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Market rally continues — What’s your game plan? Inflation report looms


Dow Jones futures open Sunday night, along with S&P 500 futures and Nasdaq futures. The stock market’s rally had a downward week after a strong rally in the previous five weeks. But the pullback is normal so far.




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Will the uptrend move higher, resume pause or more severe sell-off? Three big factors to watch for next week: CPI inflation report, earnings and Tesla (TSLA).

The CPI inflation report on Tuesday morning, helps set expectations for a Fed rate hike.

Main earnings this week include Network Arista (NET), Span Design System (College of Arts) And Airbnb (ABNB), all near the point of purchase.

Tesla stock has doubled in just over a month, with TSLA investors betting on the rosy scenario without much news to confirm or deny it. We’ll start to see how many thorns there are in that scenario next week, with Chinese electric vehicle registration data for Tesla (TSLA) and main competitors.

Meanwhile, Apple (AAPL) created a new handle purchase point while ExxonMobil (XOM) has returned to the buy zone.

The video embedded in this article has taken a close look at the market rally, while also analyzing XOM stock, Dexcom (DXCM) And Aehr test system (AEHR).

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 action overnight in future index and other places that don’t necessarily translate into actual transactions the next time stock market meeting.


Join IBD experts as they analyze stocks that could act in the stock market rally on IBD Live


Stock market recovers

The stock market rally lost momentum last week, especially in small-cap and growth stocks.

The Dow Jones Industrial Average fell 0.2% last week stock market trading. The S&P 500 index fell 1.1%. The Nasdaq composite lost 2.4%. The Russell 2000 small-cap index fell 3.4%.

The yield on the 10-year Treasury note rose 21 basis points to 3.74%.

U.S. crude oil futures rose 8.6% to $79.72 a barrel last week, recovering from the previous week’s sharp decline. Gasoline futures rose 7.9%. Even natural gas prices rose 4.3%.

ETFs

Among the growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.7% last week, while Innovator’s IBD Breakthrough Opportunity ETF (HOUR) decreased by 2.15%. iShares Expanded Tech-Soft Sector Sector ETF (IGV) retreat 1.5%. VanEck Vectors Semiconductor ETF (SMH) lost 2%.

SPDR S&P Metals & Mining ETF (XME) fell 4.6% last week. US X Global Infrastructure Development ETF (PAY THE ROAD RED) decreased by 2.3%. US Global Jets ETF (jet plane) decreased by 5.3%. SPDR S&P Homebuilders ETF (XHB) decreased by 3.5%. Energy Select SPDR ETF (XLE) spiked 5%, with XOM stock being the main component. Financial Options SPDR ETF (XLF) decreased by 0.3%. SPDR Foundation for healthcare sector (XLV) fell 0.15%, even though it was the seventh consecutive week of declines.

Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) fell 8.6% last week and the ARK Genomics ETF (ARKG) fell 8.65%, after a sharp increase in recent weeks. TSLA stock is the primary holding in Ark Invest ETFs.


The five best Chinese stocks to watch right now


CPI . Inflation Report

The CPI inflation report for January is due on Tuesday morning. Economists expect inflation to continue to trend downward, but still too high for the Fed.

On Friday, the Labor Department slightly revised up November and December CPI data. December Consumer Price Index rose 0.1% month-on-month from initial unchanged. Core CPI, excluding food and energy, increased 0.4%, revised from 0.3%. November CPI and basic CPI were also adjusted up by 0.1 percentage points.

The CPI inflation report marks a busy week in terms of economic data, including January retail sales, Philly Fed February manufacturing index, weekly jobless claims, etc. reinforce or undercut the market’s “soft landing” thesis.

For now, markets are looking forward to quarter-point rate hikes in March and May, with a solid chance of another small move in June.


‘Internet construction law’ can be crushed


income

Arista Network, Budget Avis (CAR), space (MEDP), SolarEdge Technology (SEDG), Palantir (PLTRESS) and the Cadence Design System were both mined on Monday night. CDNS . competitor summary (SNPS) is due to the third, along with Airbnb (ABNB), Marriott International (March) And global foundry (GFS). Most of these names, with the possible exception of PLTR stock, are close to potential buy points.

Shopify (SHOP), Application materials (amateurs), crocodile (CROX) And Visteon (VC) weekend.

The income season is over, but hundreds of companies will report in the next week. Hypercaps have reported, but earnings remain key across many sectors and of course individual stocks. Expedia (experience) Thursday night earnings hit travel stocks on Friday, including ABNB and Marriott shares.

