Dow Jones futures with S&P 500 futures and Nasdaq futures will open on Sunday evening. The stock market had another grizzly week with a final-hour orbital rebound to wipe out Friday’s losses.
Key indicators confirmed a new market rally on Tuesday. But that rally immediately got into trouble with a big sale on Wednesday. The Dow Jones lowered its May 12 low on Thursday, the S&P 500 and the Nasdaq did so on Friday, just days after the rally ended. A final-hour rebound erased Friday’s losses, but key indicators were down sharply for the week again.
Such as retailers Target (TGT) and Walmart (WMT) has helped trigger broader, wider sales-offs. But megacaps Apples (AAPL), Google Guardian Alphabet (GOOGL) and in particular Tesla (TSLA) was the big loser.
Tesla stock was hit particularly hard, while emerging top rivals BYD (BYDDF) was a tough week. BYD on Friday launched pre-orders for its Seal EV, a new Tesla Model 3 competitor. China EV startup Expang (XPEV) reported early Monday.
The economic outlook seems to be the most difficult as inflation pressures consumers and businesses and as a result the Fed raises rates – including global supply-chain problems. At the moment, the stock market is still adapting to that new reality where a “hard landing” is a significant or even potential possibility.
Individual investors have to adapt to that difficult reality.
Dow Jones monster Chevron (CVX), Eli Lily (LLY), World Wrestling Entertainment (WWE) and ZIM Integrated Shipping (ZIM) Everything is worth watching. LLY stocks and these other names are near the buy point with high or near relative strength lines.
ZIM stock is in IBD 50. CVX stock is in IBD Big Cap 20. WWE stocks are the focus of this week’s New America feature. The video embedded in this article discusses the weekly action in detail, as well as analyzes LLY Stock, ZIM and Tesla.
Dow Jones Future Today
Dow Jones futures with S&P 500 futures and Nasdaq 100 futures open on Sunday at 6 pm ET.
Keep in mind that overnight action in Dow Futures and elsewhere does not necessarily translate into actual trading at the next regular stock market session.
Join IBD experts as they analyze actionable stocks at IBD Live Stock Market Gathering
The capital market
The stock market showed some promise on Tuesday, but ended with another week of huge losses.
The Dow Jones Industrial Average fell 2.9% in last week’s stock market trading. The S&P 500 Index is down 3%. The Nasdaq composite fell 3.8%. The small-cap Russell 2000 fell 1.9%.
Target stocks 19.3% and Walmart stocks 19.3%, both at their lowest points since 2020, sinking weak earnings and guidance. Ross Store (ROST) crashes 21.9% in poor results and guidance. Dollar tree (DLTR) and Costco Wholesale (COST), which reported this coming week, fell 19.8% and 16.3%, respectively.
But the theme of rising costs and weak demand has spread beyond retailers to trucking firms and even food producers, traditionally a defensive safe haven.
Apple stock fell 6.5%, its eighth weekly loss. Google stock plunged 6.15% on advertising concerns. Tesla stock has crashed about 14%, there are several specific reasons for the weight on the EV Giant.
The 10-year Treasury yield has slipped 15 basis points to 2.78%, after falling 19 basis points in the previous week. The retreat in Treasury yields reflects concerns about economic growth.
US crude oil futures rose 2.5% to .2 110.28 a barrel last week.
Among the best ETFs, the inventor IBD 50 ETF (FFTY) dropped 1.6% last week, while the innovative IBD breakout opportunity ETF (BOUT) dropped 5%. iShares expanded tech-software sector ETF (IGV) and VanEck vector semiconductor ETF (SMH) both fell 1.8%.
SPDR S&P Metals & Mining ETF (XME) rose 0.6% last week. The Global X US Infrastructure Development ETF (PAVE) is down 2.4%. US Global Jets ETF (JETS) rose 0.6%. SPDR S&P Homebuilders ETF (XHB) decreased by 3.6%. Energy Select SPDR ETF (XLE) gained 1.3%, Chevron stock is a major component. Financial Select SPDR ETF (XLF) lost 1.8%. Healthcare Select Sector SPDR Fund (XLV) is up 0.9%, with LLY stock holding a significant holding. SPDR S&P Retail ETF (XRT) crashed 9.45% with WMT stock and TGT stock holding major.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) fell 2.7% last week while ARK Genomics ETF (ARKG) rose 0.6%. Tesla stock remains the No. 1 holding throughout Ark Invest’s ETF, although it is no longer the No. 1 position in ARKK. Ark Invest owns some Xpeng and BYD stocks.
Now the five best Chinese stocks to look at
Stock to see
Chevron stocks briefly topped 174.86 flat-base buy points on Monday, but returned to 167.88 before the end of the 5 cents closing week. CVX stock holds support near its 21-day and 50-day lines.
LLY stocks popped Monday, following a “novel” diabetes medication from the FDA OK from a nearly 50-day line for early entry into the flat base that could also be a treatment for obesity. Shares fell below their 50-day line on Thursday but returned on Friday. Eli Lily stock rose 2.5% for the week to 298.85. Several major pharmaceutical manufacturers, such as LLY Stock, which offer protective growth, have a good hold in the bear market.
