Dow Jones futures opens Sunday night with S&P 500 futures and Nasdaq futures. The stock market rise is in the midst of a modest setback after a strong run from the lows in mid-March.
The big indices still look healthy. But investors should be wary of new purchases in the very short term and be ready to leave positions if they do not work. Growth and shipping stocks ran into trouble late last week, such as Dutch Bros (BROS) and JB Hunt Transport Service (JBHT).
Apple stock, Exxon Mobile (XOM) and SolarEdge technologies (SEDG) creates discount points.
Tesla deliveries are due
Tesla deliveries are expected Saturday morning, though they may arrive as late as Tuesday night. Analysts are waiting Tesla (TSLA) to report first-quarter global deliveries of 309,000. The Tesla plant in Berlin has just started delivering, while the plant in Shanghai was closed for several days in March amid China’s Covid restrictions.
Tesla stock continued to run up last week towards the 1208.10 cup-base buy point or a trend line of around 1,145, but may start working on a handle.
China EV giant WORLD (BYDDF) is also expected to report sales in March over the next few days, with some expectation that sales of electric cars and plug-in hybrids peaked at 100,000 for the first time. The BYD stock regained its falling 50-day line on Friday. But it remains below its 200-day limit.
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Sales figures for Tesla and BYD will follow March deliveries from Xpeng (XPEV), Nio (NIO) and Li Auto (LI). Nine shares and Li Auto regained their 50-day lines on Friday, while XPEV shares also rose. In addition to strong deliveries, China EV names rose along with other U.S. listed Chinese stocks on a report that diminished fears of delisting.
The Tesla stock is on the IBD Leaderboard and the IBD 50. The XOM stock is on the IBD Big Cap 20, which is full of energy and commodity names. The video embedded in this article analyzes the market upswing and discusses Apple (AAPL), JBHT shares and SEDG shares.
Dow Jones Futures today
Dow Jones futures open at 18.00 ET on Sunday with S&P 500 futures and Nasdaq 100 futures.
Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze powerful stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally started strong last week but ended with modest gains or small losses.
The Dow Jones Industrial Average fell 0.1% in last week’s stock market trading. The S&P 500 index rose less than 0.1%. Nasdaq composition rose 0.7 percent. Small-cap Russell 2000 also rose 0.7%
The 10-year government bond yield fell 11 basis points last week to 2.38%. The two-year government interest rate rose to 2.48%, moving decisively above the 10-year interest rate. This reversal of dividends is a possible recession signal – along the way – with the Fed set to aggressively raise interest rates at upcoming meetings. Experts disagree on whether the inversion of the yield curve poses a serious recession risk. Fed chief Jerome Powell recently noted that the very short end of the yield curve is still well below long-term interest rates.
Still, the yield curve can keep an eye on.
Futures on crude oil in the US fell by almost 13% to $ 99.27 per share. barrel, their biggest weekly loss in almost two years. President Biden said Thursday that the United States will release 1 million barrels a day for six months from strategic reserves to help combat high gasoline prices.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.4% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 0.8%. iShares Expanded Tech-Software Sector ETF (IGV) rose 2.2 percent. But VanEck Vectors Semiconductor ETF (SMH) sold 3.6% off, falling sharply from the middle of the week.
The SPDR S&P Metals & Mining ETF (XME) retreated 1.4% last week but returned from the lows. Global X US Infrastructure Development ETF (PAVE) fell 1.5 pct. The US Global Jets ETF (JETS) rose 4.3% on lower fuel costs. SPDR S&P Homebuilders ETF (XHB) fell 2.8% to a low of 52 weeks.
Energy Select SPDR ETF (XLE) lost 2.15% but rejected lows. XOM shares are a large XLE portfolio. Financial Select SPDR ETF (XLF) fell 3.3% as the reverse yield curve hit bank stocks. Health Care Select Sector SPDR Fund (XLV) rose 1.3%.
