Dow Jones futures open Sunday evening, along with S&P 500 futures and Nasdaq futures. Stock market bulls had another strong week, moving to a major test.
After generally strong price gains over the past several weeks, a market pause would not be surprising and could be healthy. Investors should be cautious about adding too much exposure.
A diversified oil giant Exxon Mobil (XOMEnergy stocks are again in the lead, setting near potential inflows. Costco Wholesale (cost) a Cup-with-handle baseSeveral major contenders are reporting this week. United Health (UNH) trades tightly into a buy zone, creating another entry. Apple (APL) AAPL stock is nearing a breakout as it outperforms other megacaps. Microsoft (MSFT) is closing in on its 200-day line, providing an opportunity to initiate a position.
China EV startup Li Auto (LI) earnings reports before the open on Monday. LI stock is also one of the best EV stocks, outperforming the giants BYD (I will do) and Tesla (T.S.L.A), but should come above its 50-day limit. BYD stock is below its 50-day line, while Tesla is below its 200-day line.
The video embedded in this article discusses the weekly market action in depth while analyzing ExxonMobil, UnitedHealth, and Apple stocks.
Dow Jones Futures Today
Dow Jones futures open Sunday at 6 PM ET, along with S&P 500 futures and Nasdaq 100 futures.
Stock market rally
Despite some setbacks during the week, the stock market’s rally ended at a weekly high.
The Dow Jones Industrial Average rose 2.9% last week Stock market trading. The S&P 500 index rose 3.25%. The Nasdaq composite rose 3.1%. The small-cap Russell 2000 rose 5%.
The 10-year Treasury yield rose 1 basis point to 2.85%, but with few big moves on the week.
U.S. crude futures rose 3.5% last week to $92.09 a barrel, despite a pullback on Friday. Petrol futures rose 6.7%. Natural gas prices rose 8.7% on the week.
in the middle Best ETFsInnovator IBD 50 ETF (FFTY) gained 2.3% last week, while the Innovator IBD Breakout Opportunities ETF (Bot) increased by 3.1%. The iShares Expanded Technology Software Sector ETF (VAT) advanced 3%, with MSFT leading IGV. VanEck Vectors Semiconductor ETF (SMH) rose as much as 0.7%, recovering from a series of steep losses Nvidia (NVDA) and Micron (IN) warnings.
SPDR S&P Metals & Mining ETF (XME) rose 8.3% last week. Global X US Infrastructure Development ETF (sidewalk4.6% up. US Global Jets ETF (JETS) rose 3.5%. SPDR S&P Homebuilders ETF (XHB) rose 4%, its eighth straight weekly gain. Energy Select SPDR ETF (XLE) rose 7.4%, with XOM stock heavily weighted on the XLE. Fund Selection SPDR ETF (455.4% up. Health Care Select Sector SPDR Fund (XLV) up 1.65%, UNH stock is a large holding.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) rose 3.25% last week and ARK Genomics ETF (ARKG) 3.8% Tesla shares are the top holdings across Arc Invest’s ETFs. Cathie Wood’s Ark also has some BYD stock.
Stocks near buy points
XOM stock rose 6.3% last week to 93.99, moving above the 50-day line. Shares of the energy company are closing in on a trendline from their peak in early June. Officer Point of purchase 105.67, but it is above the 50-day line. Volume was light last week and not much over the past month as Exxon stock rebounded. Revenue growth will continue to pick up.
COST shares were down 0.6% last week at 537.21. Shares are moving lower on a handle with a buy point of 552.81 MarketSmith analysis.
Remember that the smaller the competitor PJ’s Wholesale (BJ) reports next Thursday. Walmart (WMT), owned by the Sam’s Club warehouse chain, is set to roll out Tuesday morning target (DGT) report on Wednesday.
UNH shares rose 1.6% to 543.70. The health insurer is still within range of a 518.80 cup-with-handle buy point, while below the April 14 high. UnitedHealth stock did not form a tight three-week pattern, breaking above the weekly moving range. But investors can still use 545.84 as an alternative buy point.
