Dow Jones futures opened Sunday night, along with S&P 500 futures and Nasdaq futures, with Twitter shares in focus as Elon Musk moved to end the takeover. The rise in equities showed strength, with Nasdaq leading the major indices higher while several quality equities flashed with buy signals.
Nasdaq ended the week around its 10-week moving average and 50-day line, where it has struggled several times this year. The large indices that decisively clear these key levels would be a positive step, although the market upturn will still face a number of challenges, from technical resistance to the start of the earnings season. Conversely, a sell-off from current levels will be a bearish signal.
Elon Musk wants to end the Twitter deal
Late Friday, Tesla CEO Elon Musk said Twitter (TWTR) that he wants to close the deal at $ 44 billion, $ 54.20 per share. Musk̵[ads1]7;s lawyers claimed that Twitter “has not complied with its contractual obligations”.
Twitter’s board said they are confident of the deal and intend to terminate the transaction. It plans to fight in court to get Musk to respect the signed agreement. Prolonged litigation is likely.
It is a major turnaround from April, when Musk too late revealed a significant “passive” TWTR shareholding and quickly moved on to a takeover agreement, claiming that he could significantly expand growth and promote freedom of expression.
Twitter shares fell 5% in trading on Friday, signaling the lowest levels since mid-March. Shares fell 5.1 percent to 36.81 on Friday after a Washington Post article that the deal was in trouble.
The TSLA share rose modestly in expanded trading.
Meanwhile, Musk’s withdrawal from Tesla could be good news for former President Trump’s hard-working Truth Social. Digital World Acquisition Corp. (DWAC), a SPAC merger partner for Truth Social’s parent, rose 29% late Friday.
Stocks make bullish movements
McKesson (MCK), UnitedHealth (UNH), Hundreds (CNC), Lantheus (LNTH), Northrop Grumman (NO C), Ali Baba (BABA), SolarEdge technologies (SEDG), Fortinet (FTNT) and Tesla (TSLA) are nine stocks in or near buy zones, ranging from traditional breakouts to early buy points to very aggressive listings.
Northrop, UnitedHealth and LNTH shares are on the IBD Leaderboard. Centene and McKesson are on SwingTrader. The FTNT stock is on IBD Long-Term Leaders. The UNH share is at IBD 50. The MCK share and Fortinet are at IBD Big Cap 20. McKesson was Friday’s IBD share.
The video embedded in the article discussed the market condition and analyzed three stocks that made bullish moves: McKesson, Lantheus and Tesla.
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 actionable stocks in the stock market rally on IBD Live
Stock market rally
The rise in the share price returned in the last week, with solid to strong gains on the indices.
The Dow Jones Industrial Average rose 0.8% in last week’s trading. The S&P 500 index rose 1.9 percent. The Nasdaq composite rose 4.6 percent. Small-cap Russell 2000 increased 2.4%.
The 10-year government interest rate rose 13 basis points to 3.1%, after falling to 2.75% intraday on Wednesday. The 2-year return climbed to 3.1% as well, after being above the 10-year interest rate for a few days.
US crude oil futures fell more than 3% last week to $ 104.79 a barrel, but after falling well below $ 100 on Wednesday.
Friday’s job report for June was stronger than expected, although employment tends to be a lagging indicator. Atlanta Fed’s GDP forecasting tool now sees an annual decline of 1.2% in the second quarter, compared to last week’s -2.1%.
CME’s FedWatch tool continues to see an interest rate increase of 75 basis points later this month and 50 basis points in September. But it sees a half-point move as likely for the November meeting, a shift from expectations of a quarter-point move in recent days.
Wednesday’s consumer price index for June may move markets and more distant Fed interest rate forecasts, but a July’s oversized 75 basis points appear to be locked.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 1.6% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 1.5%. iShares Expanded Tech-Software Sector ETF (IGV) rose 4.4%, with the FTNT stock as part of the ETF. VanEck Vectors Semiconductor ETF (SMH) rose 6.45%.
SPDR S&P Metals & Mining ETF (XME) fell 1.5%, extending a weekly losing streak. Global X US Infrastructure Development ETF (PAVE) rose 0.7%. The US Global Jets ETF (JETS) maintained high and closed flat. SPDR S&P Homebuilders ETF (XHB) rose 3.2%. Energy Select SPDR ETF (XLE) fell 2.25% and Financial Select SPDR ETF (XLF) rose 0.6%. Health Care Select Sector SPDR Fund (XLV) climbed 0.8%, with the UNH share a large stake.
ARK Innovation ETF (ARKK) reflects more speculative history stocks, jumped 13.7% last week, and jumped back over the 50-day line. ARK Genomics ETF (ARKG) increased by 14.4%, rising from the 50-day line. The Tesla stock is a large holding across Ark Invest’s ETFs.
Five best Chinese stocks to see now
Shares in buying zones
McKesson shares rose 3.1% on Friday to 331.26, flashing several early buy signals. The stock recovered from the 50-day line, broke a downward trend line and managed short-term resistance of 330.16. The MCK stock has a flat base with 340.04 buy points, according to MarketSmith analysis. The relative strength line, the blue line in the charts, has reached new heights in recent days.
