The stock market rally encountered further setbacks as the Nasdaq suffered its fourth consecutive session of losses, breaching a key level and causing market losses to widen considerably. Notable crypto plays, including COIN stock, Marathon Digital (MARA), and MicroStrategy (MSTR), also plummeted on Wednesday morning, although Coinbase (COIN) and MARA stock managed to rebound from their lows.

Tesla (TSLA) emerged as a notable loser during the trading session, although analysts suggest that this could potentially have a constructive outcome in the long run.

On a positive note, Eli Lilly (LLY) experienced solid gains, surpassing a second early entry after flashing a buy signal on Tuesday.

Dow Jones futures showed a slight increase of 0.1% compared to fair value. S&P 500 futures and Nasdaq 100 futures also climbed by 0.1%.

It is important to note that overnight trading activity in Dow futures and other markets does not always directly translate into performance during regular stock market sessions.

Throughout Wednesday's trading, the stock market rally continued to struggle, with the Dow Jones Industrial Average falling by 0.8% and the S&P 500 index experiencing a similar decline. The Nasdaq composite had a more significant slump of 1.2%.

Market breadth proved to be weak on Wednesday, following a relatively resilient performance on Tuesday. The Invesco S&P 500 Equal Weight ETF (RSP), which had a slight increase on Tuesday, dropped by 1.5% during Wednesday's trading.

For the first time since November 1, the Nasdaq closed below its 21-day moving average, while the Russell 2000 also slipped beneath that level. The S&P 500 neared their 21-day line.

Several leading stocks incurred further losses, although certain stocks attempted to find key support levels.

Meanwhile, U.S. crude oil prices surged by 3.3%, reaching $72.70 per barrel.

The 10-year Treasury yield witnessed a 4 basis points decline, falling to 3.905%, after briefly reaching 4.01% in the morning.

During the December meeting, Federal Reserve officials expressed expectations to cut rates in 2024, but the exact path remains uncertain according to the minutes released on Wednesday afternoon. Furthermore, the December ISM manufacturing index witnessed a slight increase but still indicated a contraction, while job openings decreased in November but remained slightly higher than anticipated.

Investors will closely monitor the release of the December jobs report on Friday morning.

Within the realm of growth exchange-traded funds (ETFs), the iShares Expanded Tech-Software Sector ETF (IGV) experienced a decline of 1.6%, and the VanEck Vectors Semiconductor ETF (SMH) slid by 1.8%.

Story stocks with a greater speculative nature, such as ARK Innovation ETF (ARKK) and ARK Genomics ETF (ARKG), also faced significant declines of 3.9% and 4.6% respectively. It is worth noting that COIN stock is the top holding across Ark Invest's ETFs, and Tesla stock remains a major component in Cathie Wood's Ark.

Other ETFs also experienced declines, with the SPDR S&P Metals & Mining ETF (XME) dropping by 1.9%, the U.S. Global Jets ETF (JETS) slumping by 3.9%, and the SPDR S&P Homebuilders ETF (XHB) giving up 2.7%. However, the Energy Select SPDR ETF (XLE) managed to rise by 1.6%.

The Health Care Select Sector SPDR Fund (XLV) witnessed a marginal decline of 0.2%, with LLY stock playing a significant role as a component of the fund.

The Industrial Select Sector SPDR Fund (XLI) experienced a decline of 1.5%, while the Financial Select SPDR ETF (XLF) shed 0.85%.

In the world of cryptocurrencies, Bitcoin encountered a solid decline of 4.7% on Wednesday, reaching $42,952.22. However, this was a rebound from intraday lows when it briefly fell below $40,000. The recent surge in Bitcoin's value is largely attributed to hopes that the U.S. Securities and Exchange Commission (SEC) will approve spot Bitcoin ETFs, which is expected to happen within the next few days.

MicroStrategy, a prominent Bitcoin investor, also suffered a decline of 7.7% to $632.29. On Tuesday, MSTR stock reached a two-year high of $727.77.

Bitcoin miner Marathon Digital witnessed a similar decline, falling below its 21-day line to as low as $20.39 before rebounding for a gain of 2.4% to $23.48. MARA stock had experienced a significant plunge after reaching a 20-month high of $30.30 on December 27.

Despite the overall decline, the cryptocurrency exchange Coinbase only experienced a modest decline of 2.8% to $152.45, but it rebounded from intraday lows of $144.11. On December 28, COIN stock reached a 20-month high of $187.39.

Looking at individual stocks, Eli Lilly stock saw a solid increase of 4.3% to $617.70 in above-average volume, successfully surpassing a key resistance level around $600. This provides an entry point for investors. On Tuesday, Eli Lilly shares climbed by 1.6%, moving above the 50-day line and a downward trendline, presenting another buying opportunity. Eli Lilly stock currently has an official flat-base buy point of $629.97.

On the other hand, TSLA stock slumped by 4% to $238.45 on Wednesday, falling below its 21-day line but finding support at the 10-week line. Tesla's record deliveries, released on Tuesday morning, did not impress analysts. The relative strength line remains close to October lows.

Tesla stock is now in search of support, and if it finds it, recent actions could have a positive impact. The electric vehicle giant ended 2023 with a tiny handle on a weekly chart, featuring a $265.13 buy point. However, this handle, which is valid on a daily chart after Thursday, is marked by an 11% decrease. This offers a more meaningful shakeout.

Investors eagerly await Tesla's fourth-quarter earnings report, which is scheduled for release on January 24.

While investors may look back in hindsight and identify the patterns indicating the Nasdaq's decline and subsequent rebound, it is important to note that such patterns are not always obvious, especially for individual stocks. Tesla stock, along with other major players like Microsoft (MSFT), ServiceNow (NOW), and Netflix (NFLX), may rally from their 10-week lines in the coming days, or they might experience further declines.

The future of the Nasdaq remains uncertain, with possibilities ranging from a leveling off and rebound to a retracement to the top of its previous range and a test of its 50-day line.

For the latest updates on the stock market and more, follow Ed Carson on Threads at @edcarson1971, X/Twitter at @IB