Dow Jones futures open Sunday night, along with S&P 500 futures and Nasdaq futures. Tesla deliveries blew out Q4 forecasts on Sunday after strong deliveries from Chinese electric car rivals.
The rise in the share price rose slightly last week, peaking a solid, albeit choppy 2021. The S&P 500 and Dow Jones reached record highs while the Nasdaq is close.
Electric car stocks are in focus to start 2022. Tesla (TSLA) delivered 308,600 vehicles in the fourth quarter, shattering consensus analysts’ forecasts and exceeding the most optimistic targets.
Tesla shares rose around Christmas, and then traded close to a trend line. It has become a handle purchase point.
On Saturday, China starts up Nio (NIO), Xpeng (XPEV) and Li Auto (LI) reported strong December deliveries. XPEV stock and Li Auto showed bullish action late last week, while Nio also picked up again.
China’s electric car giant WORLD (BYDDF) will probably release December sales later this week.
Meanwhile, the DDOG stock also has a weekly handle like Tesla, while Advanced micro devices (AMD) is working on a handle-like pause in its short consolidation. Everyone finds support near their 50-day lines.
Tesla and AMD shares are on the IBD Leaderboard and IBD 50. data dog (DDOG) was Friday’s IBD Stock Of The Day.
The video built into this article took a look at the market action over the past week and for 2021, while also analyzing Tesla, AMD and Datadog.
Dow Jones Futures today
Dow Jones futures open at 18.00 ET, 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
Coronavirus cases worldwide reached 290.43 million. Covid-19 deaths topped 5.45 million.
Coronavirus cases in the United States have reached 56.05 million, with deaths above 847,000.
Covid cases are increasing worldwide thanks to the more contagious omicron variant, but it is also apparently less dangerous. Hospital admissions have increased, but not nearly as much as new cases, with deaths still declining.
Stock market rally
The share price climbed higher last week in light volume at the end of the year.
The Dow Jones Industrial Average rose 1.1% in last week’s trading. The S&P 500 index rose 0.9 percent. The Nasdaq composite, which started the week strong, closed less than 0.1%. Small-cap Russell 2000 rose 0.2%
The 10-year government interest rate rose two basis points to 1.51%. Crude oil prices rose 1.9% to $ 75.21 a barrel, but ended a seven-day winning streak with Friday’s decline of 2.3%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 2% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 1.7%. iShares Expanded Tech-Software Sector ETF (IGV) fell 0.7%, with the DDOG stock as an IGV component. VanEck Vectors Semiconductor ETF (SMH) rose 0.2%, but remained close to weekly lows. The AMD stock is a large SMH stock.
ARK Innovation ETF (ARKK) reflects more speculative history stocks, falling 4.5% last week and ARK Genomics ETF (ARKG) 4.9%, despite large gains on Thursday. Tesla is still number 1 across ARK Invest’s ETFs. ARK also owns some BYD and XPEV shares.
Non-technological sectors generally performed better.
SPDR S&P Metals & Mining ETF (XME) climbed 0.9%, its fourth weekly rise in a row. Global X US Infrastructure Development ETF (PAVE) rose 1.7%. The US Global Jets ETF (JETS) fell 1.4% last week. SPDR S&P Homebuilders ETF (XHB) rose 2.9%. Energy Select SPDR ETF (XLE) rose 1.1% and Financial Select SPDR ETF (XLF) 0.6%. Health Care Select Sector SPDR Fund (XLV) rose 1.1%.
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Tesla EV supplies
Tesla’s 308,600 deliveries in the fourth quarter included 296,850 Model 3 and Y vehicles and 11,750 Model S and X luxury electric cars. For the full year, Tesla delivered 936,172 cars.
Analysts officially expected Tesla to report Q4 deliveries of 276,900, according to detailed FactSet consensus figures. It included 261,400 Model 3 and Y vehicles and 15,500 Model S and X vehicles. Some Wall Street analysts and private forecasters saw that deliveries came in far north of 280,000, with a few as 300,000 as possible.
In the third quarter, Tesla delivered 241,300 vehicles.
Q4 production was 305,400, with 292,731 Model 3 and Model Y vehicles and 13,109 Model S and Model X units.
Late Thursday, Tesla announced significant price increases for the base model Model 3 and Model Y in China. Basic model Y no longer qualifies for China subsidies, which are 30% lower in 2022.
The Tesla stock rose from its low point on December 21 to a high on December 27, and ran up to a trend line. Since then, the shares withdrew modestly in a tight manner, ending the week just below the 50-day limit. On a weekly chart, it now has handles, which gives it a buy point of 1,119.10 with a double-bottom base. The TSLA share may have control of the daily chart after Monday, but deliveries in the fourth quarter may disrupt it.
China EV supplies
Nine, Xpeng and Li Auto reported December deliveries on Saturday.
