Dow futures were little changed Sunday night, while futures for the S&P 500 and Nasdaq tilted lower.
The stock market rally has picked up steam in the past week, with solid gains, and clearing key levels. The S&P 500 briefly encountered resistance at the 200-day line, but moved above that key level on Friday. A large number of blue-chip stocks flashing points of purchase.
Investors can gradually add exposure as the market improves. While many large stocks have now been extended, Wendy (n), Exxon Mobil (xom), Quanta Services (PWR), Centennial Holdings (CELH) And Insulate (PODD) are all executable from early entries. New Wendy’s and PWR stocks flat bases, joining XOM and Insulet stocks. CELH stock needs another week to form a proper base.
Tesla stock closed slightly lower but bounced back strongly for the week. But the electric car giant is facing an agonizing shift as investors increasingly view Tesla as a car manufacturer, not a technology company.
The video embedded in this article discussed the strong week of the market rally, and analyzed WEN stock, Quanta Services, and Celsius.
Dow jones futures today
Dow futures contracts were fixed against fair value. S&P 500 futures fell 0.1%. Nasdaq 100 futures fell 0.2%.
US stock and bond markets are closed Monday for the Martin Luther King Jr. holiday, but other exchanges around the world will be open.
Bitcoin briefly surpassed $21,200 Friday night, its highest level in two months. The leading cryptocurrency is currently trading around $20,900. Bitcoin was trading just below $17,000 on January 8.
Bitcoin’s rise coincides with the rise of the stock market, which is showing a return to more speculative investment. This includes growth stocks, especially speculative-type plays like the ARKK ETF. Some meme stocks had a big week, in particular bed bath behind (BBBY). BBBY stock is up 179%, even though the retailer indicated it was heading toward bankruptcy.
Stock market rise
The stock market rally had a solid week, with major indexes closing near session highs.
The Dow Jones Industrial Average rose 2% in the past week Stock market trading. The S&P 500 jumped 2.7%. The Nasdaq Composite jumped 4.8%. Small cap Russell 2000 jumped 5.3%.
The 10-year Treasury yield fell 6 basis points to 3.51%, even with Friday’s bounce. Markets aggressively expect a quarter-point rate hike from the Fed in February and March, but then see policymakers hanging on. Lower Treasury yields and brighter economic prospects elsewhere are weighing on the dollar, providing another boost to stocks and commodities.
US crude oil futures jumped 8.3% to $79.86 a barrel last week. Copper prices jumped 7.65%.
Exchange Traded Funds
Among the ETFs, the Innovator IBD 50 ETF (fifty(up 4.4% last week, while Innovator IBD Breakout Opportunities ETF)fit) increased by 2.1%. iShares Expanded Technology and Software ETF (IGV) jumped 4.9%. VanEck Vectors Semiconductor Corporation (SMH) increased by 6.7%.
Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(up 14.7% last week and ARK Genomics ETF)ARKG) is just over 16%. TSLA stock is a major holding via Ark Invest’s ETF. Cathie Wood’s Ark has been replenishing its Tesla holdings in recent days and weeks.
SPDR S&P Metals & Mining ETFs (XMEIt rebounded 6.3% last week to a seven-month high. Global Infrastructure Development Fund X US (cradle) increased by 4.2%. US Global Gates Foundation ETF (Planes) climbed 9.4%. SPDR S&P Homebuilders ETF (XHB) gained 4.6% despite the weakness KB major (KBH) profits. Energy Defined Fund SPDR ETF (xle) was up 0.14%, with XOM stock being a major component. SPDR Financial Selection Fund (XLF) by 2.1%. SPDR Health Care Sector Selection Fund (XLV) decreased by 0.2%.
Stocks in buy zones
Wendy’s stock had a significant bullish reversal on Friday, jumping 6% to 23.08 after hitting an intraday low of 21.36. WEN stock recovered the 50-day line, moved above the 21-day line, and broke above the trend line. This provided an early entry into the new flat base. The official point of purchase is 23.88, according to MarketSmith Analysis.
On Friday, Wendy’s reported its fourth consecutive quarter of accelerated sales growth, doubled its dividend and announced a $500 million buyback.
XOM stock rose 2.4% to 113.16 last week, its fifth consecutive weekly gain. The shares are just below the official buy point of 114.76, and won’t appear to be extending from the 50-day line with this move. But investors can already get into Exxon shares.
