Dow futures will open Sunday evening, along with S&P 500 and Nasdaq futures contracts.
Major indices had a busy week, with major indexes breaking to market lows before rebounding strongly on Thursday despite the hot inflation report. Stocks resumed selling on Friday as Treasury yields rose.
While the market is still trying to rally, the major indicators are all in major downtrends. Stocks that buy flash signals or are set up, suddenly crack. Investors should remain cautious until the market shows real signs of strength.
Tesla (TSLA) and Netflix (NFLX) earnings headlines next week. TSLA stock fell to a 52-week low. The NFLX stock is established at a bottom base, but is facing significant resistance.
while, Shock Wave Medical (SWAV), Wolfspeed (wolf), Aehr . Test Systems (AEHR), Albemarle (ALB) and Digi International (DGII) are growth stocks that are holding up reasonably well, but are not yet in a position amid the current weak market. All have sustained damage in recent days, including Friday. They could decline decisively if the market shows further weakness. But if the market strengthens, these could be notable winners.
Dow jones futures contracts today
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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stock market last week
The stock market sold off to new lows in the bear market, rebounded, and then started sliding again in a choppy weekly move.
The Dow Jones Industrial Average rose 1.2% in last week’s trading on the stock exchange. The S&P 500 was down 1.5%. The Nasdaq Composite tumbled 3.1%. Small capital Russell 2000 decreased by 1%.
The 10-year Treasury yield jumped 13 basis points to 4.01%, extending the streak of weekly gains to 11 weeks. The 10-year Treasury yield reached a 14-year high of 4.06% on Thursday. The two-year Treasury yield, closely tied to Fed policy and in which interest rates may head, rose to 4.5%.
US crude oil futures fell 6.8 percent to $86.40 a barrel last week. Natural gas prices fell 3.8%.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) is down 3.6% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) is up 1.3%. Shares of the iShares Expanded Tech-Software ETF (IGV) fell 5.7% while the VanEck Vectors Semiconductor ETF (SMH) fell 8.2%, to its lowest level in two years.
The SPDR S&P Metals & Mining ETF (XME) is down 3.1% last week. And US infrastructure development firm Global X (PAVE) sank 1.5%. The US Global Gates Index (JETS) rose 5.75%. The SPDR S&P Homebuilders ETF (XHB) lost 4.2%. The Energy Select SPDR ETF (XLE) lost 1.9% and the Financial Select SPDR ETF (XLF) gained 0.4%. The SPDR Healthcare Sector Choice Fund (XLV) advanced by nearly 1%.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) tumbled 9.4% last week, on the cusp of breaking below the March 2020 Covid crash low. The ARK Genomics ETF (ARKG) is down 7.1%, still above its lows in June. TSLA stock is the highest stake in Ark Invest’s ETF.
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stock to watch
SWAV stock attempted a rebound for most of the past week, but rose in light volume. On Friday, shares pulled back strongly from their 50-day streak, closing down 7.6%. Shockwave stock remains above its September lows, holding consolidation at 315 buying points. A decisive move above the 50-day line could trigger an early buy point from the downward sloping trendline. While the SWAV stock has been choppy, the relative strength line is holding steady at the higher levels.
WOLF stock also hit resistance at the 50-day line on Friday, falling near Thursday’s low, which was well below previous trading from the past two months. The EV-focused chipmaker is approaching the 200-day streak, with the potential for a decisive break. If Wolfspeed finds support and bounces, it may soon have a new base.
AEHR stock fell back below the 50-day line on Friday, capping a difficult week. The EV-focused chip equipment maker surged the previous week on huge earnings, providing an early entry into consolidation. The official purchase point is 19.53. A break of the October 10 high at 17.61 could provide a solid entry.
ALB stock is down about 13% for the week, amid market weakness and analyst expectations that lithium prices, at record levels, will drop significantly. A week ago, Albemarle stock was on the cusp of buy signals. Now, ALB stock should hold the 200 day streak.