Apple shares rose 4.1% last week to 172.12. It’s the sixth straight weekly gain, but all have come at lower levels. On the contrary, the Relative strength line AAPL stock’s performance is reflected against the S&P 500. Apple shares move toward 179.71. Double blow Point of purchase. Technically, stocks are hitting a trendline entry. Ideally, AAPL stock would create a handle.
MSFT shares rose 3.2% to 291.91, but remained below its 200-day moving average, unlike Apple. A big move above the 200-day line presents an opportunity for MSFT stock to enter as a long-term leader. While the RS line is not far from the 2022 high, MSFT stock is significantly below its late November high of 349.67.
Li Auto Revenue
Wall Street expected a net loss of 2 cents per share on sales of $1.4 billion in the second quarter, according to FactSet. That was a 1 percent loss from $780.4 million a year earlier.
Li Auto has been profitable for the past three quarters, but the Covid shutdowns took a heavy toll on production and deliveries in Q2. Li Auto currently has only one model, the Li One Hybrid SUV.
But it has also started sales of the premium L9 hybrid SUV, with deliveries starting later this month. Pre-orders are strong, with Li Auto predicting 10,000 or more L9 deliveries in September.
LI stock fell 3.4% last week to 32.49, making more ground against its 50-day line and extending a decline that began in late June, followed by a big run since early May. The stock ended in the upper half of its weekly range. Starting to form a right side, Li Auto stock has a new base with a buy point of 41.59. A strong move above the rising 50-day could provide an initial entry.
Tesla and BYD stock
Tesla shares rose 4.1% last week to 900.09. It bounced back above its 200-day moving average, retrieving its 40-week line on Friday. A breach of its 200-day line and August 4 high of 940.82 would provide a strong entry for TSLA stock. The official buy point is 1,208.10.
BYD stock fell 0.2% last week to 36.69, trading tight but below the 50-day line. The China EV and battery company has a base with a buy point of 43.71. A decisive move beyond 50 days will provide an early entry.
According to some reports, Tesla is supplying BYD Blade batteries to Berlin. The Blade-powered Model Ys will roll off the production line in a few weeks. Meanwhile, BYD will begin deliveries of the Model 3’s more affordable competitor, the Sealed sedan, in the next few weeks. BYD is starting deliveries of the Atto 3 in Australia in a few days, entering a new market as part of a major international expansion.
Market rally analysis
The stock market rally on Monday and Thursday had unsightly intraday reversals but ultimately solid gains in major indices.
The Dow Jones, S&P 500 and Russell 2000 have decisively cleared their highs in early June, along with the Nasdaq. The Russell 2000 is just above its 200-day line, with the S&P 500 and Dow Jones close behind. When the Nasdaq hits the 13,000 level, it still has some work to do to get to that long-term level.
A break above the 200-day line would be evidence that the current uptrend has outlasted a significant bear market uptrend. A pause or pullback would not be surprising after a strong advance for the major indices, often in sluggish volume. Friday’s bounce, the S&P 500 and the Nasdaq’s intraday, came on a much milder note.
A pause or moderate pullback over several days or weeks can be constructive, but the market is going to do what it’s going to do.
Energy stocks continue to be strong, but the underlying oil and natural gas prices will rise or fall.
Broad spectrum medicine works best. Chipmakers, lithium plays, some steel plays, transportation and others are showing positive action.
What to do now
As Invest With Rules’ Scott Bennett told IBD Live on Friday, investors don’t need to put on the brakes, but they may want to ease off the gas.
Be wary of adding exposure too short, as the market rally will likely extend and face another major resistance area. Taking partial profits is still a good strategy and a way to prevent exposure from new purchases.
However, some quality stocks continue to flash buy signals or set up. Investors need to participate in this market and look for new opportunities. So keep making those watch lists.
According to Big picture Each day should be in sync with the direction of the market and the leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.
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