As a result of more speculative history stocks, the ARK Innovation ETF (ARKK) rose 4.7% last week and the ARK Genomics ETF (ARKG) 7.3%. The Tesla stock is number 1 across Ark Invest’s ETFs. Cathie Wood recently started buying some Nine stocks and has added Ark’s BYD position. Ark also owns some XPEV shares.
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Apple stock on Tuesday broke above a buy point of 176.75 with a double bottom. But after an 11-day winning streak, it was no surprise to see the iPhone giant retreat and retire modestly in the final three sessions. For the week, the AAPL stock fell 0.2% to 174.31. It now works on a handle on a daily chart, but it requires at least two more days to be correct. On a weekly chart, the Apple stock technically has a small handle with a buy point of 179.71. But investors should probably wait for at least one daily handle to be formed, perhaps with a little more depth.
The relative strength of Apple stocks is at record highs.
Exxon shares, like many other energy stocks, showed resilience amid falling crude oil prices. Shares fell 2.4% to 83.12 last week, but returned from a 10-week line test, according to MarketSmith analysis. With only 2.9% above this key level, investors could buy XOM shares here. They could also wait for the oil major to consolidate further and form a proper base, even though it would take a few weeks.
SEDG stocks tend to make large fluctuations during the day on a daily basis, but it tightens up a bit on a weekly basis. SolarEdge shares fell 3.7% to 322.83 last week and found support at its 21-day moving average. The stock is just below a buy point of 335.67 cup-with-handles. The SEDG stock is still well above the 50-day limit, so it would be helpful to pause for a while longer.
JB Hunt Stock
The JB Hunt stock had a strong eruption on March 16, initially retiring gradually before falling decisively this week. After breaking below the buy point earlier in the week, JBHT crashed below the 50-day line on Friday, closing below its 200-days for the first time in nearly two years. JBHT shares fell 9.6% on Friday, leading to all S&P 500 falls, falling 13.2% for the week.
Other truck stocks, as well as railroads, were big losers due to industry concerns about declining freight demand. Union Pacific (UNP) fell 4.85% on Friday, which was almost a modest gain from an outbreak in early March.
Analysis of market rally
The stock market rise ran up through Tuesday and broke past fresh resistance levels. Then the major indices retreated, with the Nasdaq stopping shortly after the 200-day line, while the Dow Jones fell below this key level.
So far, everything is still normal, with Friday’s push for small wins suggesting the rally is in good shape. But investors do not know whether stocks will rise rapidly, continue to retreat or move sideways for a few weeks, or whether conditions will quickly deteriorate.
Apple stock, Tesla and many others are working on possible handles. But they are still generally underway.
While the overall market looks strong, key sectors had ugly weeks.
Many technology stocks struggled at the end of last week, especially chips. Several of these names were still deep in bases, but others like Alpha & Omega Semiconductor (AOSL) were failed outbreaks. AOSL shares fell 18% last week, with an even bigger reversal from Wednesday’s highs.
The sale of JBHT shares, Union Pacific and other senders may be related to the weakness in chip and PC names. After staying close to home during the pandemic, Americans can shift spending away from goods to travel and nights in the city.
The weak guidance in the past week from the exclusive furniture retailer RH (RH) and mattress machine Tempur-Sealy (TPX) also indicates declining demand for home “stuff”.
Homebuilders and banks are in downward trends, struggling with rising interest rates and flat-to-inverted yield curves, respectively.
Meanwhile, cyclical factors such as energy, steel, fertilizer and more rose at the end of the week. Some like XOM shares and Shall (SHEL) is close to the point of purchase, while others are extended.
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What should I do now
The powerful initial stock market rally is over. Investors should also step back and take a look at their holdings.
Are you too concentrated in specific sectors? While the major indices closed relatively flat for the week, some sectors and equities suffered heavy losses. Whether this is the return on sector rotation or just a narrowing of market growth, investors need to listen to these market signals and act accordingly.
Keeping positions small and diversified in the midst of modest overall exposure can limit fallout. Taking profits quickly and cutting losses quickly is still crucial.
Work on these watchlists. The latest market initiatives can create a wave of new buying opportunities ahead. So you want to be ready.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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