Dow Jones futures opens Sunday night with S&P 500 futures and Nasdaq futures. Twitter is reportedly warming up for a takeover Tesla (TSLA) CEO Elon Musk.
The stock market suffered another week of losses while government bond yields continued to rise. The major indices hit resistance last week and broke below support levels. It was even worse below the surface. Leading stocks and sectors that had held up well showed pressure, with miners selling particularly hard. Purchasing opportunities quickly turned lower. Growth stocks continued to decline.
It’s the top week for earnings, with Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), Google parent Alphabet (GOOGL), Exxon Mobile (XOM), Larva (CAT), Chevron (CVX), Raytheon Technologies (RTX) and General dynamics (DG) among the hundreds of companies reporting in the coming week.
But with deteriorating market conditions, the flood of earnings gives investors another reason to stay on the sidelines. But keep a close eye on major revenues, such as Apple, Exxon and General Dynamics, and the market’s reaction to these reports.
Tesla shares are on the IBD Leaderboard and IBD 50. XOM shares are on the Big Cap 20 list, which is filled with energy and commodity games.
The video embedded in this article reviews the market action in detail while also analyzing AAPL stocks, Exxon and General Dynamics.
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Dow Jones Futures today
Dow Jones futures open at 18.00 ET, along with S&P 500 futures and Nasdaq 100 futures.
ETFs following the Dow Jones and S&P 500 fell 0.5% and 0.4% respectively on Friday night. Nasdaq-100 tracker Invesco QQQ ETF (QQQ) fell 0.35%.
As French President Emmanuel Macron wins re-election on Sunday, the EU is expected to start discussing a ban on Russian crude oil imports.
Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze powerful stocks in the stock market rally on IBD Live
Twitter open for Elon Musk bids?
Twitter seems more open to a takeover bid from Tesla CEO Musk, according to The Wall Street Journal. Musk announced Friday that the CEO had lined up to fund a Twitter bid, including some of his TSLA stock holdings. The two sides meet Sunday, the WSJ said, citing sources, to discuss the unofficial offer of $ 43 billion, or $ 54.20 per share.
It is unclear whether Musk will raise his bid or whether another bidder will show up.
Twitter shares rose 8.5% last week to 48.93. This is an increase of 24.5% since before April 4, when Musk recently revealed a TWTR share of 9.1%. In the meantime Snap (SNAP) has fallen by 20% and Facebook stock 18% over that period, even with a small Musk Twitter bump on April 4th. This suggests that the TWTR stock may dive below the levels before Musk if there is no deal.
Twitter and Facebook are reporting earnings this week, following worse-than-expected Snap results last week.
As for the Tesla stock, it rose just over 2% to 1,005.05 last week, but that is after rising to 1,092.22 intraday Thursday after a blowout earnings.
Tesla’s earnings are booming, but this rival is set to seize the EV Crown
Action in the stock market
The stock market tried to rise but then sold hard and fell to end at weekly lows. But the sharp weekly losses hide the size of the divestment from Thursday’s intraday peak.
The Dow Jones Industrial Average fell 1.75% in last week’s trading session. The S&P 500 index fell 2.7 percent. The Nasdaq composite fell 3.8 percent. Small-cap Russell 2000 gave up 3.1 percent.
The 10-year government bond yield rose 8 basis points to 2.91%. A 50 basis point Fed rate hike at the meeting in early May is a virtual lock along with the start of balance sheet cuts. Now the markets have largely priced an increase of 75 basis points at the June meeting.
US crude oil futures fell 4.1% to $ 102.71 per share. barrel last week.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 6.3% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) retreated just over 4%. iShares Expanded Tech-Software Sector ETF (IGV) slipped 5.5 percent. VanEck Vectors Semiconductor ETF (SMH) lost 1.5% after giving solid gains in the middle of the week.
The SPDR S&P Metals & Mining ETF (XME) dipped 11.3% last week. Global X US Infrastructure Development ETF (PAVE) fell 1.9%. US Global Jets ETF (JETS) rose 2.7 percent. SPDR S&P Homebuilders ETF (XHB) fell 0.2 percent. Energy Select SPDR ETF (XLE) fell 4.5%, with Exxon shares and Chevron as the two largest holdings. Financial Select SPDR ETF (XLF) lost almost 2%. Health Care Select Sector SPDR Fund (XLV) gave up 3.5%.
As a result of more speculative history stocks, the ARK Innovation ETF (ARKK) fell 11.1% last week and the ARK Genomics ETF (ARKG) 9.8%.
