Dow Jones futures were little changed on Sunday evening, along with S&P 500 futures and Nasdaq futures.
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The stock market rally picked up pace last week and broke key levels, posting strong gains. The S&P 500 briefly encountered resistance at the 200-day line, but broke above this key level on Friday. A number of leading stocks shone in buying spots.
Investors can gradually add risk as the market rally develops. While many top stocks are currently extended, Wendy’s (WEN), Exxon Mobil (XOM), Quanta Services (PWR), Celsius Holding (FULLY FULL) and Isolate (LOWER) transactions can be made from early entries. Restocked Wendy’s and PWR flat feetjoins XOM stock and Insulet. CELH stock needs another week to establish a proper footing.
CELH stocks open SwingTrader and IBD 50. Celsius, Insulet and Wendy’s were the three most recent. IBD Stock of the Day elections.
Meanwhile, tesla (TSLA) on Friday announced major price cuts in the US and Europe, a week after lowering prices in China and key Asian markets.
Tesla stock closed modestly lower, but has rebounded solidly over the course of the week. But the EV giant is facing a painful transition as investors increasingly see Tesla as an automaker rather than a tech company.
The video attached to this article discussed the strong week for the market rally and analyzed WEN stock, Quanta Services and Celsius.
Dow Jones Futures Today
Dow Jones futures rose 0.1 percent. reasonable value. S&P 500 futures were flat. Nasdaq 100 futures fell 0.1%.
US stock and bond markets Martin Luther King Jr. holiday, but other exchanges around the world will be open.
Remember, overnight action Dow futures and elsewhere it doesn’t necessarily turn into real trade on the next regular trade Exchange session.
Bitcoin Price
Bitcoin price briefly surpassed a two-month high of $21,200 on Friday night. The leading cryptocurrency is currently trading around $20,800. Bitcoin was trading just under $17,000 on Jan. 8.
Bitcoin’s rise coincides with the stock market rally, which is showing a return to more speculative investments. This includes growth stocks, especially speculative type games like the ARKK ETF. Some meme stocks had a big week, especially Bed Bath and Beyond (BBBY). BBBY stock soared 179% as the retailer signaled it was headed for bankruptcy.
Join the IBD experts as they analyze stock rally tradable stocks on IBD Live
Stock Rally
The stock market rally had a strong week and major indexes closed close to session tops.
Dow Jones Industrial Average up 2% last week stock market trading. The S&P 500 index rose 2.7 percent. The Nasdaq composite rose 4.8%. The small-cap Russell 2000 was up 5.3%.
The 10-year Treasury yield fell 6 basis points to 3.51%, despite the bounce on Friday. Markets strongly expect the Fed to raise rates by a quarter point in February and March, but then see policymakers put on hold. Falling Treasury yields and brighter economic prospects elsewhere are putting pressure on the dollar, giving stocks and commodities a fresh boost.
U.S. crude futures rose 8.3% last week to $79.86 a barrel. Copper prices rose 7.65%.
ETFs
Growth ETFs include the Innovator IBD 50 ETF (fifty) rose 4.4% last week, while the Innovator IBD Breakout Opportunities ETF (STRUGGLE) rose 2.1%. iShares Extended Technology-Software Industry ETF (IGV) jumped 4.9%. VanEck Vectors Semiconductor ETF (SMH) rose 6.7%.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) rose 14.7% last week and the ARK Genomics ETF (ARKG) just over 16%. TSLA stock is a major holding in Ark Invest’s ETFs. Cathie Wood’s Ark has restocked Tesla assets in recent days and weeks.
SPDR S&P Metals & Mining ETF (XME) rose 6.3% last week, reaching a seven-month high. Global X US Infrastructure Development ETF (FLOOR) rose 4.2%. US Global Jets ETF (JETS) rose 9.4%. SPDR S&P Homebuilders ETF (XHB) increased by 4.6% despite being weak Home page (CKD) earning. Energy Select SPDR ETF (XLE) rose 0.14% and XOM stock was a key component. Financial Choice SPDR ETF (XLF) rose 2.1%. Health Sector Selected SPDR Fund (XLV) decreased by 0.2%.
Top Five China Stocks to Watch Now
Stocks in Buying Areas
Wendy’s stock took a big reversal on Friday, climbing 6% to 23.08 after hitting an intraday low of 21.36. WEN stock regained the 50-day line, broke above the 21-day line, and broke above a trendline. This provided an early introduction to the new flat sole. Accordingly, the official point of purchase is 23.88. MarketSmith analysis.
Wendy’s on Friday reported accelerating sales growth for the fourth consecutive quarter, doubling its dividend and announcing a $500 million buyback.
XOM stock rose 2.4% last week to 113.16, posting its fifth consecutive weekly gain. The shares are slightly below the official 114.76 buy point and do not appear to be extended from the 50-day line as this move. But investors can already tap into Exxon shares.
