X Tesla stock briefly flashed a bullish buy signal despite more signs of weaker-than-expected Tesla ( TSLA ) demand in China. This comes amid a big Ford Motor ( F ) warning about supply costs, as well as unfinished vehicles. Ford stock fell 12%, with General Motors ( GM ) down 5.6% despite an EV supply deal with Hertz ( HTZ ). In addition to Tesla, chipmakers On Semiconductor ( ON ) and Impinj ( PI ) are showing strength along with Neurocrine Biosciences ( NBIX ) and lithium giant SQM ( SQM ). Apple (AAPL) rose for a second straight session. Apple stock remains below key levels. Meanwhile, shares of Microsoft ( MSFT ) and Google parent Alphabet ( GOOGL ) are at 52-week lows. NBIX stock is on the IBD Leaderboard. TSLA and On Semiconductor, also known as Onsemi, are in the IBD 50. ON stock is in the IBD Big Cap 20. Impinj is Tuesday’s IBD Stock of the Day. The video embedded in this article looked at Tuesday’s market action and analyzed Neurocrine Biosciences, Wolfspeed ( WOLF ) and PI stock.
Fed meeting
Policymakers appear committed to a third consecutive Fed rate hike of 75 basis points, with an announcement expected at 2 p.m. ET on Wednesday. Markets see a slight chance of a huge full point rise. The key is what the Fed sees now. The quarterly forecasts will indicate where the central bank sees the Fed Funds rate at the end of 2023 and under what economic conditions. Fed chief Jerome Powell, in his August 26 speech in Jackson Hole, made it clear that the Fed is willing to risk recession in order to bring inflation under control. Powell will speak at 2:30 p.m. ET, perhaps hinting at near-term Fed rate hikes. Markets are currently betting on a fourth move of 75 basis points in November, followed by 50 basis points in December. That will push the year-end Fed Funds rate to 4.25%-4.5% from 2.25%-2.5% today. Ahead of the August CPI on September 14, markets were looking for 3.75%-4% at the end of 2022.
Dow Jones Futures Today
Dow Jones futures were slightly above fair value. S&P 500 and Nasdaq 100 futures moved higher. Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session. Join IBD’s experts as they analyze stocks that can act in the stock market’s rally on IBD Live
Stock market Tuesday
The stock market fell on Tuesday ahead of the Fed meeting announcement. A late afternoon bounce faded in the end. The Dow Jones Industrial Average fell 1% in Tuesday trading. The S&P 500 lost 1.1%. The Nasdaq composite fell 0.95%. The small-cap Russell 2000 lost 1.4%. Apple shares, a member of the Dow Jones, S&P 500 and Nasdaq composite, rose 1.6 percent to 156.90. AAPL stock hit resistance at its 21-day and remains below the 50-day and 200-day lines after last week’s big bearish reversal. But a decisive move above the 50-day and 200-day lines could provide another early entry. US October crude fell 1.5% to $84.45 a barrel. November crude oil futures, now a contract close to the month, fell 1.7% to $83.94. The yield on the 10-year note jumped 8 basis points to 3.57%, another 11-year high.
ETFs
Among the top ETFs, the Innovator IBD 50 ETF ( FFTY ) fell 1.3%. The iShares Expanded Tech-Software Sector ETF ( IGV ) fell 1.5%. The VanEck Vectors Semiconductor ETF ( SMH ) fell 1.4%. The SPDR S&P Metals & Mining ETF ( XME ) fell 2.7%. The Energy Select SPDR ETF (XLE) was down 0.7% and the Financial Select SPDR ETF (XLF) was down 1.5%. The Health Care Select Sector SPDR Fund ( XLV ) fell 1.2%. Reflecting the most speculative stocks, the ARK Innovation ETF ( ARKK ) fell 2.5% and the ARK Genomics ETF ( ARKG ) fell 1.6%. TSLA stock is a major holding in Ark Invest’s ETFs. Five Best Chinese Stocks to Watch Now
PI stock
Impinj shares fell 2.5% to 89.66 on Tuesday. Shares of the tracking chip maker are finding support at the 21-day and 10-week lines. PI stock is working on a new consolidation that should be a suitable base until Friday’s close with a 99.10 buy point. Investors could use 93.46, just above near-term highs, as an early entry that is still close to the 10-week line. The relative strength line is right at the highs, a bullish sign for PI stock as it outperforms the S&P 500.