Nine delivered 10,489 vehicles, up 49.7% compared to a year earlier, but slightly down from November 10,878. The electric car manufacturer delivered 25,034 in Q4, near the high end of the target of 23,500-25,500.
Xpeng deliveries increased by 181% to 16,000 vehicles, a new monthly record after November 15,613. For the quarter, Xpeng delivered 41,751 cars, and easily beat the target for the fourth quarter of 34,500-36,500.
Li Auto delivered 14,087 Li One hybrid SUVs in December, up 130% compared to a year earlier. Q4 deliveries reached 35,221, well above the target of 30,000-32,000.
Xpeng shares rose 9% last week, with Li shares up 5.5%, and both took back their 50-day lines. Thursday’s peaks could have been seen as early entries in new consolidations alongside previous failed eruptions. But buying an aggressive listing in a Chinese stock right at the end of the year and with deliveries in December, seems like putting risk on risk.
The nine-share stock shot up 15% on Thursday in its heaviest volume in nine months, and rose 3.8% for the week after falling to a low of 14 months on Wednesday. Nine are still well below their 50-day and 200-day lines.
In the meantime, BYD, which makes its own batteries and chips, is likely to release December sales by the end of next week. The electric car and battery giant sold 91,219 new energy cars in November, up 241% compared to a year earlier. Of that, 90,121 were passenger cars, up 253%. It included 46,137 electric cars, up 153%, while plug-in hybrids increased by 500% to 43,984. It was the sixth month in a row that BYD increased sales of electric cars / hybrids by approximately 10,000.
However, China’s strict closure of Xi’an Province is likely to affect some BYD production.
The BYD share returned on Thursday, but still fell 1.6% for the week. It hits resistance at its 21-day line, with the 50-day line above it.
China will cut EV subsidies by 30% in 2022, and it will fall to zero after that. It may have helped increase demand by the end of 2021 for BYD, Nio, Xpeng, Li Auto and Tesla, but it could weigh on sales in early 2022. Tesla has raised starting prices for the Model-3 and Model Y produced in China. with the latter no longer eligible for subsidies.
AMD shares fell 1.5% to 143.90 last week after rising as high as 156.73 intraday on Tuesday. The chip giant is working on a handle, even though the consolidation is too short to be right yet. Nevertheless, investors can use 156.83 as an early entry. However, the AMD stock has been difficult, and trending higher in recent weeks, but with large fluctuations. Buying closer to a 50-day / 10-week line can be safer.
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The Datadog stock retreated 1.25% last week to 178.11. The DDOG stock now has a handle on a weekly chart. This creates a lower official buying point of 186.38 – 10 cents above Tuesday’s highest. On a daily chart, Datadog will likely have a handle after Monday.
The Datadog stock began working on that handle after meeting resistance at some short-term levels. But stocks held above a recent trend line break and found support on the 50-day line. The DDOG stock is still above the 50-day line, which has converged with the 21-day line and is almost synchronized with the 10-day line.
Market Rally Analysis
The stock market rise ended in 2021 with another calm session after a bullish rise before and just after Christmas. The large indices that trade close to record highs, which drift slightly lower, are healthy action. This allows leading stocks such as Tesla and Datadog to forge handles.
Large institutions will return to power in 2022, while many investors who delayed selling shares before the end of the year for tax reasons may pull the trigger. Early January can bring nice gains, but also some heavy losses. So it is better that stocks come into position at the turn of the year instead of sending a lot of buy signals that may not survive the new year.
Overall, the large indices look healthy. Market leadership, or at least potential leadership, is relatively broad.
Russell 2000, however, continues to meet resistance on its 200-day line. The market width is still lukewarm, although it will improve towards the end of 2021. The width was poor for most of 2021, although it did not stop the technology-led megacap increase in the major indices. Nevertheless, as long as the width is narrow, it will be more difficult to find winning stocks and surpass the indices.
Looking back on 2021, the market delivered solid gains, but the choppy action and sector rotation – along with narrow leadership – made it difficult to navigate. The S&P 500 led Nasdaq, with megacaps driving both indices.
It was not necessarily a “right” way to trade in 2021. Among notable IBD Live guests, Mark Minervini focused on short-term trading. David Ryan played sector movements, often targeting non-tech companies. Charles Harris mostly stuck to a core position, Tesla, in which he had big gains and deep convictions. The key is to find good stocks and follow sound trading rules that work for you.
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What to do now
Whether you are 100% cash or significantly invested, start the new year with a clean slate. Yes, you want to learn lessons from your winning and losing trades, but do not bask in the glories of big wins from 2021 or observe painful mistakes. Be mentally healthy and open to the new year and the new opportunities that will surely emerge.
Develop your watch lists, look for stocks in bases with strong relative strength and impressive fundamental values. Be careful with “N” in CAN SLIM. Seek out the new products, services and ideas that can generate tremendous long-term growth.
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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