as the start of a new consolidation.
Tesla Model Y Update
Tesla plans to upgrade its Model Y crossover, Bloomberg reported. The Shanghai facility's phase 2 reportedly will suspend production during the Lunar New Year holiday for a week for a partial upgrade. More plant changes will be needed for mass production, which could start as soon as mid-2024.
However, Tesla China on Wednesday refuted the Bloomberg report, issuing a statement to local media.
A Model Y upgrade has been rumored for quite some time to follow the Model 3 upgrade. The Highland Model 3 launched from Shanghai a few months ago, with the Fremont expected to start making the new M3 in early 2024.
Tesla Model Y sales have held up well in 2023, following big price cuts in October 2022 and January 2023, even as the EV giant has had to step up discounts in Europe and the U.S.
Tesla Stock
Tesla stock rose a fraction early Wednesday, as the Model Y upgrade may not be a surprise.
Shares rose 1.6% to 256.61 in Tuesday's session. Technically, TSLA stock has a 259.84 handle buy point on a weekly chart, but it's a wafer thin. Investors may still prefer to use a 278.98 double-bottom buy point.
What To Do Now
The market rally is looking strong, but also flashing some signals that a pullback or pause could be ahead, with tax selling in early January a possible catalyst.
That's a reason to avoid being aggressive with new buys in the final trading week of the year. There aren't many stocks that are actionable right now in any case.
Investors could use the Santa Claus rally to take some partial profits. But being significantly invested still makes a lot of sense.
Some stocks are working on possible handles, pullbacks, pauses and full-on bases that could create opportunities for new or add-on buys.
So definitely keep your watchlists up to date.
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