Dow Jones futures open Sunday night, along with S&P 500 futures and Nasdaq futures. The stock rise is tilting, with last week’s short-term setbacks fast.
The stock market rise is still standing, but is battered and shaky. The large averages test key support areas, although Nasdaq has kept its 200-day line so far.
Nasdaq has been lagging behind the S&P 500 index since February last year, and the bottom line has increased in the last two months.
apple (AAPL) stock and Apple iPhone chipmaker Qualcomm (QCOM) are two growth stocks that are holding up relatively well, while Tesla (TSLA) Rival China Xpeng (XPEV) is right at an early entrance. Meanwhile, the DE share is up, while SM Energy (SM) broke out on Friday.
Goldman Sachs (GS), Charles Schwab (SCHW) and Signature Bank (SBNY) report before Tuesday’s market opening. The GS stock fell below the 200-day moving average on Friday, although it is technically in a base. The Schwab warehouse has been expanded. The SBNY stock is on the edge of a buying zone.
The Xpeng stock is on the IBD 50 list. Deere (DE) was Friday’s IBD Stock Of The Day.
The video embedded in this article discussed the volatile market action as well as the SM stock, On semiconductor (ON) and Deere.
Dow Jones Futures today
Dow Jones futures open at 6pm ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
US markets will be closed on Monday for the Martin Luther King Jr. holiday, although other exchanges around the world will be open.
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
Coronavirus cases worldwide reached 324.07 million. Covid-19 deaths topped 5.54 million.
Coronavirus cases in the United States have reached 66.16 million, with deaths above 871,000.
While cases continue to reach new heights around the world, new infections appear to have peaked in the UK and New York, following the pattern in South Africa. Hospital admissions are increasing, but not nearly as much as in previous Covid waves.
Stock market rally
The stock price rise traded up and down close to important support levels over the past week, and finally closed modestly to a solid lower.
The Dow Jones Industrial Average fell 0.9% in last week’s trading. The S&P 500 index and Nasdaq composite fell 0.3 percent. Small-cap Russell 2000 gave up 0.8%.
The 10-year government interest rate rose 1 basis point to 1.77%, and picked up on Friday after modestly withdrawing in three straight sessions. It reached a 23-month high of 1.81% intraday on Tuesday. US crude futures rose more than 6% for the week to $ 83.82 a barrel.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.3% last week, but after reaching a 52-week low intraday on Monday. Innovator IBD Breakout Opportunities ETF (BOUT) climbed 1%. iShares Expanded Tech-Software Sector ETF (IGV) fell 1.6%. VanEck Vectors Semiconductor ETF (SMH) rose 3.4%, with the Qualcomm share a notable stake.
SPDR S&P Metals & Mining ETF (XME) rose 2% last week. Global X US Infrastructure Development ETF (PAVE) retreated 1.3%. The US Global Jets ETF (JETS) rose 0.1 percent. SPDR S&P Homebuilders ETF (XHB) withdrew 1%. Energy Select SPDR ETF (XLE) jumped 5.2% after rising 10.5% the week before. The Financial Select SPDR ETF (XLF) withdrew almost 1%, but many banks had strong weeks. Health Care Select Sector SPDR Fund (XLV) fell 0.2%.
The ARK Innovation ETF (ARKK) and the ARK Genomics ETF (ARKG) reflected more speculative history stocks, both falling almost 5% to a 19-month low. The Tesla share is still number 1 across ARK Invest’s ETFs, but Cathie Wood has cut its TSLA share in recent months while stepping up its investments in hard-hit, highly valued growth.
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Apple shares rose 0.5% to 173.07 last week. On Monday, January 10, the AAPL stock returned from its 10-week line for the first time since the November eruption. Investors may use a pull above Thursday’s high of 176.62, a place to buy Apple shares from the 10-week line-up. It would also push the iPhone maker over its 10-day and 21-day lines.
Apple does not have a base in itself, but has consolidated closely in recent weeks, with the relative strength line staying around record highs. Investors can treat this recent trade as a messy flat base, with a buying point around 181-182.
QCOM shares rose 4.6% to 188.69 last week. Shares have generally found support on their 21-day line since mid-December, but on January 10 returned from their 50-day line. The RS line for the Qualcomm stock is at a new high, especially strong performance for a growth stock.
