Dow Jones futures fell modestly Wednesday morning, along with S&P 500 futures and Nasdaq futures.
The stock market rally started off 2024 mixed but generally lower, with selling concentrated in chips, software and tech megacaps that had been big winners. Apple[tiycker symb=AAPL], which closed just below a buy point at the end of 2023, fell below another key level Tuesday.
Market breadth wasn't that bad, though.
Celsius Holdings staged a bullish upside reversal while Eli Lilly nudged back above its 50-day line. Both weight-loss plays offered early entries.
Tesla was little changed after the EV maker reported record fourth-quarter deliveries that slightly topped.
Microsoft tested its 10-week line but came off lows, continuing to trade tightly as it works on a new base.
Tesla stock and Microsoft are on IBD Leaderboard. Eli Lilly stock was added to SwingTrader Tuesday. MSFT stock is on IBD Long-Term Leaders. CELH stock and United Rentals are on the IBD 50. Eli Lilly was Tuesday's IBD Stock Of The Day.
The video embedded in the article discusses the market's action Tuesday and analyzes Celsius, Microsoft and LLY stock.
Dow Jones Futures Today
Dow Jones futures lost 0.3% vs. fair value. S&P 500 futures fell 0.4% and Nasdaq 100 futures declined 0.5%.
The 10-year Treasury yield edged up to 3.97%.
Crude oil rose slightly.
Bitcoin tumbled to around $42,500, with crypto-related stocks also selling off. Crypto-related plays have been volatile heading into an expected SEC approval of the first spot Bitcoin ETFs within the next week but that comes amid a huge rally on spot ETF buzz.
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 started 2024 with a mixed-to-weak performance Tuesday, with tech growth leaders near highs leading the retreat.
The Dow Jones Industrial Average edged up 0.1% in Tuesday's stock market trading. The S&P 500 index fell 0.6%. The Nasdaq composite slumped 1.6%.
Apple stock fell 3.6% to 185.64, dropping below its 50-day moving average, acting as a drag to the major indexes. AAPL stock had closed just below a buy point and 21-day moving average on Friday. Barclays downgraded the tech titan to underperform, expecting weak iPhone sales and noting a relatively lofty valuation for Apple stock given the weak growth.
Losers led winners Tuesday, but not by that much, especially given the S&P 500 and Nasdaq losses.
The small-cap Russell 2000, which briefly turned positive Tuesday morning, closed down 0.7%.
The Invesco S&P 500 Equal Weight ETF lost a fraction, easily besting the S&P 500.
Medicals and financials broadly did well, while metal and mining stocks held up.
Some investors may have waited until the new year to take some profits in big 2023 tech winners for tax reasons. A number of cloud software plays that had traded tightly in the waning days of 2023 suffered big losses Tuesday.
The Nasdaq tested its 21-day moving average for the first time in three months. But a pullback or pause would likely be healthy. Many leaders could use a longer break, while rebounding names like Celsius could show new relative strength.
U.S. crude oil prices fell 1.8% to $70.38 a barrel, reversing lower after initially popping Tuesday on Red Sea shipping concerns and Mideast tensions.
The 10-year Treasury yield rose 8 basis points to 3.94%.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF gave up 2.8%. Microsoft stock is a major IGV holding. The VanEck Vectors Semiconductor ETF slumped 3.4%.
Reflecting stocks with more speculative stories, the ARK Innovation ETF fell 3.6% and ARK Genomics edged down 0.3%. Tesla stock is still a key holding across ARK Invest's ETFs.
The SPDR S&P Metals & Mining ETF fell 0.85%. The SPDR S&P Homebuilders ETF stepped down 1.2%. The Energy Select SPDR ETF climbed 1.1%. The Health Care Select Sector SPDR Fund gained 1.8%, with LLY stock a significant component.
The Industrial Select Sector SPDR Fund declined 1%. The Financial Select SPDR ETF rose 0.4%.
Tesla Vs. BYD: TSLA Near Buy Points, But Rival Is The New EV King
Stocks To Watch
CELH stock briefly came down to its 50-day line, then roared higher for an 8.3% gain to 59.03. Shares cleared last week's highs and broke a downward-sloping trendline. That offered an early entry, though shares are already close to extended vs. the 50-day line. The relative strength line had slumped since early September but has been moving higher in the past couple of weeks.
The official buy point is 68.95.
The energy drink maker claims its special blend helps increase metabolism and burn calories. Earnings and sales growth is booming.
Celsius is gearing up for a big international expansion this year, fueling Tuesday's gains.
LLY stock climbed 1.6% to 592.20, moving back above the 50-day line and a downward-sloping trendline, offering an early entry. The weight-loss drug giant also has key resistance around 600. Eli Lilly stock has an official flat-base buy point of 629.97.
TSLA stock lost 6 cents to 248.42 on Tuesday, holding its 21-day line. Before the open, Tesla reported record fourth-quarter deliveries of 484,507 EVs, slightly topping views of just above 480,000. The electric-vehicle giant edged above its full-year target of 1.8 million vehicles. However, China rival BYD surpassed Tesla in fully battery electric vehicles for the first time, selling 526,409 BEVs in Q4.
Tesla stock fared much better than BYD and other China EV stocks that also reported solid-to-strong deliveries. Rivian plunged on missing Q4 delivery estimates.
Tesla stock has a 278.98 double-bottom buy point. However, it does have a 265.13 entry from a weekly handle, but a bit more depth would be ideal.
Microsoft stock fell 1.4% to 370.87, closing right around its 10-week line but still close to its 21-day line. Intraday, MSFT tested a prior 366.78 buy point from a cup base. At this point, investors should probably be focused on its new flat base. The official buy point is 384.30, according to MarketSmith analysis. But a move above 377 would clear key resistance, offering an early entry. On the downside, a decisive move below the 10-week line would be a sell signal.
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What To Do Now
Some growth tech winners retreated to start the year while defensive and defensive growth names led. Is that just a blip or the start of a real trend?
Early-January volatility isn't a big surprise. Investors can nibble at new buying opportunities in names like Celsius or LLY stock. Alternatively, they can take some partial profits, especially if they didn't do so at the tail end of 2023.
For the most part, it's a good time to wait and see which stocks stand out after early-January shakeouts. Which leaders will hold up or move into position and which will fall off?
Work on your watchlists to track these moves.
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