PWR stock climbed 6.7% to 148.50 last week, making an early entry above the 50-day line. The shares also reclaimed the previous 144.41 purchase points, which is no longer valid.
CELH stock broke above the 50-day and 21-day lines on Wednesday, breaking the downtrend, giving plenty of reasons for an early entry. Stocks held support on day 21, then rose on Friday. Centigrade stock could now take action after rising 13.2% for the week.
Insulet stock increased 4.65% last week, recovering from 21-day and 50-day lines to 305.89. Shares are now actionable. However, traders can expect a breakout of the trendline, which is currently just above Friday’s high of 309.44.
Does Tesla Stock Automatically Downshift?
Tesla stock rose 8.3% last week to 122.40 and continued its uptrend on January 1. The 6-bear market fell to 101.81. Shares fell 0.9% on Friday, well off their intraday lows. Tesla announces extensive price cuts in the USA and Europe. This comes a week after Tesla lowered prices in China and key 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 huge price cut for US consumers. But Tesla’s precious margins are likely to take a hit.
On Tuesday, investors will receive weekly Chinese EV records that should show a huge jump in Tesla sales, as well as possible impacts on competitors. But will Tesla have a permanent rise, especially in China and Europe? Orders in late 2022 have significantly delayed deliveries, so Tesla needs a massive boost in new demand to maintain its current delivery pace in 2023.
Competition in China, already fierce, will intensify in 2023 as Tesla’s price cuts trigger a wave of cuts that are perhaps killing margins. Europe is getting more and more crowded. Even the US EV market will be more competitive within a year, with the decline in used car prices already having a huge impact on new car prices.
But aside from Tesla’s EV sales, TSLA stock has a bigger problem. Investors are increasingly seeing the EV giant as an automaker rather than a tech company. Tesla’s current price-to-earnings ratio of 33 isn’t too high for a tech company. But it’s unusually high for an automaker. Auto industry advantages and margins tend to erode relatively quickly, which is happening to Tesla right now.
TSLA stock may deserve a high valuation for a car manufacturerIt reflects the EV giant’s still-solid EPS and sales growth. But even so, this represents a much lower valuation than it boasted until recently.
general engines (GM), ford (F) and Chrysler-and-Fiat parent stellantis (STLA) all have single digit PE ratios. toyota (TM) at 10.
Tesla vs. BYD: EV Giants Are Competing For The Crown, But Which Is Better To Buy?
Market Rally Analysis
The stock market rally had an encouraging week with a strong January 1st. 6 wins. Major indices rose solidly and regained key levels. A number of leading stocks posted buy signals throughout the week, with most holding or gaining.
The S&P 500 index climbed above its 50-day moving average and reached the 200-day line. The benchmark index hit this key resistance Thursday-Friday, but eventually strengthened.
The Dow Jones, Russell 2000 and S&P MidCap 400 are above all their moving averages and approaching their December short-term tops.
The Nasdaq retraced its 50-day moving average and climbed above the 11,000 level. The lagged index was close to bear market lows at the start of the year.
Stocks opened solidly lower on Friday as earnings initially hit airlines, health insurers and bank stocks, Tesla price cuts hit auto shares hard, and an analyst’s downgrade hit major defense contractors.
Even without the negative headlines, the market probably needed a pullback after strong gains and with the S&P 500 at the 200-day line.
Still, the market quickly recovered and closed higher.
Industry, the large residential sector, many medical and some retailers and restaurants are showing strength.
Even as they try to bounce back, tech names are still few among the leading stocks. The SMH chip ETF cleared the 200-day line last week, while the IGV software ETF and ARKK are above its 50-day average.
The S&P 500 still needs to steadfastly break the 200-day line. Range highs look big for all major indices.
Earnings season will be at the fore, as the stock market appears less worried about the Federal Reserve, with a path to a rate hike pause.
Time the Market with IBD’s ETF Market Strategy
what to do now
Investors may be making new purchases as stocks continue to improve. But do it slowly. While the market rally has shown strength and resilience in recent days, a pullback for major indices, key sectors or individual stocks would not come as a surprise.
Earnings season will intensify for the next few weeks, creating the potential for big swings. Exxon and Tesla shares to report in the next three weeks, along with tech giants Apple (AAPL), Microsoft (MSFT), amazon.com (AMZN) and Google top Alphabet (GOOGLE).
Therefore, do not concentrate too much on a particular industry even if it performs well. Strive for diversity of leading stocks.
Collect your watchlists. Look for stocks that are tradable, set, or potentially tradable if they pause or retrace. At the very least, broad power outside of technology should offer a range of opportunities.
To read big picture Staying in sync with market direction and leading stocks and industries every day.
Please follow Ed Carson on Twitter: @IBD_ECarson for stock market updates and more.
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