Dow Jones futures will open on Sunday night, along with S&P 500 futures and Nasdaq futures.
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A new attempt at a stock market rally got under way last week, with big early gains for the Dow Jones and other major indices. But when hopes of a Fed pivot faded again, Treasury yields rallied and stocks fell from resistance. Along with the warnings advanced micro devices (amd) Y CVS Health (CVS) that hit their stocks at the end of the week, the major indices erased most of their gains.
While the market’s rally attempt is not over, the Dow Jones, S&P 500 and Nasdaq are near bear market lows. Investors need to be extremely cautious in the current environment.
vertex Stock, Neurocrine Biosciences (NBIX) Y Eli Lilly (LLY) are traded around buy points. NBIX shares and Vertex Pharmaceuticals (VRTX) they are in IBD classification table.
Tesla (TSLA), phase energy (ENPH) Y in semiconductors (IN), three stocks that had been close to buying points, suffered large sell-offs. TSLA shares were sold off Monday on disappointing deliveries, then continued to slide. Shares of Enphase briefly showed an aggressive buy signal on Tuesday and then plunged sharply on Wednesday. ON shares closed above a trend line entry on Thursday, then plunged on Friday as AMD sparked a chip sell-off.
Megacaps are not helping. Microsoft shares, Google parent Alphabet (GOOGLE) Y amazon.com (AMZN), all just below their 21-day lines on Thursday, fell sharply on Friday, back to bear market or short-term lows. Apple (AAPL), which never reached its 21-day low, slipped towards short-term lows.
Microsoft (MSFT) and Google shares are active IBD long-term leaders. ON stock is in the IBD 50. everybody, Vertex Pharmaceuticals (VRTX) and ENPH shares are in the IBD large cap 20. Vertex was Friday IBD Day Stock.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 and Nasdaq 100 futures.
Remember that the overnight action in dow futures and elsewhere does not necessarily translate to actual trading in the next regular stock Exchange session.
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stock rally
An attempted stock market rally got off to a good start, but was floundering by the end of the week near bear market lows.
The Dow Jones Industrial Average rose 2% in the past week stock trading. The S&P 500 index rose 1.5%. The Nasdaq Composite rose 0.7% after falling 3.8% on Friday. The small-cap Russell 2000 advanced 2.2%.
Apple shares rose 1.4% for the week but sank 3.7% on Friday. Microsoft managed a weekly gain of 0.6% as AMD’s warning on PC demand sent Mr. Softy slipping 5.1% on Friday. Shares of Google and Amazon rose 3.2% and 1.4%, respectively, also paring strong weekly gains on Friday.
The 10-year Treasury yield rose 8 basis points to 3.88%, rising for the 10th week in a row. That is after falling to 3.56% intraday on Tuesday, testing its 21-day line. The 10-year Treasury yield is nearing 12-year highs, close to 4% set in late September.
The US dollar, which fell sharply at one point, rallied to post a modest weekly gain.
US crude oil futures rose 16.5% to $92.64 a barrel, rising all five days. OPEC+ production quota cut of 2 million barrels per day boosted gains. Meanwhile, US shale operators remain cautious about ramping up drilling.
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ETFs
Between best ETFsthe Innovator IBD 50 ETF (FFTY) rose 1.7% last week, while the Innovator IBD Breakout Opportunities ETF (COMBAT) gained 1.2%. The iShares Extended Technology Software Sector ETF (VAT) was up 2.6%, with MSFT shares a massive holding. The VanEck Vector Semiconductor ETF (SMH) rose 1.9% but sold off sharply on Friday on AMD’s warning and an expanded US ban on chip technology exports to China. AMD shares are a big holding for SMH with On Semiconductor being a notable component.
Mirroring more speculative historical stocks, ARK Innovation ETF (ARKK) fell 0.6% last week and ARK Genomics ETF (ARKG) fell 0.15%, after both sold off more than 6% on Friday. Tesla shares remain a major holding in Ark Invest ETFs.