Tesla demand

Tesla shares fell 5% to 196.89 on Friday, ending a streak of eight gains. The stock is still up 3.6% for the week, close to the 200-day line. TSLA stock has jumped 93% from its January 6 bear market low of 101.81. January 6th is the next day for the current market recovery.

January 6 is also the day Tesla announced a major price cut in China and key Asian markets, following a significant price cut in China at the end of October. Tesla followed with big discounts in Europe and the United States, which then also make many Model 3 and Model Y vehicles, qualify for large tax credits of up to $7,500.

The price cuts are taking a toll on Tesla’s well-regarded gross margin, which is already at its highest. But they’ve also boosted Tesla’s demand. Tesla stock has jumped in part on hopes — fueled by CEO Elon Musk — that a drop in Tesla prices will boost demand throughout the year.

The risk is that demand weakens after the initial boom, especially in China. Unlike the US, China has a highly competitive EV market. Many other EV manufacturers have slashed prices or offered large discounts following Tesla’s January 6 move. More moves are sure to come. Meanwhile, competitors continue to launch new or improved electric models.

On Tuesday, investors will receive China’s electric vehicle registration data for the week ending Feb. 12. It is the first real data to see no impact of the Lunar New Year holiday on the Chinese New Year holiday. production and sales. Most electric vehicle manufacturers will see a sharp increase in registrations.

Unfortunately, Tesla sales can be difficult to explain. High registrations will indicate strong ongoing demand, but they may represent the fulfillment of orders from previous weeks, with little new sales. Weak registrations may reflect Tesla Shanghai exporting much of its latest products.

So while Tuesday’s data will be important, it could be weeks before investors get a clear picture of Tesla’s continued demand.


Tesla vs. BYD: Electric car giants vying for the crown, but which is better to buy?


apple stock

Apple stock fell 2.3% to 151.01 in the latest week, after four straight weeks of gains from bear market lows. That now gives AAPL stock the ability to handle on an August basis, at 157.48 buy points. The tech giant is not the market leader, with relative strength line Still at a September high. However, as the only $2 trillion stock in the world and a member of the Dow Jones, S&P 500 and Nasdaq composite indexes, the performance of the Dow Jones Industrial Average. Apple stock is very important.

Exxon stock

Elated by a rebound in crude oil prices, XOM stock jumped 6.5% to 119.20 last week, back above 114.76. flat sole buy points, follow MarketSmith Analysis. Many energy stocks sold off sharply last week as oil prices plunged, but XOM stock was reluctant to drop. Stocks found support at the 10-week line on Monday and then rebounded.

Analysis of market recovery

The stock market rally is in the midst of its first real drop since the Jan. 6 tracking. So far the retreat has been modest and healthy.

Nasdaq, S&P 500 and Russell 2000 all fell but found support around their 21-day moving averages on Friday. The S&P and Russell are also trading to hold their late 2022 highs. The Dow Jones, which has consistently tested its 50-day line over the past two weeks, recovered from that key level on Friday.

While Friday was mixed for the major indexes, it didn’t feel the same for the big names.

However, the pullback is allowing the market to digest the strong gains, with the moving averages catching up somewhat. The top stocks are hammering the handle or finding support at the upside, although a few are moving higher or moving into position.

Of course, the constructive action of major indexes and leading stocks can quickly turn unconstructive. If they drop significantly from here, that will start to be worrying.

Treasury yields and the dollar have rebounded sharply over the past two weeks, weighing on equities. It’s no coincidence that the market rally peaked on February 2, when 10-year Treasury yields hit a five-month intraday low of 3.33%. The dollar bottomed recently on Feb. 1.

So the CPI inflation report and other economic data will be very important. So the income stream is still huge from ANET, Shopify, Airbnb, Cadence Design, etc. EV stocks and speculative growth can take cues from Tesla.


Market Timing with IBD’s ETF Market Strategy


What to do now

Until the market rally shows real strength, investors should be careful about adding risk. The recent drop in price highlights the importance of adding exposure gradually and without prolonged buying.

However, investors should be ready if the market recovers to regain real momentum. Enjoy the Super Bowl this Sunday, but run your screens this weekend and prepare your game plan for next week.

That game plan isn’t all about offense. Be prepared to take defensive action if conditions deteriorate for the broader market or specific holdings.

Read Big picture every day to stay in sync with market trends and top stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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