Dow Jones Futures: After Game-Changing Week For Market Rally, Don’t Do This

Dow Jones futures open Sunday night, along with S&P 500 futures and Nasdaq futures.


The recovering stock market had a great week, with Nasdaq boasting its best weekly gain since March. The major indexes rallied on Thursday in a Fed-friendly inflation report. On Friday, the shift away from defensive names ramped up, with many potions and other defensive playstyles or defensive growths dropping sharply.

Although opportunities to buy into leading stocks are limited, investors should seek to gradually increase their buying rate.

Arista Networks (NET), Pure storage (PSTG), Mobileye (MBLY), Shift4Payments (Four) and Bend (FLEX) are technology companies with strong growth but reasonable valuation. Flex and the recent MBLY IPO stock is in a traditional buy zone. FOUR stocks have had a positive entry while Arista Networks and Pure Storage are setting up.

Arista Networks and MBLY stock are on the IBD Leaderboard watchlist. PSTG and Flex stock is available on IBD 50. ANET stock is available on IBD Big Cap 20.

The video embedded in this article discussed an important week for market recovery and analysis Cigar (CI), Flex and MBLY shares.

Megacap shares

Megacap stock rallied last week, but from lows or close to a bear market. Apple (AAPL) and Microsoft (MSFT) have regained their 50-day moving average.

One big laggard is Tesla stock, which hit a two-year low last week. Tesla (TSLA) is under pressure from CEO Elon Musk’s extravagant start to own Twitter. Meanwhile, concerns about Chinese demand continue, even after the October 24 price drop and the recent return of insurance subsidies.

Massive data center chips and graphics Nvidia (NVDA) reporting on a still active earnings season. Nvidia’s strong earnings and guidance, plus results from the semiconductor maker Application materials (AMAT), could keep the chip rally continuing, a positive sign for the market’s recovery. NVDA stock has rallied strongly over the past four weeks, but remains below the 200-day mark.

Bitcoin price

Bitcoin price traded below $17,000, relatively stable since Friday morning, but dipped slightly to $16,500 on Sunday. Bitcoin has plummeted for the week, hitting a two-year low of $15,554.48 on Wednesday, with several other cryptocurrencies suffering massive losses. Cryptocurrency exchange FTX, considered the white knight in the industry just a few months ago, has suddenly collapsed, with filing for bankruptcy shortly before the stock market opened on Friday. The ongoing disclosures about FTX and related company Alameda indicate significant financial variability.

The failure of FTX, following the collapse of several crypto industries earlier this year, raises confidence concerns even as the underlying value of the cryptocurrency plunges. faced massive withdrawals over the weekend after admitting to mishandling a large transaction in late October.

Midterm elections

Democrats have retained control of the Senate, winning at least 50 seats. That number could go up to 51 if they keep their seats in Georgia’s upcoming election. Republicans are still backed to take over the House, but by a slim majority that is by no means guaranteed.

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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 does not necessarily translate into actual trading during the next regular stock market session.

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

Rally stock market

The stock market rally faltered midweek, but bounced back on Thursday thanks to a lower-than-expected inflation report. China eased Covid restrictions on Friday, giving another boost to commodities and stocks.

The Dow Jones Industrial Average was up 4.15% in stock market trading last week. The S&P 500 index rose 5.9%. The Nasdaq Composite Index rose 8.1 percent. The small-cap Russell 2000 gained 4.6%.

Shares of Apple, which on Wednesday set its worst close in nearly four months, rose to close with an 8.2% weekly gain. AAPL has moved above the 50-day line but below the 200-day line, where it hit resistance in late October. Microsoft stock jumped 11.6% back from the 50-day mark after hitting its lowest point of the year. bear market on November 3

Tesla shares fell 5.5% to 195.97, but rose from Wednesday’s two-year low of 177.12. China’s offers extended, following recent price cuts there, adding to demand concerns. But Musk’s tumultuous start to his Twitter reign could be the biggest drag on TSLA stock. That includes sales of Musk’s new Tesla stock and more brief concerns that the “Twitter circus” is hurting the Tesla brand.

Nvidia jumped 15.3% last week to 163.27, its fourth consecutive weekly gain and one of three double-digit gains.

The yield on the 10-year Treasury note fell 33 basis points to 3.81%. Markets strongly expect a 50 basis point Fed rate hike in December and are leaning towards a quarter point move in February.

The US dollar fell sharply, suffering its worst weekly loss in years, reflecting falling yields.

U.S. crude oil futures fell 3.9% to $88.96 a barrel, despite Friday’s rally.


Among the best ETFs, the iShares Expanded Technology-Software Sector (IGV) ETF is up 12.35% for the week, with MSFT stock as a major component. The VanEck Vectors Semiconductor ETF (SMH) is up 15.4%, above the 50-day line and close to the 200-day line. NVDA stock is the key stock.

