Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally rose slightly last week, capping a solid if choppy 2021. The S&P 500 and Dow Jones hit record highs while the Nasdaq is close.
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EV stocks will be in focus to start 2022 after Tesla (TSLA) and several rivals revved up in late December. Tesla will report global fourth-quarter production and delivery data early next week, likely on Monday. China startups Nio (NIO), Xpeng (XPEV) and Li Auto (LI) will likely report December deliveries by Monday morning, if not sooner. China EV giant BYD (BYDDF) will likely release December sales later in the week.
Tesla stock is close to a trend line buy point. XPEV stock and Li Auto showed bullish action late last week.
Tesla’s tight trading at the trend line could soon turn into a handle. Advanced Micro Devices (AMD) and DDOG stock also are working on handle-like pauses in their consolidations, while also finding support at their 50-day lines.
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Tesla and AMD stock are on IBD Leaderboard and the IBD 50. Datadog (DDOG) was Friday’s IBD Stock Of The Day.
The video embedded in this article took a look at the market action for the past week and for 2021, while also analyzing Tesla, AMD and Datadog.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Coronavirus News
Coronavirus cases worldwide reached 288.24 million. Covid-19 deaths topped 5.45 million.
Coronavirus cases in the U.S. have hit 55.55 million, with deaths above 846,000.
Covid cases are surging worldwide thanks to the more-infectious omicron variant, but it’s also seemingly less dangerous. Hospitalizations have increased, but not nearly as much as new cases, with deaths still declining.
Stock Market Rally
The stock market rally crept higher last week in light end-of-year volume.
The Dow Jones Industrial Average rose 1.1% in last week’s stock market trading. The S&P 500 index climbed 0.9%. The Nasdaq composite, which started the week strong, closed down less than 0.1%. The small-cap Russell 2000 edged up 0.2%
The 10-year Treasury yield rose two basis points to 1.51%. Crude oil prices rose 1.9% to $75.21 a barrel, but ended a seven-day win streak with Friday’s 2.3% decline.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 2% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) advanced 1.7%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.7%, with DDOG stock an IGV component. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.2%, but nearly weekly lows. AMD stock is a major SMH holding.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slumped 4.5% last week and ARK Genomics ETF (ARKG) 4.9%, despite big gains on Thursday. Tesla is still the No. 1 holding across ARK Invest’s ETFs. ARK also owns some BYD and XPEV stock.
Non-tech sectors generally fared better.
SPDR S&P Metals & Mining ETF (XME) climbed 0.9%, its fourth straight weekly gain. The Global X U.S. Infrastructure Development ETF (PAVE) advanced 1.7%. U.S. Global Jets ETF (JETS) slid 1.4% last week. SPDR S&P Homebuilders ETF (XHB) popped 2.9%. The Energy Select SPDR ETF (XLE) advanced 1.1% and the Financial Select SPDR ETF (XLF) 0.6%. The Health Care Select Sector SPDR Fund (XLV) climbed 1.1%.
Five Best Chinese Stocks To Watch Now
Tesla EV Sales
Analysts officially expect Tesla to report Q4 deliveries of 276,900, according to detailed FactSet consensus figures. That includes 261,400 Model 3 and Y vehicles and 15,500 Model S and X vehicles. In Q3, Tesla delivered 241,300 vehicles in the quarter. Some Wall Street analysts and private forecasts see deliveries coming in far north of 280,000, with 300,000 not out of the realm of possibility.
Late Thursday, Tesla announced sizeable price increases for the base-model Model 3 and Model Y in China. The base Model Y no longer qualifies for China subsidies, which are declining 30% in 2022.
Tesla stock surged from its Dec. 21 low to its Dec. 27 peak, running up to a trend line. Since then, shares pulled back modestly in tight fashion ending the week just below the 50-day line. On a weekly chart, it now has handle, giving it a 1,119.10 buy point with a double-bottom base. TSLA stock could have a handle on its daily chart after Monday, but Q4 deliveries could disrupt that.
China EV Sales
Nio, Xpeng and Li Auto will likely report December deliveries before Monday’s open, possibly as soon as Saturday.
With chip woes starting to ease, all three reported record sales in November. Xpeng delivered 15,613 EVs , up 270% vs. a year earlier and 10,138 in October. Li Auto delivered 13,485 Li One hybrid SUVs, up 190% vs. a year earlier and a big jump from 7,649 in October.
