Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures.
The stock market’s rally ended on Friday, with the major indexes moving sharply higher on the December jobs report and the ISM jobs index.
ELF Beauty (ELF), SLB (SLB), Mashot (CAT), Rio Tinto (RIO), Atkore (ATKR), KLA (KLA)C, United Therapeutics (UTHR), Insulate (PODD), and TJX (TJX) broke, highlighted buy signals or were definitely active.
Commercial Metals (CMC) reports before opening. The CMC company climbed last week, withdrew from the moving averages and cleared a tight spot. But CMC’s future earnings have added a lot of risk.
After the market closes on Friday, Macy’s (M) warned that fourth-quarter holiday sales would be at the low end of expectations. It sees consumers remaining under pressure in 2023. Macy’s stock fell more than 4% late Friday, with several other retailers also down.
ELF Beauty and CAT stock joined the IBD Leaderboard on Friday, with UTHR stock on the Leaderboard watch list. ATKR Stocks and Commercial Metals are included in the IBD 50 index. KLAC stock is on the IBD Big Cap 20.
ELF Beauty was IBD’s Stock of the Day on Friday. United Therapeutics and RIO stock were selected earlier in the week.
In the meantime, Tesla ( TSLA ) rocked China’s EV market on Friday with sharp price cuts amid weaker-than-expected sales there. Tesla’s stock fell for the week but reversed on Friday. Tesla’s move may hurt its profit margin, but it will help the growth of its larger EV rival BYD (BYDDF), which is increasingly profitable. BYD’s stock fell on Friday, but it still had a strong week. China’s EV startups such as No (NIO), At Auto (LI) and XPeng (XPEVs), which are losing money, face a tough challenge. Nio Corporation, Li Auto and Xpeng fell on Friday but posted weekly gains.
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 activity in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular market session.
Join IBD experts as they analyze active stocks in the market rally on IBD Live
Stock Market Rally
The stock’s new highs looked shaky for most of the week, but then rallied strongly on Friday.
Some strong labor market data weighed on major indexes, but Friday’s jobs report had some soft elements, notably cooler wage growth. At the same time, the ISM services index showed a big drop, indicating that the economy is slowing significantly.
The Dow Jones Industrial Average rose 1.5 percent in last week’s stock market trading, along with the S&P 500 index. The Nasdaq composite rose 1%. The smaller Russell 2000 index rose 1.8 percent. All the index gains and then some came on Friday.
The 10-year Treasury yield fell 26 basis points to 3.57%. The probability of a quarter Fed rate hike on February 1 is now 74%. Markets are also betting on a quarter-point move in March, in a range of 4.75%-5%. Although the Fed is forecasting a 5 percent hike, markets are not pricing in much more.
A barrel of US crude oil fell 8.1% last week to $73.77. Natural gas crashed by 17%.
Among growth ETFs, the Innovator IBD 50 ETF ( FFTY ) rose 0.55% last week, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) rose 1.2%. The iShares Expanded Tech-Software ETF ( IGV ) fell 0.9%. VanEck Vectors Semiconductor ETF ( SMH ) rose 4.3%, retracing its 50-day line.
In terms of speculative stocks, the ARK Innovation ETF (ARKK) rose 0.4% last week and the ARK Genomics ETF (ARKG) gained 0.2%. Tesla Inc. remains a major shareholder in all of Ark Invest’s ETFs. Cathie Wood continued to increase TSLA ownership starting in 2023.
The SPDR S&P Metals & Mining ETF ( XME ) rose 6.1 percent last week, outperforming all of its major index movers. The US Global X Infrastructure Development ETF (PAVE) rose 3.1%. The US Global Jets ETF (JETS) rose 7.9 percent. The SPDR S&P Homebuilders ETF (XHB) rose 5.5%. The Energy Select SPDR ETF ( XLE ) rose 0.1%, with SLB stock a prominent component. Financial Select SPDR ETF ( XLF ) climbed 3.45%. The SPDR Health Care Select Sector Fund ( XLV ) fell 0.1%, but retook its 50-day line on Friday.
The Five Best Chinese Stocks to Watch Now
Stocks To Watch
The ELF company was very transparent. Shares climbed 4.4% to 58.05 on Friday, off a flat base and more than double normal volume, according to MarketSmith analysis. The relative strength line has hit new highs.
SLB stock rose 3.5% to 54.50 on Friday, extending a move above its 50-day line and clearing an early entry in the rally. SLB was formerly known as Schlumberger.
