Dow Jones futures open Sunday night, along with S&P 500 futures and Nasdaq futures. The stock correction got worse, even though the slim to modest weekly losses contradicted the volatile sales late in the week when government interest rates rose. Nasdaq undermined a rally attempt and reached the worst levels since 2020.
Eli Lilly (LLY), Albemarle (ALB), Dollar tree (DLTR), ZIM integrated shipping (ZIM) and new listing Excelerate energy (EE) are five stocks worth seeing, either in buy zones, close to buy points or simply by bending relative strength.
Relative strength is important, but in a market correction, relative winners can be “absolute losers”. apple (AAPL) is a good example. Its relative strength is at record highs, but the AAPL share has fallen for six weeks in a row.
The LLY stock and ZIM are on IBD 50.
The video built into the article discussed the volatile market week in depth, and also analyzed DLTR stocks, Excelerate Energy and Apple.
Dow Jones Futures today
Dow Jones futures open at 6pm ET on Sunday, along 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 trading session.
Join IBD experts as they analyze powerful stocks in the stock market rally on IBD Live
Stock market rally
The rise in equities started with solid gains that ended abruptly on Thursday, when the Nasdaq plunged 5% that day.
The Dow Jones Industrial Average fell 0.2% in last week’s trading. The S&P 500 index fell 0.2 percent. The Nasdaq composite lost 1.5 percent. Small-cap Russell 2000 fell 1.3%.
The 10-year government interest rate rose by 24 basis points to 3.12%, with almost the entire gain as a delayed reaction to Wednesday’s Federal Reserve meeting. The 10-year return is crashing against an 11-year high of 3.25% from October 2018.
US crude oil futures rose 4.9% to $ 109.77 a barrel in the past week.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 2.4% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 3.3%. iShares Expanded Tech-Software Sector ETF (IGV) fell 4.9% as investors shut down the software. VanEck Vectors Semiconductor ETF (SMH) rose 1.2%.
SPDR S&P Metals & Mining ETF (XME) slipped 3.65% last week, when steelmakers followed miners to break key support. Global X US Infrastructure Development ETF (PAVE) retreated 1.4%. The US Global Jets ETF (JETS) fell 4.9 percent. SPDR S&P Homebuilders ETF (XHB) rose 0.1%. Energy Select SPDR ETF (XLE) rose 10.3%. Financial Select SPDR ETF (XLF) rose 0.6%. Health Care Select Sector SPDR Fund (XLV) fell 0.4%.
As a result of more speculative history shares, the ARK Innovation ETF (ARKK) fell 3.25% last week and the ARK Genomics ETF (ARKG) 3.8%, both to a 25-month low. ARKK in particular saw a record entry as late as Tuesday, despite the ETF’s huge decline since early 2021.
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Eli Lilly Stock
Eli Lilly shares continued to trade around their 21-day line last week, finding support on their 10-week line. Shares rose 1.6% to 296.90 last week. The LLY stock is in the range of 284 buying points from a cup base. The stock has also broken over a short trend line, using Wednesday’s high of 296.28 as a trigger. Or you can wait to see if the LLY stock builds a new base, offering a buying point under hopefully better market conditions.
The RS line continues to hit new highs even with LLY shares from the peaks in early April.
The ALB share rose 26% to 242.41 last week, driven by strong earnings and guidance from Livent (LTHM) and then Albemarle himself. The lithium giant has vaulted over its 50-day and 200-day lines and broken a trend line. It would provide an early entry into a better market. The ALB share is currently working on a deep cup base with a buying point of 291.58. But maybe Albemarle could form a handle, right around the key resistance of 248.
Dollar Tree Stock
The Dollar Tree stock has retreated to its 50-day / 10-week lines for the first time since the outbreak in early March. The DLTR stock tried to bounce on Friday, but in light volume. A slightly stronger move, ideally in higher volume, will offer an early entry. The Dollar Tree stock seems to be leading among discount traders right now.
The RS line for DLTR shares is straight at heights.
ZIM shares rose 19% to 66.16 last week, rising to regain their 50-day line. It is after the bottom from 48.21 last week, and tested the 40-week line. The high-yield freight game now has a cupbase with a buy point of 79.05. Ideally, the ZIM stock would move slightly higher than forging a handle on its way to earnings on 18 May.
ZIM is an ocean-going container ship, but it has also recently chartered three LNG vessels.
Excelerate Energy is a rare listing in 2022. Shares priced at $ 24 per share in the first half of April, reversed lower from a record high of 29.10 on 18 April to a low of 22.65 on 22 April. The EE share now has a stock exchange base with 29.20 trading points, according to MarketSmith analysis. The stock tried to break a downward trend line on Friday, before closing at 26.90. A move above Friday’s high of 27.38 will offer an early entry.
The RS line, the blue line in the accompanying charts, is already at a new high.
Excelerate Energy operates liquid terminals for liquefied natural gas. It is already profitable, with earnings expected to skyrocket by 726% in 2022 as demand for LNG increases abroad.
Finally, Apple stock sold out hard Thursday after briefly flashing an early entry on Wednesday. The shares extended a weekly series of losses, although the decline of 0.2% to 157.28 was not much. The RS line for the AAPL stock is just record high on a weekly chart. It is a reflection of how weak the S&P 500 has been since the end of March. But it is also a reminder of how relative winners can be absolute losers in a market correction.
Still, Apple stock is worth seeing as one of the only technology or growth names that show any kind of resilience. If it can hold up in the Nasdaq bear market, it could become a leader in the next sustained uptrend.
Market Rally Analysis
The stock market had a stomach-churning roller coaster ride last week. After starting a rally on Monday and increasing on Wednesday, the major indices plunged on Thursday, and then lost more terrain on Friday intraday.
Nasdaq plunged to its lowest levels since 2020, wiping out the rally attempt on Thursday and swapping 12,000 cards on Friday. Russell 2000 also fell to the end of 2020 levels on Friday.
The S&P 500 underwent almost Monday’s lowest level on Friday.
The market rally attempt is still alive on the S&P 500 and Dow Jones. So they could arrange a follow-up day at any time.
Without a doubt, the stock market can use another big shakeout to trigger capitulation sales. Fear meters are close to the latest highs, but have not jumped above the 2022 peaks. The continued inflows to ARKK and other growth funds also signal that “buy the dip” is still valid.
New downturns continue to dominate new highs, especially on the Nasdaq. The market breadth is gloomy. It has been a problem over the last year. But by 2022, Apple stocks and other megacaps will no longer mask the underlying weakness.
Commodity trading is still a bright spot, especially oil and gas names. Fertilizer names try to keep around the 50-day moving average. Lithium play is back in focus, while wood products and building materials look interesting. Meanwhile, health insurance companies continue to look strong, as do some drug manufacturers such as LLY shares, but medical leadership has been reduced.
Meanwhile, steelmakers are breaking support, wanting to join gold and base metal miners. Heavy construction companies have also fallen in recent weeks. And while oil and gas spills are strong, uranium and solar energy stocks have fallen sharply in recent weeks.
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What to do now
Investors should be in all cash or almost that. The exceptions will be small exposure to leading sectors or long-term holdings with large gains.
As Thursday’s fantastic sale showed, the market can sell much faster and deeper than it gathers. So if you have exposure, be quick to take partial profits and be ready to reduce losses quickly.
Do not try to guess the market bottom. You will eventually be right, but how many possible bottoms have there been in recent months?
For now, keep the powder dry and your mind fresh – and work on your watch lists.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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