Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally is in the midst of a modest pullback after a strong run from mid-March lows.
The major indexes still look healthy. But investors should be cautious about new buys in the very short term and be ready to exit positions if they aren’t working. Growth and shipping stocks ran into trouble late last week, such as Dutch Bros (BROS) and J.B. Hunt Transport Services (JBHT).
Apple stock, Exxon Mobil (XOM) and SolarEdge Technologies (SEDG) are setting up near buy points.
Tesla Deliveries Due
Tesla deliveries are expected Saturday morning, though they could come as late as Tuesday evening. Analysts are expecting Tesla (TSLA) to report Q1 global deliveries of 309,000. The Tesla Berlin factory has just begun deliveries, while the Shanghai plant was closed for several days in March amid China Covid restrictions.
Tesla stock continued to run up last week toward the 1208.10 cup-base buy point or a trendline entry around 1,145, but might be starting work on a handle.
China EV giant BYD (BYDDF) also is expected to report March sales in the next few days, with some expectation that EV and plug-in hybrid sales topped 100,000 for the first time. BYD stock reclaimed its falling 50-day line on Friday. But it remains below its 200-day line.
Tesla Vs. BYD: Which Booming EV Giant Is The Better Buy?
Tesla and BYD sales figures will follow March deliveries from Xpeng (XPEV), Nio (NIO) and Li Auto (LI). Nio stock and Li Auto reclaimed their 50-day lines on Friday, while XPEV stock also rose. In addition to strong deliveries, the China EV names rallied with other U.S.-listed Chinese stocks on a report easing delisting fears.
Tesla stock is on IBD Leaderboard and the IBD 50. XOM stock is on the IBD Big Cap 20, which is full of energy and commodity names. The video embedded in this article analyzes the market rally and discusses Apple (AAPL), JBHT stock and SEDG stock.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET on Sunday, 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
Stock Market Rally
The stock market rally started last week strong but ended with modest gains or slim losses.
The Dow Jones Industrial Average dipped 0.1% in last week’s stock market trading. The S&P 500 index rose less than 0.1%. The Nasdaq composite rose 0.7%. The small-cap Russell 2000 also climbed 0.7%
The 10-year Treasury yield sank 11 basis points last week to 2.38%. The two-year Treasury yield spiked to 2.48%, decisively moving above the 10-year rate. This yield inversion is a possible recession signal — down the road — with the Fed set to aggressively raise rates at upcoming meetings. Experts differ on whether the yield curve inversion poses a serious recession risk. Fed chief Jerome Powell recently noted that the very short end of the yield curve is still well below long-term rates.
Still, the yield curve bears watching.
U.S. crude oil futures plunged nearly 13% to $99.27 a barrel, their biggest weekly loss in nearly two years. President Biden said Thursday that the U.S. would release 1 million barrels a day for six months from strategic reserves to help combat high gasoline prices.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.4% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) dipped 0.8%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 2.2%. But the VanEck Vectors Semiconductor ETF (SMH) sold off 3.6%, falling sharply from mid-week.
SPDR S&P Metals & Mining ETF (XME) retreated 1.4% last week, but rebounded well off lows. The Global X U.S. Infrastructure Development ETF (PAVE) sank 1.5%. U.S. Global Jets ETF (JETS) jumped 4.3% on lower fuel costs. SPDR S&P Homebuilders ETF (XHB) slumped 2.8% to a 52-week low.
The Energy Select SPDR ETF (XLE) lost 2.15%, but bounced off lows. XOM stock is a major XLE holding. The Financial Select SPDR ETF (XLF) slumped 3.3%, as the inverted yield curve hit bank stocks. The Health Care Select Sector SPDR Fund (XLV) climbed 1.3%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) jumped 4.7% last week and ARK Genomics ETF (ARKG) 7.3%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs. Cathie Wood recently began buying some Nio stock and has been adding to Ark’s BYD position. Ark also owns some XPEV stock.