CAT stock fell 3.6% to 248.86, with a decision to a buy zone from a deep 6% flat base next to a long and deep consolidation.
RIO stock climbed nearly 3% to 74.07, clearing a cash-in-hand buy point.
Stocks KLAC and ATKR retreated from their 10-week lines and raised their 21-day moving averages, offering early entries.
UTHR stock has retreated slightly from its 10-week line as it is trading very tight. Maybe United Thera could use a little more power to clean up a little trend.
PODD stock retook its 50-day line, but backed off to close just below the 21-day line. A move above the 300 level would provide an early entry into a flat base.
TJX stock broke out of a flat base along a long and deep bullish pattern.
Tesla Rolls China EV Market
Tesla on Friday cut prices in China and the key Asian markets of Japan, Australia and South Korea. This came after posting fourth quarter records that lost views for the second straight quarter. With backlogs falling fast – essentially zero in China – Tesla needed to act boldly just to try to maintain current deliveries.
Due to some big end-of-year incentives, some of which run into 2023, the price cuts in China may not be as big as they seem on the surface. Still, the Tesla Model 3, which has faced stiff competition in China, now costs about $600 more than a similar BYD Seal, essentially erasing a nearly $10,000 shortfall in just a few months.
While the price cuts will eat into Tesla’s excellent margins, the question is how much they will increase demand for the Model 3 and Y, and for how long.
Tesla’s China price war is largely aimed at BYD, which is either the world’s largest EV maker or the fastest-growing number 2. Also, its big exports, including Australia and, on January 31, Japan, may help it.
China’s EV price war may be a bigger concern for EV startups. Nio and XPeng are still losing money. Li Auto has been unquestionably profitable.
Keep in mind that Tesla’s second China price cut in 10 weeks may be just the beginning of a nasty downward spiral. Tesla has plenty of spare capacity while its competitors are all ramping up, especially BYD. And they all go hard into the $30,000-$50,000 range where the Tesla resides.
Tesla stock fell 8.2 percent to 113.06 for the week, continuing a massive buying spree. But the stock bounced back from Friday’s fresh bear market low of 101.81 and rose 2.5% on the session. BYD stock fell 1.55% on Friday, but still climbed 7% for the week, above its 50-day line.
Borsa Nio, Li Auto and XPEV fell 4.5%, 9.2% and 15% respectively on Friday. But it rose 2%-6% for the week.
Tesla stock obviously looks terrible right now, but none of these EV stocks are looking good.
Tesla Vs. BYD: THESE GIANTS ARE GOING FOR THE CROWN, BUT WHICH DID THE BEST?
Market Rally Analysis
The stock market took a positive step on Friday.
The Dow Jones broke above its 50-day and 21-day moving averages after hitting resistance in recent days. Dow is the leader in the current market, with industrials, healthcare and many Dow-style companies such as Caterpillar.
The S&P 500 cleared its 21-day line, right up to the 50-day line. The Russell 2000 retook the 21-day, but still has a little work to do to reach the 50-day.
The S&P MidCap 400 moved above its 21-day, 50-day and 200-day moving averages. So is the Invesco S&P 500 Weighted ETF (RSP).
The Nasdaq is nearing its 21-day line for the first time in weeks, but is clearly retreating.
Even the Dow is still facing its December peak, with other indexes facing more challenges. The S&P 500 breaking above its 50-day line would be another big step.
This may signal the start of a more meaningful rally, even if it’s just a short-term, commercial rally, but it’s still uncertain.
The leading stocks, which have generally outperformed the S&P 500 in recent months, showed strong activity on Friday, with a number of breakouts and buy signals. But that’s after some disappointing returns earlier in the week, and more broadly over the past two months.
See if a market rally can build momentum in major indexes and leading stocks. On Thursday, the consumer price index is up.
Market Timing With IBD’s ETF Market Strategy
What to do now
The stock market rally looks better for now. Investors may want to add some exposure, either to individual stocks or through sector-wide market ETFs. But don’t get too excited.
This could be a significant turn, or just another fake head.
The market could turn around quickly. Or, the S&P 500 could reach 200-day or December highs — and retreat.
Taking small positions in the beginning may be the best course. Let the market draw you in. Be prepared to cut losses quickly and still consider taking partial profits quickly.
But it’s definitely time to build your watch lists. Make sure you have a separate address. While the growth and technology sectors are still lagging with a few exceptions, such as KLAC stock, a large number of stocks from various sectors look attractive.
Read The Big Picture every day to stay in sync with market direction and leading companies and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.
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