Nio delivered 10,878 vehicles in November, up 106% above a year earlier. That was up sharply from October deliveries of just 3,667 amid production line shutdowns.
Xpeng stock rallied 9% last week, with Li stock up 5.5%, both reclaiming their 50-day lines. Thursday’s spikes could have been seen as early entries in emerging consolidations next to prior failed breakouts. But buying an aggressive entry in a Chinese stock right at year-end and with December deliveries imminent seems like piling risk upon risk.
Nio stock shot up 15% Thursday in its heaviest volume in nine months, advancing 3.8% for the week after sinking to a 14-month low on Wednesday. Nio remains well below its 50-day and 200-day lines.
Meanwhile, BYD, which makes its own batteries and chips, will likely release December sales by the end of next week. The EV and battery giant sold 91,219 new energy vehicles in November, up 241% vs. a year earlier. Of that, 90,121 were personal vehicles, up 253%. That included 46,137 EVs, up 153%, while plug-in hybrids shot up 500% to 43,984. It was the sixth straight month that BYD has increased EV/hybrid sales by roughly 10,000.
However, China’s strict lockdown of Xi’an province is likely affecting some BYD production.
BYD stock rebounded on Thursday, but still fell 1.6% for the week. It’s hitting resistance at its 21-day line, with the 50-day line above that.
China is cutting EV subsidies by 30% in 2022, with that falling to zero after that. That’s an issue for BYD, Nio, Xpeng, Li Auto and Tesla.
AMD Stock
AMD stock fell 1.5% to 143.90 last week after rising as high as 156.73 intraday Tuesday. The chip giant is working on a handle, though the consolidation is too short to be proper yet. Still, investors could use 156.83 as a new early entry. However, AMD stock has been tricky, trending higher over the past few weeks but with huge gyrations. Buying closer to the 50-day/10-week line might be safer.
Datadog Stock
Datadog stock retreated 1.25% last week to 178.11. DDOG stock now has a handle on a weekly chart. That creates a lower official buy point of 186.38 — 10 cents above Tuesday’s high. On a daily chart, Datadog will likely have a handle after Monday.
Datadog stock began working on that handle after hitting resistance at some short-term levels. But shares held above a recent trend line break and found support at their 50-day line. DDOG stock is still above its 50-day line, which has converged with its 21-day line and almost in sync with the 10-day.
Market Rally Analysis
The stock market rally closed 2021 with another quiet session after bullish gains before and just after Christmas. The major indexes trading tightly near record highs, drifting slightly lower, is healthy action. This is letting leading stocks such as Tesla and Datadog forge handles.
Big institutions will return in force in 2022, while many investors that delayed selling stock before year-end for tax reasons may pull the trigger. Early January can deliver nice gains but also some sharp losses. So it’s better that stocks get in position at year-end rather than send a flurry of buy signals that might not survive the new year.
Overall, the major indexes are looking healthy. Market leadership, or at least potential leadership, is relatively broad.
However, the Russell 2000 continues to hit resistance at its 200-day line. Market breadth, though improving at the end of 2021 remains tepid. Breadth was poor for most of 2021, though that didn’t stop the megacap tech-led rally in the major indexes. Still, as long as breadth is narrow, it’ll be harder to find winning stocks and outperform the indexes.
Looking back on 2021, the market delivered solid gains, but the choppy action and sector rotation — along with narrow leadership — made it difficult to navigate. The S&P 500 led the Nasdaq, with megacaps fueling both indexes.
There wasn’t necessarily a “right” way to trade in 2021. Among notable IBD Live guests, Mark Minervini focused on short-term trades. David Ryan played sector moves, often targeting non-tech companies. Charles Harris largely stuck to a core position, Tesla, that he had huge gains and deep conviction in. The key is finding good stocks and following sound trading rules that work for you.
Time The Market With IBD’s ETF Market Strategy
What To Do Now
Whether you are 100% in cash or significantly invested, start the new year off with a clean slate. Yes, you want to learn lessons from your winning and losing trades, but don’t bask in the glories of big gains from 2021 or obsess over painful mistakes. Be mentally fresh and open for the new year and the new opportunities that will certainly arise.
Develop your watch lists, looking for stocks in bases with strong relative strength and impressive fundamentals. Pay close attention to the “N” in CAN SLIM. Seek out the new products, services and ideas that can generate tremendous long-term growth.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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The post Dow Jones Futures: Tesla, Nio, Xpeng EV Deliveries In Focus; Bring On The 2022 Market Rally appeared first on Investor’s Business Daily.
