Dow Jones Futures: Market Rally Attempt Begins, Netflix Leads 7 Stocks Showing Strength; Tesla Deliveries Loom
Dow Jones futures will open Sunday night, along with S&P 500 futures and Nasdaq futures. The significant indexes and leading stocks suffered heavy losses recently, triggering a shift in the market instructions to “correction.”
Financiers are still on Tesla (TSLA) shipment watch. The EV maker might launch third-quarter production and sales figures this weekend or early next week.
The S&P 500 and Nasdaq plunged listed below their 50-day lines and damage their Sept. 20 lows. Development stocks had their worst week given that the coronavirus crash. While stocks rebounded Friday, the marks the first day of a market rally effort. In the meantime, the marketplace stays in a drop.
In such an environment, financiers must have restricted market direct exposure or be totally in money. Try to find stocks with strong relative strength lines.
Netflix (NFLX), Datadog (DDOG), Mosaic (MOS), American Express (AXP), Bill.com (EXPENSE), Quanta Solutions (PWR) and Paychex (PAYX) all have RS lines at or near highs, showing their outperformance vs. the S&P 500 index.
Netflix stock remains in a buy zone now. In a healthy stock exchange rally, financiers might purchase NFLX, or see early entries on Datadog, Mosaic, Paychex and AXP stock.
Likewise watch on Microsoft (MSFT) and Google (GOOGL). These tech megacaps’ RS lines aren’t far from highs. If MSFT stock and Google can recover their 50-day lines, it’s an excellent indication for the Nasdaq.
When it comes to TSLA stock, it’s keeping in a buy zone. The RS line for Tesla isn’t at a brand-new high, however is at its finest levels in almost 6 months.
Tesla stock, Microsoft and Google are on IBD Leaderboard. Microsoft stock and Google likewise are on IBD Long-Term Leaders. American Express and PWR stock are on SwingTrader. Google stock is on the IBD 50.
The video embedded in this post examined the total stock exchange action and examined Netflix, Mosaic and DDOG stock.
Why This IBD Tool Streamlines The Look For Leading Stocks
Facilities Expense Still In Flux
On the other hand, the fate of the $1.2 trillion facilities costs stays uncertain. Home progressives are requiring considerable development, at minimum, on a multi-trillion dollar reconciliation tax-and-spend bundle prior to electing the bipartisan facilities costs. However Democratic leaders now seem attempting to get centrist Democrats to consent to a $2 trillion reconciliation bundle vs. the long-promoted $3.5 billion bundle. President Biden met with Democratic lawmakers Friday, telling them the infrastructure bill won’t pass until there’s “agreement” on the reconciliation bill.
Also, while Congress last week extended government funding into early December, lawmakers still must approve a debt limit hike. Treasury Janet Yellen has pegged Oct. 18 as the likely government default date. Raising the debt limit without Republican votes could complicate the reconciliation bundle, which in turn could keep the facilities costs in a holding pattern.
Dow Jones Futures Today
Dow Jones futures will begin trading at 6 p.m. ET on Sunday. So will 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 cases worldwide reached 235.03 million. Covid-19 deaths topped 4.80 million.
Coronavirus cases in the U.S. have hit 44.44 million, with deaths above 718,000.
New Covid cases are falling sharply in the U.S. and worldwide, but still remain quite high.
Stock Market Rally Attempt Begins
The stock market closed the week with hefty losses, despite Friday’s bounce.
The Dow Jones Industrial Average fell 1.35% in recently’s stock market trading. The S&P 500 index lost 2.2%. The Nasdaq composite gave up 3.2%. The small-cap Russell 2000 dipped 0.3%.
The 10-year Treasury yield, which shot up to nearly 1.57% Tuesday morning, ended the week at 1.465%, up less than a basis point. Friday’s 10-year yield retreat helped buoy stocks at the end of the week.
Growth stocks were hard hit. Among the best ETFs, the Innovator IBD 50 ETF (FFTY) plunged 8.7% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) sank 4.1%. The iShares Expanded Tech-Software Sector ETF (IGV) gave up 4.2%, with Microsoft stock a top component. The VanEck Vectors Semiconductor ETF (SMH) skidded 5.8%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) tumbled 5.1% and ARK Genomics ETF (ARKG) 4.9%. Tesla stock remains the No. 1 holding across ARK Invest ETFs, though Cathie Wood has actually sold a big chunk of ARK’s stake in recent weeks.
