Dow Jones futures will open Sunday afternoon, along with S&P 500 futures and Nasdaq futures. The stock market rally shrugged off a Thursday morning tumble, with the major indexes closing Friday essentially at record highs. Tesla (TSLA) and Virgin Galactic (SPCE) are in focus over the weekend, along with a further China crackdown on U.S. IPOs.
Roku (Roku), Advanced Micro Devices (AMD), Vale (VALE), Upwork (UPWK), Ford Motor (F), Victoria’s Secret parent L Brands (LB), Zscaler (ZS) and Cimarex Energy (XEC) are stocks with bullish action this past week from strong areas of the market.
LB and ZS stock are the only ones above official buy points. But Roku stock, AMD, Vale and, arguably, Ford are actionable now. UPWK stock and Cimarex have a little more work before tripping early or official entries.
Even leading stocks will tend to follow the overall market, which is why Roku, AMD and these other names tumbled and rebounded on Thursday. But group and industry action also is important.
The overall stock market rally showed resilience. But bouncing back so quickly, especially on light volume, carries its own risk.
China IPO Crackdown
China’s cybersecurity regulator said Saturday that companies with data from over one million users must seek its approval when listing overseas due to risks such information could be “affected, controlled, and maliciously exploited by foreign governments.”
The Cyberspace Administration’s edict comes after ordering ride-hailing giant Didi Global (DIDI) and two other recent U.S. IPOs to suspend new user registrations, while also ordering app stores to pull Didi’s app.
Didi stock plunged 22% last week, while many other Chinese companies also sold off. In addition to the record Alibaba (BABA) antitrust fine and related remedies earlier this year, Beijing is imposing sweeping controls on internet and data-centric companies.
Earnings On Tap
Earnings season will get underway this coming week. Dow Jones giants JPMorgan Chase (JPM) and Goldman Sachs (GS) kick off bank earnings on Tuesday, with Bank of America (BAC) and Wells Fargo (WFC) due Wednesday and Morgan Stanley (MS) on Thursday. Meanwhile, Delta Air Lines (DAL) reports on Wednesday, with UnitedHealth (UNH) and Taiwan Semiconductor (TSM) on Thursday.
Dow Jones Futures Today
Dow Jones futures will open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Coronavirus cases worldwide reached 187.05 million. Covid-19 deaths topped 4.03 million.
Coronavirus cases in the U.S. have hit 34.71 million, with deaths above 622,000.
New U.S. coronavirus cases topped 27,000 on Friday, the highest since late May, as the more-infectious Delta variant becomes dominant. But hospitalizations and deaths remain low. Coronavirus vaccines provide strong protection vs. the Delta variant for serious illness.
Stock Market Rally
The stock market rally ultimately closed with slim weekly gains, right at record highs. The Dow Jones Industrial Average edged up 0.2% in last week’s stock market trading. The S&P 500 index and Nasdaq composite advanced 0.4%. The small-cap Russell 2000 fell 1.3%.
The 10-year Treasury yield fell 7 basis points to 1.36%. It hit a five-month low of 1.26% on Thursday.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) tumbled 2.4% for the week, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 1.35%. The iShares Expanded Tech-Software Sector ETF (IGV) added 0.8%. The VanEck Vectors Semiconductor ETF (SMH) fell 1.1%, with AMD stock a notable component.
SPDR S&P Metals & Mining ETF (XME) eked out a 0.55% weekly gain after undercutting recent lows. The Global X U.S. Infrastructure Development ETF (PAVE) closed a fraction below breakeven. U.S. Global Jets ETF (JETS) slumped 2.1% as Delta Covid fears continue to weigh on travel-related stocks. SPDR S&P Homebuilders ETF (XHB) fell 1.1%. The Energy Select SPDR ETF (XLE) tumbled 3.4% and the Financial Select SPDR ETF (XLF) slipped 0.7%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) sank 2% and ARK Genomics ETF (ARKG) 2.2%, but both rebounded from their 200-day lines. Roku stock is the No. 2 holding in the ARKK ETF, after Tesla. Tesla stock is the No. 1 holding for Ark Invest overall.
Tesla FSD Beta V9 Release
Tesla FSD Beta V9 was released at Friday midnight, letting a select group of owners test the latest version of the driver-assist system. Expect videos highlighting FSD’s pros and cons in the days ahead. Despite their names, Autopilot and Full-Self Driving are L2 driver-assist systems, a long way from fully autonomous L5. But FSD revenue has been important to Tesla, which hopes to introduce a monthly subscription version.
Meanwhile on Monday, a long-awaited case involving Tesla’s acquisition of SolarCity is set to get underway. Tesla CEO Elon Musk is accused of buying SolarCity to avoid a default, rather than a deal to add value to the electric automaker. Musk was SolarCity’s largest shareholder, with some family members key executives and major investors.
Tesla stock fell 3.2% last week to 656.95, but found support at its 50-day and 200-day lines on Thursday. TSLA stock has an aggressive entry at 700.10. While the share price has rallied somewhat from May lows, the relative strength line for Tesla stock is not far from those 2021 lows.
