Dow Jones futures open on Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally had another strong week and turned into a major test.
A market break should come as no surprise, and could be healthy, after strong price gains in generally light volume over the past few weeks. Investors should be careful about adding more exposure.
Diversified oil giant Exxon Mobil (XOM) settles near potential entries as energy supplies once again take the lead. Costco Wholesale (COST) is on a head-to-head basis, although several key rivals report this week. UnitedHealth (UNH) has traded tightly within a buy zone, sparking new entry. Apple (AAPL) is approaching a breakout as AAPL stocks outperform other megacaps. Microsoft (MSFT) is approaching its 200-day line, which could present an opportunity to start a position.
China EV startup Li Auto (LI) reports earnings ahead of Monday’s opening. LI stocks were among the better EV stocks, outperforming giants BYD (BYDDF) and Tesla (TSLA), but must exceed the 50-day limit. BYD shares are below the 50-day line, while Tesla is just below the 200-day mark.
UNH shares are on the IBD leaderboard and were the IBD share of the day on Friday. MSFT stocks are a long-term IBD leader.
The video embedded in this article discussed the weekly market action in depth while also analyzing the stocks of Exxon Mobil, UnitedHealth and Apple.
Dow Jones Futures Today
The Dow Jones futures open at 6 p.m. ET on Sunday, along with the S&P 500 futures and the Nasdaq 100 futures.
Keep in mind that an overnight action in Dow futures and elsewhere does not necessarily lead to actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
stock market rally
The stock market rally closed at weekly highs, despite some reversals during the week.
The Dow Jones Industrial Average rose 2.9% in stock trading last week. The S&P 500 index shot up 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 some major moves during the week.
US crude oil futures rose 3.5% last week to $92.09 a barrel, despite Friday’s slump. Gasoline futures were up 6.7%. Natural gas prices rose 8.7% this week.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) gained 2.3% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 3.1%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 3%, with MSFT being the largest IGV holding. The VanEck Vectors Semiconductor ETF (SMH) rose 0.7% and recovered from steep losses after the Nvidia (NVDA) and Micron (MU) warnings.
SPDR S&P Metals & Mining ETF (XME) rose 8.3% last week. The Global X US Infrastructure Development ETF (PAVE) rose 4.6%. US Global Jets ETF (JETS) rose 3.5%. SPDR S&P Homebuilders ETF (XHB) rose 4%, its eighth weekly gain in a row. The Energy Select SPDR ETF (XLE) was up 7.4%, with XOM stocks holding a huge weight in XLE. The Financial Select SPDR ETF (XLF) rose 5.4%. The Health Care Select Sector SPDR Fund (XLV) climbed 1.65%, with UNH shares a huge stake.
Due to more speculative story stocks, ARK Innovation ETF (ARKK) climbed 3.25% and ARK Genomics ETF (ARKG) 3.8% last week. Tesla stocks are a major holding in Ark Invest’s ETFs. Cathie Wood’s Ark also owns some BYD stock.
Five best Chinese stocks to watch right now
Stocks near buying points
XOM shares rose 6.3% last week to 93.99 and bounced back above the 50-day line. The energy giant’s shares are closing on a trendline from its early June peak. The official buy point is 105.67, but that would be significantly above the 50-day line. Volume was light last week and not great in the past month as Exxon stocks recovered. Earnings growth continues to grow.
COST shares are down 0.6% in the past week to 537.21. Shares float lower in a handle with a 552.81 buy point, according to MarketSmith’s analysis.
Keep in mind that smaller rival BJ’s Wholesale (BJ) reports this next Thursday. walmart (WMT), owner of the Sam’s Club warehouse chain, is out Tuesday morning with: Target (TGT) reports Wednesday.
The UNH share rose 1.6% to 543.70. The health insurance giant is still in the range of a 518.80 cup-and-handle buy point, while still below the April 14 high. UnitedHealth stocks didn’t quite forge a tight three-week pattern, but crossed the weekly limit of movement. But investors can still use 545.84 as an alternative buying point.
