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Stock Market Holds Gains; Chip Stock Breaks Out

The stock market strengthened in the final trading hour Tuesday, with all major indexes posting gains. Investors awaited Thursday’s December CPI and jobless claims numbers as well as the start of earnings season as they try to anticipate the Fed’s next move.




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Powell, in an address in Stockholm, reiterated the central bank’s commitment to restoring price stability, agreeing that interest rate hikes are not a popular action. The speech contained little new information.

The S&P 500 rose 0.7% while the Nasdaq gained 1%. The Dow Jones Industrial Average added 0.6% and the Russell 2000 outperformed the other indexes, up 1.5%.

Volume was lower on the NYSE but higher on the Nasdaq vs. the same time on Monday.

The Dow held above its 50-day line and 21-day exponential moving average. The S&P 500 closed back above its 50-day line. The Nasdaq has found support at its 21-day line and resistance at its 50-day line.

The tech-heavy Nasdaq 100-tracking Invesco QQQ trust ETF (QQQ) added 0.9%.

Crude oil rose 0.4% to $74.92 per barrel. The Energy Select Sector SPDR ETF (XLE) added 0.7%. Natural gas fell 7.9% and is back below $4 per million British thermal units.

Bitcoin futures rose 1.6% to $17,505.

European stock markets fell, with the German DAX down 0.1% and the Paris CAC 40 shedding 0.6%. The London FTSE 100 gave back 0.4% to close out the trading day.

The 10-year Treasury note yield added 8 basis points to 3.62%.

Odds for a 25-basis-point hike at the February Fed meeting stand at 79.2%. That would take the fed funds rate to the 4.5%-4.75% range. Meanwhile, 20.8% of traders are looking for a 50-basis-point hike, according to the CME Group FedWatch Tool.

Stock Market Movers Breaking Out

European drugmaker AstraZeneca (AZN) rose 1% and broke out of a double-bottom base in heavy volume, hitting the 68.49 buy point. The stock is in the 5% buy zone, reaching to 71.91.

The stock gapped up to start the new year, hitting a 52-week high on Tuesday. AstraZeneca announced plans to acquire CinCor Pharma (CINC), the maker of clinical-stage blood pressure drug baxdrostat, in a deal valued at $1.8 billion. CINC was up 0.2% on the news.

Air pollution control company Ceco Environmental (CECO) rallied 13.4% in huge volume and broke out of a newly formed flat base, hitting the 12.99 buy point. The stock has extended from the 5% buy zone, reaching to 13.64. Its relative strength line hit a new high, as indicated by the blue dot.

Specialty retailer Five Below (FIVE) gained 2% after breaking out of a flat base and hitting the 188.77 buy point. Shares are in the buy zone.

Economic Data Due Out Thursday

The December National Federation of Independent Business (NFIB) small-business optimism index came in lower, at 89.8 vs. the 91.3 consensus. The dip represents the 12th month in a row below the 98 historical average.

The NFIB index compiles results from surveyed companies in 10 areas, including hiring plans, capital expenditures, expectations for the economy, sales, inventory levels and earnings. Small-business outlooks can give insight to changes in the sector, including small-cap stocks.

Thursday 8:30 a.m. ET. could be a pivotal point for economic data. The consensus for the December CPI data is unchanged, while the year-over-year rate is projected at 6.6%.

Initial weekly jobless claims for the week ended Jan. 7 are projected to be 215,000, higher than the 204,000 in the prior week.

Q4 earnings season starts Friday with big banks including JPMorgan Chase (JPM), Bank of America (BAC) and Citigroup (C).

Stock Market Movers: Crypto Exchange Stock Rebounds

Oak Street Health (OSH) soared 27.5% on Bloomberg news that it is in talks with pharmacy retailer CVS Health (CVS) to be acquired for more than $10 billion. Chicago-based Oak Street services Medicare-eligible patients in more than 160 centers across 21 states.

The company has a partnership with AARP and its nearly 38 million members. Shares of CVS dropped 0.9% on the news.

Dow component Boeing (BA) fell 0.9% after Morgan Stanley downgraded the stock to equal weight from overweight, while raising its price target to 220 from 213.

Shares are extended from a cup base with a buy point of 173.95. The aerospace stock holds a 96 Relative Strength Rating, meaning it has outperformed 96% of all stocks in the IBD database. Shares are up about 68% from a 120.99 low on Sept. 30.

Belgian tanker company Euronav (EURN) dropped 15.3% in huge volume on news that Frontline (FRO) ended their merger agreement. FRO shares rallied 25.7% on the news.

Cryptocurrency exchange Coinbase (COIN) popped 13% after announcing it will lay off about 20% of its workforce, around 950 employees, and plans to cut operating expenses by 25%.

Cosmetics manufacturer ELF Beauty (ELF) sold off 8.3% in heavy volume, adding to yesterday’s 3.9% drop, also in heavy volume. The stock is now trading below its 50-day moving average.

IBD 50 Movers: Chip Stock Jumps

The Innovator IBD 50 ETF (FFTY) traded in line with major stock market indexes, adding 1.1%.

Circuit board test systems developer Aehr Test Systems (AEHR) popped 9.4% following better-than-expected fiscal Q2 2023 EPS and sales numbers on Jan. 5. Shares broke out past a 28.10 buy point in higher-than-average volume.

Super Micro Computer (SMCI) dropped 7.6% after Spruce Point Management released a bearish short report, issuing a strong sell recommendation. The report details Super Micro’s history of financial restatements and accounting violations.

SMCI dropped below its 50-day line after reversing on Monday. The sell-off below the 50-day line is a warning signal.

Cloud management platform Box (BOX) fell 6.3% in heavy volume, sending it below its 200-day moving average. The big move puts the stock near the 7%-8% sell zone, after being in the buy zone of a cup-with-handle base with a 29.57 buy point.

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