Other sectors were mixed.
SPDR S&P Metals & Mining ETF (XME) rose 2.6% and Global X U.S. Infrastructure Development ETF (PAVE) fell 0.9%. U.S. Global Jets ETF (JETS) ascended 2.5%. SPDR S&P Homebuilders ETF (XHB) gave up 4%. The Energy Select SPDR ETF (XLE) shot up 5.8%. The Financial Select SPDR ETF (XLF) dipped 0.3%. AXP stock is notable XLF holding.
Five Best Chinese Stocks To Watch Now
The EV giant will report third-quarter deliveries and production figures soon, possibly over the weekend or as late as next Tuesday.
Tesla deliveries will hit roughly 232,000, according to the latest, upwardly revised analyst consensus. Tesla sold the Model Y in Europe for the first time, most likely boosting sales in that region. Tesla exported most of its Shanghai production in July and August, mostly to Europe, but September looks to be a big figure for local China sales.
Chip shortages may be restraining Tesla production, but if so it’s only slowing the growth in output so far. Meanwhile, global auto production has plunged, boosting Tesla demand and pricing.
Even aside from Tesla deliveries, the next week will be big for the EV maker.
On Oct. 8, Tesla will begin rolling out FSD Beta to Full Self-Driving owners and subscribers who want to opt into the still-unfinished driver-assist software. Elon Musk said recently that Tesla would roll out Beta at 1,000 drivers per day, starting those who scored highest on a driving safety test. Keep in mind that despite its name, Full Self-Driving is a Level 2, hands-on system.
Meanwhile, on Oct. 7, Tesla will hold its annual shareholder meeting at its Austin plant, followed by event at its Berlin plant on Oct. 9. It’s possible Musk will drop hints on when the Austin and Berlin plants will begin production.
Tesla stock edged up 35 cents to 774.74 for the week, holding above a 764.55 handle buy point cleared on Sept. 24. The RS line is still off all-time levels, but is back to its April short-term highs.
The major indexes suffered big losses last week. Even worse, the S&P 500 and Nasdaq broke below the 50-day line and recent lows. It was good to see the major indexes rebound on Friday, but it was just one day. The anemic volume, especially on the Nasdaq, was not inspiring.
After rising Treasury yields were a headwind for much of the week, Friday’s sharp drop in the 10-year yield help spur equities.
If the major indexes avoid undercutting Friday’s lows, we might have a follow-through day later this coming week or beyond. But for now, the market remains in a correction. The major indexes are below their 50-day and 21-day moving averages. On the plus side, the Russell 2000 managed to regain its 10-, 21-, 50- and 200-day lines in one fell swoop Friday.
Growth stocks had a horrible week. The FFTY’s weekly decline was the worst since the coronavirus crash. That came on the heels of a strong run for growth stocks.
Growth stocks, or many of them, might take a back seat in the coming weeks.
Energy stocks, financials and travel stocks fared relatively well last week. Energy and bank stocks generally have the most compelling charts, but these sectors are subject to shifts in energy prices and Treasury yields, respectively. Travel stocks may have a longer-run tailwind. With the Covid delta wave seemingly fading in the U.S. and worldwide, more people will be willing to travel, especially with governments lifting or easing restrictions on cross-border travel.
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What To Do Now
Investors should keep their exposure at minimal levels, perhaps holding onto core positions in longtime or recent big winners. There is nothing wrong with being entirely in cash at the moment. Being in cash during market corrections preserves your capital, but also your psychological capital. Trying to make money in a correction, can be mentally exhausting and warps your perspective. The simple act of investing heavily during a correction means that you’re not listening to the market. When the market is back in a sustained uptrend, will you be ready to take advantage?
If you do feel compelled to make new buys, keep them small and cut your losses quickly. Be ready to take at least partial profits quickly to help lock in gains amid a weak-to-choppy market environment.
For the most part, investors should be building their watchlists with the relative strength line in mind. Stocks like Netflix, Mosaic, Datadog, Paychex and American Express all have strong RS Lines. Don’t exclude sectors just because you have a bias for highly valued growth stocks. Let the market and your screens guide you to the possible leaders in the next confirmed uptrend.
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 exchange updates and more.
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Jobber Wiki author Frank Long contributed to this report.