Five Best Chinese Stocks To Watch Now
Apple stock broke out Tuesday above a 176.75 double-bottom buy point. But after an 11-day win streak, it wasn’t a surprise to see the iPhone giant pull back, retreating modestly in the last three sessions. For the week, AAPL stock edged down 0.2% to 174.31. It’s now working on a handle on a daily chart, but that needs at least two more days to be proper. On a weekly chart, Apple stock technically has a small handle with a 179.71 buy point. But investors likely should wait for at least a daily handle to form, perhaps with a little more depth.
The relative strength line for Apple stock is right at record highs.
Exxon stock, like many other energy plays, showed resilience amid plunging crude prices. Shares fell 2.4% to 83.12 last week, but rebounded from a 10-week line test, according to MarketSmith analysis. At just 2.9% above that key level, investors could buy XOM stock here. They could also wait for the oil major to consolidate further and form a proper base, though that would take a few weeks.
SEDG stock tends to make big intraday swings on a daily basis, but it’s tightening up somewhat on a weekly basis. SolarEdge stock fell 3.7% to 322.83 last week, finding support at its 21-day moving average. Shares are just below a 335.67 cup-with-handle buy point. SEDG stock is still well above the 50-day line, so pausing for a while longer would be helpful.
J.B. Hunt Stock
J.B. Hunt stock had a strong breakout on March 16, initially pulling back gradually before failing decisively this week. After breaking below the buy point earlier in the week, JBHT plunged Friday below the 50-day line and closed below its 200-day for the first time in nearly two years. JBHT stock fell 9.6% on Friday, leading all S&P 500 decliners, and was down 13.2% for the week.
Other trucking stocks, as well as rail plays, were big losers amid industry concerns of slowing freight demand. Union Pacific (UNP) sank 4.85% on Friday, nearly round-tripping a modest gain from an early March breakout.
Market Rally Analysis
The stock market rally ran up through Tuesday, breaking past fresh resistance levels. Then the major indexes pulled back, with the Nasdaq stopping short of the 200-day line while the Dow Jones fell back below that key level.
So far this is all still normal, with Friday’s push for slim gains suggesting the rally is in sound condition. But investors don’t know if stocks will quickly rebound, continue to pull back or move sideways for a few weeks, or if conditions will rapidly deteriorate.
Apple stock, Tesla and many others are working on possible handles. But those are still generally works in progress.
While the overall market looks strong, key sectors had ugly weeks.
A lot of tech stocks struggled late last week, notably chips. Several of those names were still deep in bases, but others like Alpha & Omega Semiconductor (AOSL) were failed breakouts. AOSL stock crashed 18% last week, with an even-bigger reversal from Wednesday’s highs.
The sell-off in JBHT stock, Union Pacific and other shippers may be related to the weakness in chip and PC names. After staying close to home during the pandemic, Americans may shift spending away from goods toward travel and nights out on the town.
The weak guidance this past week from upscale furniture retailer RH (RH) and mattress maker Tempur-Sealy (TPX) also suggest declining demand for home “stuff.”
Meanwhile, cyclicals such as energy, steel, fertilizer plays and more reasserted themselves late in the week. Some like XOM stock and Shell (SHEL) are near buy points, while others are extended.
Time The Market With IBD’s ETF Market Strategy
What To Do Now
The powerful initial stock market rally run is over. Investors also should step back and take a look at their holdings.
Are you too concentrated in specific sectors? While the major indexes closed relatively flat for the week, some sectors and stocks suffered sharp losses. Whether this is the return of sector rotation or just a narrowing market rally, investors need to listen to these market signals and act accordingly.
Keeping positions small and diversified amid modest overall exposure can limit the fallout. Taking profits quickly and cutting losers quickly is still vital.
Work on those watchlists. The recent market action could create a wave of new buying opportunities ahead. So you want to be ready.
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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