SPDR S&P Metals & Mining ETF (XME) jumped 7.3% last week. The US Global X Infrastructure Development ETF (TO PAVE) burst 3.4%. US Global Jets ETF (JETS) rose 3.7%. SPDR S&P Home Builders ETF (XHB) rose 4.5%. The Energy Select SPDR ETF (XLE) rose 13.6% and the Financial Select SPDR ETF (Four. Five) rose 1.9%. The SPDR Fund of the Select Sector of Health Care (XLV) was up 1.25% with LLY shares a big holding.
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Tesla Stock
The shares fell 16% last week to 223.07 after Tesla’s record third-quarter deliveries fell short of expectations amid concerns about demand from China. Elon Musk noted that he will go ahead with the Twitter (TWTR) acquisition, reviving fears that it will sell more TSLA shares to fund the deal. Musk touting the start of Tesla Semi production did not provide a boost on Friday. Shares are still above late May lows of 206.84, but not by much.
Market recovery analysis
The stock market action last week was almost textbook. Major indices, at bear market lows, rebounded strongly from deep oversold conditions Monday through Tuesday. But the stock market’s attempted rally quickly hit resistance at the 21-day moving average, while Treasury yields and the dollar rallied. Selling intensified on Friday on the strong jobs report, further boosting yields and the dollar.
And now that? The attempted rally in the stock market continues until the main indices lower their recent lows. But the Dow, S&P 500 and Nasdaq are not far behind.
A follow-up day It could still come at any time to confirm the uptrend of the market. That would be a positive sign. Investors should remain cautious, especially if the indices post an FTD below their 21-day lines. Also, a follow-up ahead of Thursday’s consumer price index carries additional risks.
New stage of the bear market?
On the other hand, risks are high that the bear market breaks lower for another leg down.
The market rallied earlier in the week amid hopes the Federal Reserve would slow rate hikes, perhaps in part due to tensions abroad. Falling job openings and a small increase in rates from Australia bolstered that case. But Fed officials continue to insist they won’t back down, while Friday’s jobs report was too hot. Ultimately, the odds of a fourth consecutive 75 basis point rate hike in November, which were already high, strengthened over the past week. Markets are close to fixing at least 50 basis points in December, with a small but growing chance of 75 basis points.
In addition to concerns about the recession and the Federal Reserve, earnings season could be a minefield. The warnings from AMD and CVS follow earlier high-profile announcements, with earnings set to begin next week. Even after a long bear market and clearly tough trading conditions, markets still haven’t priced in the bad news, with shares in AMD and CVS down more than 10% on Friday.
key sectors
Energy stocks look strong as crude oil prices soar. However, many seem stretched out after great runs.
Meanwhile, rising oil prices may be bad news for the broader market. Higher energy costs, especially gasoline prices, will complicate the Federal Reserve’s task of controlling inflation. Gasoline prices had already rebounded significantly, especially in California, on several refinery issues.
Some drug and biotech names continue to do well, somewhat insulated from economic concerns. But can they go much further if the broader market heads for new lows?
Meanwhile, some tech and medical product names that had shown signs of buying in recent days were big losers on Friday. Some held up reasonably well, while others saw big sell-offs, including shares in ENPH and On Semiconductor. Tesla shares, which even a week ago were plausibly close to an entry point, plunged towards 2022 lows.
Stocks in Apple, Microsoft and other tech titans aren’t leading the decline, but they certainly aren’t driving the major indices.
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What to do now
The case for being all-cash or all-cash remained strong even at weekly highs, and is even stronger now. The market’s attempted rally is floundering. Indices could soon break below bear market lows.
If you recently bought some new positions, in addition to the energy sector and certain medical services, you may have already had to eliminate or exit them. Even if you’re just taking pilot positions, don’t let the losses mount. If you are in profit, you may want to lock in some of that given general market conditions.
Keep working on your watchlists and stay engaged. The market’s attempted rally could still come to life, likely triggering buy signals for a large number of stocks. So focus on the actions that are being set up. But also keep a broader list of strong stocks that are showing relative strengtheven if your graphics need repair.
Read The panorama every day to stay in sync with market direction and major stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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