The QCOM share has consolidated in a messy way since mid-November, although trading looks tighter on a weekly basis. Officially, the Qualcomm share has a three-week tight entry of 193.68, just above the top of the broader consolidation. Investors can look for a “draw the line” listing that is slightly lower than that. Alternatively, another test of the 50-day / 10-week line, which may be equivalent to 21-day, may be another way to enter Qualcomm.
The consolidation over the past two months follows two major moves from the QCOM share. The stock broke earnings, then rose two weeks later when CEO Cristiano Amon claimed a bright future for his company after Apple.
The wireless chip giant is likely to see its iPhone business fade in the coming years as Apple designs more chips internally. But Qualcomm aims to expand its total addressable market from $ 100 billion today to about $ 700 billion over the next decade, and connect Internet devices from augmented reality glasses to cars.
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Xpeng shot up 10% to 49.69 last week, pulling back from its 200-day line and taking back its 50-day line. Shares in China EV startup, which has gone up Nio (NIO) and Li Auto (LI) in monthly deliveries, has an official purchase point of 56.55 from a consolidation that goes back to 1 December. But the XPEV stock just crossed a trend line on Friday, offering an early entry not far from the 50-day line. Shares also have 51.50 as short-term resistance.
As for the Tesla stock, the EV giant rose 2.2% to 1,049.61 in a wild week, ending just below the 50-day line, but just above the 10-week line. The TSLA share has a buying point of just over 1200.
SM Energi shares
The SM share rose almost 12% to 36.64 last week, and managed a buying point of 35.82 cups with handles on Friday, according to MarketSmith analysis. However, the volume was light. The RS line for SM shares is close to peaks, which reflects its strong performance compared to the S&P 500. But there is some lag in the oil field. How long can oil prices and energy stocks continue to run higher?
Deere shares rose 0.2% to 379.56 last week. Shares fell slightly on Friday, giving a new handle a less wedge-like appearance. The handle purchase point is 386.65 in a base that dates back to the beginning of September. But the DE share has consolidated since May last year or even March. After earnings doubled in the financial year 2021, analysts see solid growth for the farm equipment giant in 2022 and 2023.
Market Rally Analysis
The stock rally’s decline from Monday 17 January, low hit resistance on Wednesday, with the major indices falling on Thursday and Friday morning. But the Nasdaq, which fell below its 200-day mark again on Friday, led a partial upswing.
The Dow Jones tested its 50-day line on Friday, with the S&P 500 holding below that key level. Russell 2000 undermined Monday’s low, threatening to break during years of consolidation.
The major indices are not far from the lowest on 10 January. Closing below these levels could mean the end of the market upturn, which is already under pressure. On the plus side, after a cruel sale last week, the major indices did not give up much ground this past week.
The rise in shares could still need a convincing victory. But, as a 3-0 or 3-1 team in a best-of-seven series, a “win” would not solve market problems. In addition to going back from or back above important moving averages, the major indices must regain Wednesday’s peaks. For Nasdaq, the 50-day line and its peak on January 4 will be further testing.
The Nasdaq composite has been behind the S&P 500 for 11 months. This is despite megacaps such as Apple stock, Tesla, Microsoft (MSFT), Nvidia (NVDA) and Google parent Alphabet (GOOGL), which at least until very recently all had performed better than the benchmark index. It is a reflection of how weak the average growth share has been. Highly valued growth has been hammered, especially in the last couple of months, as FFTY, IGV and especially ARKK and ARKG show.
With the Federal Reserve increasingly hawkish and government interest rates rising, growth stocks may continue to struggle.
Energy stocks remain strong, along with most finances. But Friday JPMorgan Chase (JPM) sales are a reminder that the earnings season is back, adding a number of risks to individual stocks, sectors and the broader market.
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What to do now
Investors should be defensive. The big indices are closer to breaking down than breaking out. Growth and technology stocks are not working right now, except for Apple and some brands like Qualcomm.
Do not rush to jump into the next bounce in growth. After several headaches, investors should wait for real strength, not even a dead-cat bounce.
The energy and finance sectors continue to lead, along with fertilizers and some other cyclical names. But do not get too concentrated even here. A reversal in these areas would not be surprising, either from underlying bond or commodity prices changing or the broader stock market pulling everything down.
This is a time to build watch lists. Look for stocks that show strong relative strength and hold important support levels. A number of machinery, chemical and industrial warehouses are taking shape, including Deere. Continue to rework your lists. Some stocks, such as Home Depot (HD), looked strong and steady two weeks ago, but is now falling. Meanwhile, some other names, such as Xpeng and Deere, are showing some strength.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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