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Apple’s earnings for the second quarter of the fiscal year are expected Thursday night. Analysts expect a 2% EPS gain of $ 1.43 with a modest revenue increase over a year earlier. The iPhone giant is likely to highlight production issues for Q2 and for the current Q3. Analysts also predict a dividend increase and AAPL stock buyback for the cash-flush tech titan.
After flashing some buy signals at the end of March during an 11-session winning streak, Apple stock has fallen back for four weeks in a row to below its 50-day line. It fell 2.1% to 161.79 last week and stocks are moving back towards their 200-day moving average. Technically, the Apple stock still has a trade buy point of 179.71, just above the March 30 high.
The relative strength line of AAPL stocks is not far from record highs. It’s more a sign of the S&P 500’s weakness than Apple’s strength. Still, if Apple’s earnings are solid and the market improves, the AAPL stock may be among the leaders.
Exxon earnings are due on Friday, along with other oil-sized Chevron shares.
After a strong upswing, the XOM stock is working on a shallow cup base and finding support along the 21-day moving average. Exxon shares fell 3.1% to 85.13 last week, giving a bit of a shake-up after some tickling in previous weeks.
It is not far from a buy point of 91.60 on a daily chart, according to MarketSmith analysis. On a weekly chart, the XOM stock has a handle with an 89.90 entry. But no matter what, investors should probably avoid making new purchases before earnings are announced.
Oil Major Chevron also reports Friday. The CVX stock has shown similar charting actions in recent weeks and months.
General Dynamics stock
General Dynamics’ earnings fall due on Wednesday. In the past week, General Dynamics shares fell 2% to 238.79, which is below its 21-day moving average. On a weekly chart, the DG share finds support just above its 10-week line.
The defense giant has a flat base with a buy point of 255.09. On a weekly chart, General Dynamics stock has a four-week tight, just missing a fifth “tight” week. Investors could use 249.79, just above Wednesday’s high, as an early entry.
RTX stock, Northrop Grumman (NOC), and L3Harris Technologies (LHX) also has earnings in the coming week with the shares in flat bases near their 10-week lines. Lockheed Martin (LMT), which already reported last week, shows similar chart actions.
Stock market analysis
The stock market once again suffered significant weekly losses as government interest rates continue to move significantly higher. Last week, the major indices came up to or above key levels, but then fell sharply, closing at weekly lows. Nasdaq and then the S&P 500 broke below the previous week’s lowest level.
The Nasdaq is a bad day from undercutting its lowest levels in March. The S&P 500 and Russell 2000 are not far from their worst levels in 2022.
Google and Nvidia (NVDA) has already underestimated their lowest March. ARKK and ARKG are just above the levels.
Leading stocks also sent negative signals.
Mining stocks sold hard as several warned of weaker production updates and rising costs. Alcoa (AA), BHP (BHP), Rio Tinto (RIO), Vale (VALE), Freeport McMoRan (FCX) and Mining in Newmont (EASY) all fell below their 50-day moving average.
Fortinet (FTNT) and Expedia (EXPE), two stocks in relative pockets of market power, suffered sharp negative turns. Speaking of Expedia, hotels also fell back despite more bullish news from airlines.
Hospitals had been under construction, however HCA Healthcare (HCA) crashed on Friday, pulling the group down on its profit warning. HCA, along with careful guidance from Intuitive surgical (ISRG), also affected several manufacturers of medical products.
Pharmaceutical manufacturers and biotech companies suffered some notable losses in the last week. Some still have decent charts, though Eli Lilly (LLY) has fallen for nine consecutive sessions to undercut buy points. Lilly’s earnings fall due in the coming week.
Still, the steel stocks still look OK, even though they slipped on Friday.
Many energy stocks still look good, but even the lost ground. Meanwhile, coal, uranium and solar energy stocks fell below recent records at the end of last week.
Defense contractors like General Dynamics and Raytheon hold bases. REITs and insurance companies are relatively safe. But strength pockets are shrinking – and increasingly relative strength relative to actual gains – while the wider market is selling hard.
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What should I do now
The stock market has gone from bad to worse. Even areas of strength begin to suffer and are subjected to sudden, violent divestments.
There is no real reason to have anything other than minimal exposure in the current market, with the possible exception of long-term big winners. Being completely cash makes a lot of sense.
Market conditions will get better eventually, but they can get much worse before that happens. There is no guarantee that past leaders, or your current possessions, will lead the next step.
Right now, investors should focus on preserving their financial and mental capital. You do not want to fight against a negative market trend and then be too exhausted and cloudy to take advantage of the next sustained trend.
Do not get sucked into a strongly open market or even solid session or two. Big gains in bad markets should be viewed with suspicion.
Keep working on your watchlists. Focus on relative strength, even if the stocks are not necessarily in place.
Read The Big Picture every day to stay in line with market trends and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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