In stock
Shares of Semiconductor fell 2.4% to 68.48 after rising 1.8% on Monday. Shares of the EV-focused chip maker closed just below the 21-day and 10-week lines. The RS series for Onsemi stock is right at the highs. After a late August fade from a long base, ON stock could make a new, shallow base at the end of next week. Investors could use 73.03 as an aggressive entry, which would also be behind the top of the previous consolidation.
NBIX stock
Neurocrine stock fell 0.7% to 107.09, again finding support at its 21-day moving average. NBIX stock has a flat base with a buy point of 109.36, according to MarketSmith analysis. The flat base lies directly above a previous consolidation, making it a base-base formation. Investors could use a move above Monday’s high of 108.71 as a slightly lower entry. The RS series for NBIX stock is at a new high.
Share SQM
SQM stock fell 2.4% to 104.66, right at its 21-day line. Shares of the Chilean lithium and fertilizer giant tried to break out of a messy holding base earlier this month, but never closed above a buy point of 113.80. The good news is that the 50-day line is starting to arrive. The RS line for SQM stock is near highs.
Tesla stock
Tesla stock rose as high as 313.33, paring gains and moving above a very aggressive buy point of 309.22. However, shares fell 0.1% to 308.73. TSLA stock is nearing the 314.74 buy point from a short-term consolidation within a much larger consolidation that could be a suitable base at the end of this week. The RS line has been bouncing recently just below the early April highs. Buying TSLA stock or any stock in the current market environment would be extremely aggressive. CEO Elon Musk tweeted Tuesday about Optimus, the humanoid Tesla Bot he may show off at the company’s AI Day on September 30. Most experts say a useful general-purpose humanoid robot is decades away. He also hinted at an improved Smart Summon or autopark feature, which has had issues over the years. However, Tesla’s sales in China have fallen short of expectations. Local sales should hit a record in September as Shanghai capacity has expanded again. But Tesla vehicle insurance registrations have fallen in the last week, a time when they usually rise hard. Tesla China’s wait times have fallen sharply in recent weeks, with the EV giant resorting to a large insurance subsidy to fuel end-of-quarter sales. This could foreshadow real price cuts later this year. Tesla Vs. BYD: Which EV giant is better to buy?
Stock Market Analysis
Well, it’s a stock market correction. The S&P 500 and Dow Jones on Tuesday retreated from last Friday’s lows before retreating somewhat. The good news for Tuesday is that stocks didn’t rally on big Fed-related news. This contrasts with the Aug. 26 Jackson Hole speech by Fed chief Powell or the Sept. 14 CPI inflation report. It’s no coincidence that the stock market is struggling with bond yields screaming higher. The summer bull case revolved around the Fed. First, the Fed was expected to slow rate hikes soon and then begin cutting rates in 2023. Then there was still hope that the Fed would taper off rate hikes and stop by the end of the year. But now the Fed is on track to raise rates aggressively through the end of the year, with more likely in 2023. That means a lot more pain for the economy. The current environment of low growth and high inflation has not exactly been easy for companies. Ford, FedEx ( FDX ) and General Electric ( GE ) are among those that warned last week. Tuesday’s selloff in Ford stock, following FDX and GE last week, suggests investors haven’t priced in significant earnings disappointments. Expect many more warnings in the coming weeks. Given the weakness in recent weeks, the market is likely to recover on Wednesday after the Fed meeting and Fed Chair Powell’s speech. Keep in mind that the market often reverses course in a second-day reaction to a Fed meeting. Until there is clarity on when the Fed can begin to slow and stop its tightening, it is difficult to see markets making significant progress. It’s not hard to see the major indices testing or undercutting their June lows. Time the Market with IBD’s ETF Market Strategy
What should we do now
The market correction is back in effect as the Fed prepares to sharply raise interest rates again with no end in sight. Companies are issuing big warnings amid tough macroeconomic conditions that are likely to worsen. Investors should have little or no exposure and not make new purchases. Wait until there is a confirmed uptrend, which would likely involve a retracement of the 50-day moving averages of the major indicators. Even in this scenario, other technical obstacles, as well as the Fed and the financial environment, should keep investors cautious. For now, investors should work on their watchlists, focusing on relative strength such as NBIX, On Semi and Tesla stocks. Remember, today’s relative winners may start to collapse if the correction intensifies. Read The Big Picture every day to stay in sync with market direction and top stocks and sectors. Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more. YOU MIGHT ALSO LIKE: Do you want to make quick profits and avoid big losses? Try SwingTrader The best growth stocks to buy and watch IBD Digital: Unlock IBD’s Premium Stock Lists, Tools and Analysis Today