DGII stock jumped to a record high on October 6, but has since sold out. On Thursday, the networks play fell below the 50-day streak, but climbed to close almost unchanged. But with shares tumbling again on Friday, Digi International slipped back towards Thursday’s losses. The DGII stock needs time to form a new base, but its strong growth and RS streak make it worth watching.
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Netflix Subscriber Transfer
Netflix’s earnings are due Tuesday night, but analysts and investors will focus on subscribers. They will be particularly interested in the prospects for Netflix subscribers. Last week, Netflix announced the launch of the ad support tier on November 3, priced at $6.99 per month.
Netflix stock hit bottom after crashing from mid-November to mid-May. Stocks are trading around the 50-day line, but it’s still below the rapidly declining 200-day mark. The buy point is 252.09. That’s just above the top of the NFLX stock earnings gap that fell on April 20, indicating that there’s a lot of general resistance out there.
Tesla’s earnings were set Wednesday night. Analysts expect a 53% gain on the stock with revenue up 62% to $22.28 billion. But investors are likely to be interested in future growth prospects. Third-quarter deliveries reached a record 343,800, but that was well below estimates of nearly 360,000 vehicles, and about 22,000 fewer than what Tesla produced in the quarter.
The backlog in China has dropped significantly for the non-refreshed 3 and Y models, while competition is heating up dramatically. With production in Shanghai so dramatically increased, will Tesla be able to export the bulk of that increase in the fourth quarter and beyond? Or will the electric car giant start cutting prices, after raising them dramatically over the past two years?
Meanwhile, investors will want fresh hints about Cybertruck and any other future products. Elon Musk recently tweeted that Tesla Semi production has started, but in what quantity? There are still many questions about half-product pricing, costs and key specifications.
Tesla stock fell dramatically for the fourth week in a row, finally running from its lowest level in May to its worst level in 16 months. Admittedly, it’s not the time for most growth stocks, especially electric car makers. TSLA stock, which is down more than 50% from its November 2021 peak, needs a lot of repair work.
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stock market analysis
The Dow Jones, Standard & Poor’s 500 and Nasdaq all hit their lowest levels last week. On Thursday, they rebounded strongly from sharp intraday losses after a hot inflation report. But on Friday, the major indexes gave up much or all of the previous day’s gains, although they remained above Thursday’s lows.
The Dow, which regained its 21-day moving average on Thursday, fell again on Friday. The S&P 500 and Russell 2000 hit resistance at that short-term level, which also coincides with the top of the downward sloping trendline. The Nasdaq never got close to 21 days, and it stumbled at the 10-day streak.
During the week, the Dow rose, while the S&P 500 and Nasdaq fell.
The market attempt is still underway, but it hasn’t done anything so far to indicate a real bottom has been identified.
It’s hard to see a sustained rally in the market while Treasury yields are rising and the Fed tightens tight. The 10-year yield is at a 13-year high, above 4%. Expectations of a Fed rate hike rose further over the past week amid hot inflation data.
Last week included a positive market reaction to the UK government’s actions as well as the early start of earnings season. But the coming weeks will see a deluge of earnings that could upset the market as well as individual stocks and sectors.
There are a number of medicine and energy stocks that hold up well, including Eli Lilly (LLY), humana (hm), Vertex Pharmaceuticals (VRTX), Cardinal’s health (CAH), ExxonMobil (XOM) and Devon Energy (DVN).
Most growth stocks were hit hard, including Tesla. Even names like Shockwave and DGII are liable to sell out once established.
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What are you doing now
Investors need to be patient and prepare for tomorrow. While large bounces like Thursday are exciting and increase the potential for a market bottom, more evidence is needed to suggest that this is the case.
Even if a market rally gains steam and begins a follow-up day, this is not a signal to push all of your chips inside. The FTD could fail quickly, or the uptrend could simply be another short-term tradable high within the bear market.
Investors should focus on preparing for the next bullish trend. Looking for stocks that hold bases above the 50-day line is great. But also keep track of relatively strong stocks with damaged charts.
Read the big picture every day to stay in sync with market trend, stocks and leading sectors.
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