ZIM stocks were up and down for the week, rising 1.65% to end at 64.70. Shares seem to be working on a handle on a cup base, but it needs one more day. Container-based shipper GIM Integrated reported that EPS rose 190% as revenues more than doubled, beating both. ZIM also declared a dividend of 2.85 per share.
WWE stock rose 4.6% last week to 60.91, moving above its 50-day line after finding support just above the 200-day line the previous week. Shares are trading flat with 63.81 buy points, according to Marketsmith. WWE stocks closed on a trendline, just above the 50-day line, offering an early entry.
Tesla’s stock fell 13.7% last week to 663.90, with a new nine-month low of 6.4% on Friday, providing a decisive break below the February 24 and May 12 levels. Unlike in this case, TSLA stock did not rebound strongly from low to intraday.
The volume was very high, the last four weeks being marked by heavy selling days.
In addition to the sell-off in the broader market, Tesla has encountered a number of headwinds that could affect TSLA stock.
Tesla Shanghai is still working in one shift. It comes as China EV and battery giant BYD (BYDDF), slightly affected by the Covid lockdown, has surpassed Tesla in car sales. On Friday, BYD began pre-ordering the Seal sedan, a rival to the Model 3 which has a long range, fast acceleration but $ 10,000 cheaper. BYD stock jumped 10% to 33.33 last week, recovering its 200-day moving average.
A New York Times documentary aired Friday night, “Elon Musk’s Crash Cause,” highlights the problems of Tesla autopilot and fully self-driving and Mask’s unfulfilled commitment. This comes when NHTSA investigates another Tesla fatal crash, part of a larger investigation into autopilot-related accidents.
Musk Twitter The (TWTR) story is also a negative one, as investors fear more TSLA stock sales and an ongoing confusion. Finally, Musk denies allegations of sexual misconduct related to the alleged Business Insider report of the 2018 settlement with a SpaceX employee.
But, like the general market, what matters to investors is how the stock responds. At the moment, Tesla stock is in a big sell-off. Anyone who bought a Tesla last year should leave long ago. Long-term investors need to decide how long to hold big winners and when to take full or partial profits. There is no easy answer.
Tesla vs BYD: How these two EV giants match
The best thing that can be said about the recent assembly is that it failed so quickly and decisively. So it gives less temptation than the bear market rally in late March.
On Tuesday, major indicators staged all the follow-through days, confirming the rally of the new stock market. There were plenty of reasons to be skeptical and there were few stocks to buy, so why not claim a “good” FTD? IBD founder Bill O’Neill wanted to make sure he and other investors would not miss the new rally, even if it meant FTDs that didn’t work out in the end.
Still, Wednesday’s stunning sell-off was a major breaker of expectations. Rallies fail 90% of the time when key indicators close below their follow-through day lows and they stab well below that level on Wednesday. The formal end of the uptrend was almost a formality.
The weekly chart shows a relentless sell-off from the beginning of April.
On Friday, the S&P 500 was down more than 20% from its January 4 peak until a final hourly rally closed at most for most of the session.
The Dow Jones and S&P 500 gained fractions on Friday, marking the first day of a technically new market rally. Nasdaq has closed in the upper half of its daily range, making it a “pink rally” day. Theoretically, the major indicators could stage the FTD at the end of next week, assuming that they will not decrease on Friday.
The market environment is extremely tough, the Federal Reserve is not worried about defending the Dow Jones this time. Inflation is stifling consumer and business alike, with growth and employment already slowing. The Fed is raising rates rapidly to cool inflation, also contributing to the slowdown. It will be extremely difficult to bring down inflation to avoid a recession. Powell and his colleagues may think that a slight recession is inevitable. Probably even necessary Substantial reduction in demand to bring inflation under control.
Break down the supply-chain chaos from China’s lockdown and Russia-Ukraine war, and there are some interesting economic conditions ahead in the coming months.
At some point, the stock market will set the price in negative news and look to a brighter future. But not today.
When it’s time to sell your favorite stock
What to do now
This is not the time to be brave or cunning. It’s a time to be smart and manage risk.
If you have some energy stocks with decent gain, you may choose to keep a minimum exposure. But here too you may want to take partial or full profit. Investors also have to decide about big long-term winners like Apple or Tesla stocks.
But otherwise, investors should be on the side. It is possible that ZIM, Ellie Lilly, Chevron or WWE stocks will trigger a buy signal in the near future, but any purchase would be extremely risky, given the upward trend.
At the moment, it is better to wait for a good market to develop. And it’s a strong open – or close – or even much more than a big day or two.
Even when there is another confirmed assembly, slowly add exposure and exit quickly.
Study past beer markets and revisions, including those from the late 1960s to the early 1980s, when inflation was a major threat.
And continue working on the watchlist. If you haven’t updated them in the last week, get ready for some big overhauls. Many stocks have broken, including the strong RS line. But look for new relative winners there.
Read The Big Picture every day to stay in tune with market trends and leading stocks and sectors.
Please follow Ed Carson on Twitter IBD_ECarson For stock market updates and much more.
You may also like:
Want to get quick profits and avoid big losses? Try SwingTrader
The best growth stock to buy and view
IBD Digital: Unlock IBD’s premium stock listings, tools and analytics today
Market time with IBD’s ETF Market Strategy
How to identify the top positions in the stock market