PWR stock jumped 6.7% to 148.50 last week, bouncing back above the 50-day line, providing early entry. The shares also regained an earlier buy point of 144.41 that is no longer valid.
On Wednesday, CELH stock emerged above the 50-day line and the 21-day line, breaking through a downtrend, providing multiple reasons for early entry. Stocks held support at 21 days, then rose on Friday. The percentage stock is now actionable after gaining 13.2% for the week.
Insulet stock is up 4.65% in the past week to 305.89, bouncing off the 21-day and 50-day lines. Stocks are now executable. But investors can wait for the trend line break, which is currently just above Friday’s high of 309.44.
Tesla’s stock drop slides into cars?
Tesla stock rose 8.3% to 122.40 last week, continuing its rebound from the January 6th bear market low of 101.81. Shares fell 0.9% on Friday, off the day’s lows though Tesla announces significant price cuts in the United States and Europe. This came a week after Tesla cut prices in China and major Asian markets.
The price cuts should boost sales, especially in the US, with more Tesla EV variants eligible for the $7,500 tax credit. This means a significant price cut for American consumers. But Tesla’s precious margins are likely to be affected.
On Tuesday, investors will get weekly electric vehicle registrations in China, which should show a significant jump in Tesla sales, as well as any potential impact on competitors. But will Tesla enjoy a lasting boost, especially in China and Europe? Orders are significantly behind deliveries in late 2022, so Tesla needs a significant increase in new order just to maintain its current pace of deliveries in 2023.
Already fierce competition will intensify in China in 2023, with Tesla’s price cuts likely to trigger a wave of margin-killing cuts. Europe is also increasingly crowded. Even the electric car market in the US will be more competitive in a year’s time, as the slump in used-car prices is already a major drag on new-car prices.
But sales of Tesla electric cars aside, TSLA stock has a bigger problem. Investors increasingly view the electric car giant as an automaker rather than a technology company. Tesla’s current price-earnings ratio of 33 isn’t too high for a technology growth company. But it’s unusually high for an automaker. The auto industry’s advantages and margins tend to erode relatively quickly, which might be happening to Tesla right now.
TSLA stock may deserve a higher valuation auto, reflecting the sales growth and sales growth of the EV giant. But even then, that would indicate a much lower valuation than he had been boasting about until recently.
Market rally analysis
The stock market had an encouraging week, building on strong gains on January 6th. Major indices rose strongly, and regained key levels. A large number of blue-chip stocks flashed buy signals during the week, and most of them were holding or extending gains.
The S&P 500 moved above its 50-day moving average and climbed to the 200-day line. The benchmark hit resistance at this key level on Thursday and Friday, but eventually passed it hard.
The Dow Jones, Russell 2000 and S&P MidCap 400 are above all of their moving averages and approaching short-term highs in December.
The NASDAQ recovered its 50-day moving average and moved above 11,000. The laggard was near bear market lows at the start of the year.
On Friday, stocks opened strongly lower, as earnings initially hurt airlines, health insurers and bank stocks, Tesla price cuts weakened auto stocks and an analyst downgrade hurt big defense contractors.
Even without the negative headlines, it could be argued that the market was about to pull back after the strong gains and with the S&P 500 at the 200-day line.
However, the market rebounded quickly and closed higher.
Industries, the broad housing sector, many pharmaceuticals as well as some retailers and restaurants are showing strength.
Tech names are still rare among blue-chip stocks, though they’re making a comeback. The chip ETF SMH cleared the 200-day line last week, while the IGV ETF and ARKK are above the 50-day average.
The S&P 500 still needs to decisively clear the 200-day line. December gains loom for all major indices.
While the stock market seems less worried about the Fed, with a path toward a halt in rate hikes, earnings season will take center stage.
What are you doing now
Investors can make new purchases as stocks continue to improve. But do it gradually. While the market rally has shown strength and resilience in recent days, the decline will not be surprising for major indices, major sectors or individual stocks.
Earnings season will ramp up over the next few weeks, creating the potential for significant volatility. Exxon and Tesla stocks will report within the next three weeks, along with the tech giants an Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN) and the parent of Google the alphabet (The Google).
So don’t focus too much on a particular sector, even if it’s doing well. We strive to have a variety of leading stocks.
Collect your watchlists. Look for stocks that are executable, established, or potentially executable if they pause or decline. Broad power, at least outside of technology, should provide a number of opportunities.
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