Virgin Galactic Space Flight
Sunday’s Virgin Galactic space flight will include billionaire founder Richard Branson, giving him bragging rights over Amazon (AMZN) founder Jeff Bezos. Bezos will be aboard a June 20 flight from his Blue Origin space company. While Virgin Galactic’s flight will gain a lot of publicity, it’s also the launchpad for commercial service and turning space dreams into down-to-earth cash.
SPCE stock rose 9.5% last week to 49.20. After more than tripling from mid-May lows, SPCE stock has consolidated in volatile fashion in the past few weeks. Virgin Galactic arguably has a 57.61 handle buy point from an extremely deep base.
Roku stock edged up 0.3% for the week to 431.61. On Thursday, shares tested their 21-day exponential moving average, rebounding from just above a 397.79 entry in what could be seen as a double-bottom buy point. Roku stock now has a handle buy point of 463.09. Investors could buy Roku if it crosses a downward-sloping trend line in its handle.
Roku is a clear leader among streaming media, acting as a content gatekeeper for various streaming services. Netflix (NFLX) is trying to set up again, along with Comcast (CMCSA). Disney (DIS) reclaimed its 50-day line Friday.
AMD stock last week tested its 21-day line and a prior early entry of 89.30 at Thursday’s low before rebounding. For the week, shares fell 4% to 90.90. AMD stock now has a cup-with-handle base on a weekly chart, presenting a 95.44 buy point.
AMD is a rival to Nvidia (NVDA), which is greatly extended from any buy area. AMD stock is one of the more-promising semiconductor setups right now, along with several chip-gear makers.
Vale stock undercut its 50-day line intraday Thursday, but closed above that key level. It kept rising Friday. For the week, Vale stock dipped 0.3% to 22.42. Vale isn’t far from a 23.22 flat-base buy point. Investors could buy it now off the 50-day, which has been a safer entry recently for Vale stock.
Vale is among the best-looking mining stocks right now, and is part of the broader metals and mining sector that has been a big winner in 2021.
UPWK stock tested its 21-day on Thursday before rebounding. For the week, Upwork stock fell 1.1% to 57.83. It now has a cup-with-handle buy point of 61.31, according to MarketSmith analysis.
UPWK stock is part of the leading staffing group as companies are desperate to find workers. Several staffing stocks are showing positive action, including AMN Healthcare (AMN).
Ford stock on Thursday fell intraday to 13.73, testing its 50-day line and a prior 13.72 cup-base buy point. Shares rebounded from Thursday’s lows and kept rising Friday. Ford stock still fell nearly 3% to 14.49 for the week. Investors could have bought Ford stock from the 50-day bounce. But they also could wait for a little more strength, letting shares retake the 21-day line and break a downward-sloping trend line.
Ford is part of the auto manufacturers group, rated dead last out of IBD’s 197 industry groups. But high-priced Tesla stock, well off all-time levels, is distorting the price-weighted group’s rankings. In addition to Ford, Stellantis (STLA), Volkswagen (VWAGY) and General Motors (GM) are setting up.
L Brands Stock
LB stock tumbled below a 72.08 flat-base buy point on Thursday, but rebounded from just above its 10-week line to close just below the entry. On Friday, shares moved back into a buy zone. LB stock rose 0.8% to 73.46 for the week.
L Brands stock is one of several apparel chains trading around buy points. American Eagle (AEO) and Urban Outfitters (URBN) also are worth watching, but sold off harder last week and have not reclaimed buy zones.
ZS stock jumped 6.1% to 227.79 last week, clearing a 224.04 cup-with-handle buy point. On Thursday, Zscaler stock pulled back modestly to its 10-day line, but closed little changed, in buy range.
ZS stock had an early entry just below 200, cleared on June 10.
XEC stock edged up 0.6% for the week to 74.14 after briefly testing its 50-day line Thursday. The shale operator has an official buy point of 75.02. Investors could buy XEC stock now, based off the 50-day line and breaking a mini downtrend, or wait for an official breakout.
Cimarex is one of the top stocks in the No. 1-rated Oil & Gas-U.S. exploration & production group. There are many big winners from oil and gas groups, but most of those are extended.
Market Rally Analysis
Friday’s stock market rally, following Thursday’s rebound from lows, was encouraging. The S&P 500 hit an all-time high Friday while the Dow Jones and Nasdaq set record closes. Even the Russell 2000 reclaimed its 50-day line. Several stocks flashed buy signals, including Roku stock, Ford and L Brands.
However, Friday’s price gains came on very light volume.
The biggest concern with the stock market rally is that it’s doing too well. The Nasdaq is 5.6% above its 50-day moving average. That’s not extended but it’s not far from being so. The Nasdaq 100 is 6.6% above its 50-day line.
That raises the question of how much room the stock market rally has to run before another pullback, especially techs. Running up on light volume adds to the risk.
Of course, the next pullback could be like last Thursday’s, momentarily alarming while offering buying opportunities for the brave.
What To Do Now
After the past week, investors should evaluate their portfolios. Are there laggards to trim or exit? Are you comfortable with your overall exposure? Are you too concentrated in some leading sectors and underweight in others?
Try to have a diversity of leadership, with top stocks from a variety of sectors. Cast a wide net as you update your watchlists, with a special eye on stocks that you’re most interested in.
Revisit some past trades from 2021. Are you buying the right stocks at the right time, or are you buying extended or laggard stocks? Did you handle selling well? See what lessons you can take to improve current and future trades.
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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