UnitedHealth shares rose 0.8% on Friday to 518.63. During the day, the Dow Jones giant reached 528.37, removing a buy point of 518.80 from either a cup or double bottom, but closed just below the entrance. On Tuesday, the UNH stock tested its 50-day line intraday as a mini-shakeout. Several health insurance companies in or near shopping zones, including Centene, are a positive sign. But UnitedHealth revenues fall due on Friday 15. July.
The Centene share rose 3.2% to 88.01 on Friday, moving above an 87.44 double-bottom buying point. Like UnitedHealth, the CNC stock tested its 50-day line on Tuesday. The RS line for Centene is at a new high. Centene earnings are not due until July 26, but UnitedHealth results may affect CNC shares on Friday.
Lantheus shares jumped 7.4% on Friday to 67.79, rebounding back over its 50-day line, also breaking a trend line and topping a short-term high. The LNTH share is consolidating after a huge rise from the end of February to the beginning of June, but needs another week to become a proper base.
Northrop shares fell 1.2% in the last week to 480.43, after returning to the buying area last week, but recovered from Tuesday’s 50-day line test. The NOC share is active from the 50-day line and an old buy point of 477.36. The Northrop share now has a new flat base with a buy point of 492.40.
Alibaba shares broke above the 200-day line and broke out from a bottom base with resistance just above 121. For the week, BABA shares rose 4.2% to 120.90, but fell 1.2% on Friday to close just below these key levels. On Thursday, the BABA share will ideally form bottom bases above or largely above the 200-day line, but many shares show similar patterns. More Chinese Internet stocks show better action.
SolarEdge shares rose 6.75% last week to 295.11, moving back from the 50-day line on Tuesday and taking back the 200-day line on Friday. The SEDG stock works with a buy point of 314.62 from a cup with handles. But it trades right on a trend line from the top of the handle or the top of the three-month base.
The Fortinet share rose 9.3% in the last week to 62.70, taking back the 50-day line and ending just above the 200-day line. It provides an opportunity to buy FTNT shares as an early entry or as a long-term leader. However, the volume was light all week. While the Fortinet stock is well off the top, the RS line is at a new high, something few software players can claim.
Tesla vs. BID: Which EV giant is the best buy?
Tesla shares rose 10.3% during the short week to 752.9, back above the 50-day limit for the first time in two months. The TSLA share did not undergo its lowest May last month, so it is undoubtedly trying to manage a too short bottom base.
Tesla shares rose 2% late Friday after news that Musk was trying to end the Twitter deal, which may have required more TSLA sales or security.
An extremely aggressive trader may try to take a position here, but it would not be a typical IBD purchase, even as an early entry. The Tesla stock has a long way to go before it reaches its 200-day high, with all-time highs well above that.
Unlike rivals China EV BYD (BYD) and Li Auto (LI) is in buying zones now, and is trading just below 52 week highs.
Tesla may soon open its Supercharger network in the United States, according to a note from the White House. Tesla revenues fall due on July 20.
Market Rally Analysis
The rise in shares, which spilled a week earlier, returned last week after recovering from Tuesday’s lowest level. Nasdaq moved up to its 50-day and 10-week lines as well as its peaks at the end of June.
The 10-week line has been a major area of resistance for the technology-heavy index.
On Friday morning, the large averages withdrew solidly after a strong job report that pushed government interest rates higher. But they gathered back to finish little changed.
The S&P 500, Dow Jones and Russell 2000 have not yet reached the 50-day / 10-week line range, but have regained their 21-day moving averages.
But last week’s gains came at low volume, indicating that large institutions are not investing heavily in this market rally yet.
The market upswing to stop around current levels and stop here for a few days or weeks would not be terrible. It would allow more bases to form and allow large averages to catch up with leading stocks or fall down to hard-hitting names trying to bounce back.
However, several stocks set up buying points of different quality. The medical sector still dominates, and accounts for four of the nine shares highlighted here. But there are other sectors that show some promise.
Remember that the financial markets still weigh the risk of inflation, recession and Fed rate hikes. Stocks, bonds and commodities tend to fluctuate sharply.
Time market with IBD’s ETF market strategy
What to do now
The market upturn is still “under pressure”, but the large indices look much better than a week ago, and are on their way to taking a big positive step. Leading stocks are growing more and working well.
All this remains for the time being. Sharp sales, especially from current levels, will be a bearish signal. Some bad days would make recent purchases a clear loss, with the indices heading for the lowest level again.
So build up your exposure slowly as your market and positions work. You can still take some partial profits on winners to lock in winnings. Be ready to cut losses quickly.
Work hard this week on your watchlists. Build a broad list, and pay special attention to a select group of potential purchases in the coming days.
Pay special attention to the earnings season, which begins to pick up next week. In the midst of high inflation, a strong dollar and declining growth, you expect many companies to miss out or provide dismal guidance. So be aware when your inventory reports earnings, or when key rivals are on tap.
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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