Dow Jones futures will open Sunday night, along with S&P 500 and Nasdaq futures. The stock market rally made solid gains last week, breaking through some key resistances. The technicians withdrew on Friday Instantaneous (INSTANTANEOUS) and other mediocre incomes.
META and Google stocks sold hard on Friday on Snap results and lack of guidance. Microsoft stock fell back to its 50-day line. Amazon simply cut big weekly gains. But Apple stock is one of five, even close to its 200-day line, and it has no obvious buy point in sight.
Meanwhile, the Federal Reserve is meeting, with another big 75 basis point rate hike likely to come on Wednesday. Advice for future moves will be essential. Investors began to pare September’s rate hike, with limited tightening thereafter. This is largely due to the economy rapidly slowing down or even falling into recession. A recession, coupled with persistently high inflation, is not a great mix for corporate earnings.
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Although recent action by major indices has been promising, investors should remain cautious as they add exposure.
Few leading stocks have given buy signals. Meanwhile, several promising stocks saw sudden sell-offs, including dollar tree (LTRD), Lanthee (LNT), Agilon Health (AGL) and Li-Auto (LI), forcing investors to make difficult decisions.
The video embedded in the article reviews the important market action, while analyzing Cross Country Health Care (CCRN), Stock Li Auto and DLTR.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET Sunday, along with S&P 500 and Nasdaq 100 futures.
Remember that overnight action on futures contracts on Dow and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Stock market rally
The stock market rally posted strong weekly gains, even with Friday’s pullback.
The Dow Jones Industrial Average rose 2% in stock trading last week. The S&P 500 index gained 2.6%. The Nasdaq composite jumped 3.3%. Small cap Russell 2000 jumped 3.7%.
The 10-year Treasury yield fell 15 basis points to 2.78%, plunging 25 basis points Thursday-Friday. The Treasury yield curve is inverted from 1 year to 10 years. The six-month Treasury bill rate, at 2.94%, is significantly higher than the 10-year Treasury yield. All this reflects the growing risks of recession.
U.S. crude oil futures fell nearly 3% to $97.59 a barrel last week.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.6% last week, while ETF Innovator IBD Breakout Opportunities (FIGHT) rose 0.45%. The iShares Expanded Tech-Software Sector ETF (VIG) jumped 5.4%, with MSFT stock a major contributor. The VanEck Vectors Semiconductor ETF (SMH) increased by 5.6%.
The SPDR S&P Metals & Mining ETF (XME) rebounded 1.9% last week. The Global X US Infrastructure Development ETF (PAVE) jumped 5%. US Global Jets ETF (JETS) increased by 0.9%. ETF SPDR S&P Home Builders (XHB) jumped 6%. The SPDR Energy Select ETF (XLE) gained 3.7% and the Financial Select SPDR ETF (XLF) 3%. SPDR Healthcare Sector Fund (XLV) fell 0.3%.
Five best Chinese stocks to watch now
Stock takeovers, Stock takeovers
When a dominant stock sells to or below the buy point, investors are faced with a tough decision: hold on, exit, or reduce the position. There is not necessarily a “right” answer. Sometimes the stock will rebound right away, others will continue to fall – perhaps after rebounding briefly. A more cautious approach may make more sense in today’s volatile market. Buying near the entrance can also provide a bit more cushion.
DLTR stock had gradually risen into a buy zone this week when it suddenly plunged nearly 5% intraday on Thursday. The shares slightly undercut the buy point of 166.45, but found support at the 21-day line, according to MarketSmith analysis. At the close, DLTR stock was down just under 1%. On Friday, Dollar Tree stock briefly exited the buy zone before closing with little change.
LNTH stock hit a record high on Wednesday, fresh off a cut base, but closing nearly 14% above the 50-day line. On Thursday, Lantheus stock fell 7.8% during the day, although it narrowed its loss to 3.1%. A quick warning shot? Maybe not. LNTH stock fell 4.5% on Friday.
Agilon stock broke Thursday from a low with a buy point of 27.12. But shares fell 8.3% to 25.18 on Friday.
Li Auto stock rebounded from its 21-day line on July 13 and made strong gains on Monday July 18. But stocks fell below the 21-day line on Tuesday, although they rallied to close above that key level, down 4.7%. On Wednesday, LI stock fell 3.7%, just off Tuesday’s low. Li Auto nearly recovered its 21-day line on Thursday, but then sold convincingly on Friday. Ultimately, it was a bearish reversal week for the Chinese electric vehicle maker.
Market rally analysis
The stock market rally made significant progress last week. The major indices broke above their 50-day and 10-week moving averages, which had been a major stumbling block in recent months.
But it can be said that the market was to suffer a pullback, especially the Nasdaq and growth stocks. It is better to get this withdrawal before the full profit crush.
If everyone is optimistic as earnings approach, that’s a recipe for big sell-offs on actual results. That may be especially true this time around, with guidance particularly unclear with a rapidly deteriorating economy.
Friday’s retreat underscores how dangerous earnings season is, and not just for the company. Snap’s earnings report criticized the actions of Meta and Google, as well as other online businesses dependent on advertising and the broader market.
Friday’s retreat also shows the risks of bottom fishing, buying downed growth stocks as they come back.
It’s possible the market bottomed out in mid-June, but that doesn’t necessarily mean it’s a quick and easy march to all-time highs and beyond. The market bottomed in late 2002 and late 2008, but did not make a sustained run for several months.
In addition to tech titans Apple, Microsoft, Meta, Google and Amazon, other notable results this coming week include Exxon Mobil (XOM), Chevron (CLC), Merck (M.K.R.), Pfizer (DFP), General Engines (GM) and Qualcomm (COMQ).
Apple, Microsoft, Merck and XOM stocks are all components of Dow Jones.
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What to do now
Investors should still have, at most, a modest exposure. There haven’t been many good stocks to buy, and these can be subject to sudden selling. Earnings season and the Fed meeting could send the market, various sectors and individual stocks in all sorts of directions.
So be extra careful over the next few days. If you are making new purchases, look for early buying opportunities and try to buy as close to these entries as possible.
Keep working on your watchlists. The market recovery showed some strength. You want to be ready to take advantage of it.
Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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