The SPDR S&P Metals & Mining ETF (XME) gained 3.9% last week. The US Global Infrastructure Development X ETF (PAVE) jumped 5.4% higher. The US Global Jets ETF (JETS) gained 5.6%, its sixth consecutive weekly gain. SPDR S&P Homebuilders ETF (XHB) rose 12.1%. The Energy Select SPDR ETF (XLE) is up 1.95%, right at the high end. and the SPDR Financial ETF (XLF) rose 5.8%. The SPDR Fund for the Healthcare Sector (XLV) is up 1.75%, despite Friday’s slide.

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Reflecting a more speculative narrative in equities, the ARK Innovation ETF (ARKK) reversed from a five-year low to gain 14.6% last week and the ARK Genomics ETF (ARKG) gained 11.4%. TSLA stock remains a major holding on Ark Invest ETFs.

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Growth stocks near buy point

Arista Networks’ revenue and earnings growth accelerated for four consecutive quarters, to 69% and 57% respectively in the third quarter. ANET stock fell 1.9% to 128.55 last week, but after two weeks of big gains on high volume. Arista stock has a high-processing entry of 133.80 in a consolidation from August 18 – or a longer consolidation in late 2021. ANET stock price to earnings ratio is 32.

PSTG shares rose 1.45% to 30.78 last week. Investors can use 31.62 as a buy point or early entry from consolidation going back to August 18 or from a cup-with-handle base starting in late March. grew 129% in the most recent quarter with a 30% increase in revenue. PSTG stock has a PE ratio of 27.

MBLY stock has rallied 15.7% over the past week to 29.95, having just completed 29.86 IPO base buys. Mobileye, the driver assistance system company, went public in late October at $21 a share, topping the official range but far below the valuation that owners own Intel (INTC) was hopeful. Mobileye earnings grew 36% in the latest quarter, with revenue growth of 41%. MBLY stock has a PE of 48.

FOUR stock rose 17.8% to 47.30, but after a wild week. Shift4 Payments reversed a sharp drop on Monday after earnings, but then rebounded for the rest of the week. On Friday, Shift4 stock regained the 200-day line and broke the trendline. According to MarketSmith’s analysis, FOUR stock has 51.52 basic buy points to create a bottom. Shift4 earnings grew 69% and revenue 45%, both up from the previous quarter. Stock FOUR has a PE of 45.

FLEX stock has gained 5% over the past week to 20.18, closing within a 19.73 buy point. The stock is offsetting a short-term base but also a long consolidation from early 2021. FLEX earnings grew 31% in fiscal Q2 with revenue up 25%, both accelerating in the fourth quarter. three in a row. Flex is part of the highly regarded Electronic Contract Manufacturing Group.

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Market aggregation analysis

The stock market rallied on an important week. Already under pressure, bulls struggled with some notable losses on Wednesday that pushed the S&P 500 index below its 50-day line.

But Thursday’s October CPI inflation report was a game changer, signaling a slower pace of rate hikes by the Fed and perhaps a lower peak rate. The major indexes edged higher as Treasury yields and the US dollar fell sharply. The Dow Jones Industrial Average rebounded above its 200-day line, while the S&P 500 and later Nasdaq crossed the 50-day line and the October high. The Russell 2000 broke above the 50-day and 200-day lines of the Dow Jones Industrial Average. it.

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All of that action pushed the market back into a “confirmed uptrend.”

Meanwhile, actionable stocks are hard to find. Many of the big winners are defeated megacaps like stock Apple and Microsoft, as well as defeated cloud software. On the other hand, the leading players in defense and defense are suddenly under pressure. That includes many drugs in the pharmaceutical space, health insurers, and drug distributors. Defense contractors, auto parts retailers, restaurants, discounters and food manufacturers also suffered losses.

Even outside of that space, there are some nasty bearish reversals in stocks, including CF Industries (CF) and Enphase Energy (ENPH).

Construction products, network stocks and many energy games are doing well. A few traditional automakers, not Tesla, are showing strength. Some steel stocks are doing well, while miners are currently bullish.

Chip names are also recovering, but most, like Nvidia stock, have a long way to go. Solar and medical products have some interesting names.

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What to do now

The stock market rally is resurgent with positive inflation news providing a breather. There seems to be a rotation away from defensive stocks and into growth, but the stocks have a rather limited ability to act.

Investors should look to increase exposure, but don’t rush it. With very few stocks showing buy signals so far, there are plenty of opportunities ahead if the market rallies.

One option is to buy broad market or regional ETFs until more promising individual names emerge. Even then, keep your exposure modest, letting the market engage you over time.

As you add exposure, be careful not to focus too much on one particular area.

But build those watch lists. Interesting stocks are setting up while the bulls are making a comeback. You want to be ready to buy the best names when they explode.

Read the 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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