Apple stock rose 4.1% last week to 172.12. It was the sixth consecutive weekly win, but they have all come in at light volume. On the upside, the relative strength line has hit several new highs, reflecting the AAPL stock’s outperformance against the S&P 500. Apple stock is moving toward a double-bottomed 179.71 buy point. Technically, stocks are just hitting a trendline entry. Ideally, AAPL stock would forge a handle.
MSFT shares were up 3.2% to 291.91, but unlike Apple, it’s still below the 200-day moving average. A big step above the 200-day mark could present an opportunity to enter MSFT stock as a long-term leader. The RS line is not far from 2022 high, even with MSFT stocks well below the late November record high of 349.67.
Li Auto Revenue
Wall Street expects a net loss of 2 cents a share on second-quarter revenue of $1.4 billion, according to FactSet. That compares to a loss of 1 cent at $780.4 million a year earlier.
Li Auto has been profitable for the past three quarters, but Covid shutdowns took their toll on production and deliveries in the second quarter. Li Auto currently has only one model, the Li One hybrid SUV.
But it has started selling the premium L9 hybrid SUV, with deliveries starting later this month. Preorders were strong, with Li Auto forecasting L9 deliveries of 10,000 or more in September.
LI shares fell 3.4% to 32.49 last week, opening up more room from the 50-day line and extending a downtrend that started in late June. That followed a huge run from early May. Shares closed in the upper half of the weekly range. Li Auto stock would have a new base with a buy point of 41.59, if it starts building on the right. A strong move above the rising 50 days could provide an early entry.
Tesla vs BYD: EV Giants Are Now Frenemies
Tesla and BYD stocks
Tesla stock rose 4.1% to 900.09 last week. That bounces back above the 200-day moving average and restores the 40-week line on Friday. Breaking the 200-day line and the August 4 high of 940.82 would provide an aggressive entry for TSLA stocks. The official point of sale is 1.208.10.
BYD stock fell 0.2% to 36.69 last week, trading tight but below the 50-day line. The Chinese EV and battery giant has a base with a buy point of 43.71. A decisive step above 50 days would provide an early entry.
BYD supplies Blade batteries to Tesla Berlin, according to some reports. Blade-powered Model Ys should roll off the production line in a few weeks. Meanwhile, in the coming weeks, BYD will begin deliveries of the Seal sedan, a much cheaper rival to the Model 3. BYD will also begin Atto 3 deliveries in Australia in a few days, entering a new market as part of a massive international expansion. .
Market rally analysis
The stock market rally had some ugly intraday reversals on Monday and Thursday, but ended up seeing solid gains on major indices.
The Dow Jones, S&P 500 and Russell 2000 have finally cleared their early June highs and joined the Nasdaq. The Russell 2000 is just above its 200-day mark, with the S&P 500 and Dow Jones close by. The Nasdaq has a little more work to get to that level in the long run when it gets to the 13,000 level.
Moving above the 200 day mark would be proof that the current uptrend is more than a substantial bear market rally. A pause or pullback shouldn’t come as a surprise after a strong rally for the major indices, largely at moderate volume. Friday’s rally, an inside day for the S&P 500 and Nasdaq, came in at very low volume.
A pause or modest pullback over several days or a few weeks could be constructive, but the market is going to do what it is going to do.
Energy stocks continue to look strong, but will rise or fall with underlying oil and natural gas prices.
A wide range of medical specialists are doing well. Chipmakers, lithium clearances, some steel clearances, transports and more are showing positive action.
Time the Market with IBD .’s ETF Market Strategy
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 may want to take it easy.
Be careful about adding exposure in the very short term as the market rally may extend and face yet another important area of resistance. Taking partial profits is still a good strategy and a way to avoid increasing exposure from new purchases.
Still, some quality stocks continue to flash or mount buy signals. Investors should participate in this market and look for new opportunities. So keep building those watchlists.
Read The Big Picture every day to stay up to date on market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.
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