Dow Jones futures open Sunday evening, along with S&P 500 futures and Nasdaq futures, with Fed Chairman Jerome Powell looming large next weekend. The stock market rally pulled back from key resistance last week, while Treasury yields moved toward 3%.
High-value growth names that made big moves in the past two months were the biggest losers. Bitcoin and other cryptocurrencies sold off sharply on Friday.
Investors should wait to see how the market pulls back before adding new exposure.
Warren Buffett shares Apple (AAPL) and Occidental Petroleum (OXY) must see. Occidental Petroleum rallied on Friday as Warren Buffett’s Berkshire Hathaway won regulatory approval to boost its OXY stake by 50%. AAPL stock is trading around a trendline entry. Tesla (D.S.L.A), Celsius Holdings (CELH), AstraZeneca (AZN), Monolithic Power Systems (MPWR) and Insulate (PODD) are various nearby Buy points.
CELH Stock and Monolithic Power are available IBD Leaderboard Watch list. AZN stock is in motion Swing Trader. MPWR stock is in operation IBD long-term leaders. Celsius, Monolithic and Tesla are stocked IBD 50. Monolithic and OXY stocks are available IBD Big Cap 20.
There was Insulet and AstraZeneca IBD stock of the day Exam last week.
Fed chief Powell
Fed Chairman Powell will deliver a policy speech on Friday at the annual Jackson Hole meeting. Powell had used the speech in previous years to signal significant policy changes. It is unclear what he will say that will surprise the markets. The Federal Reserve is in the middle of a cycle of rate hikes to combat high inflation. Policymakers may soon move to smaller Fed rate hikes, but Powell is not ready to tip his hand.
He could point to longer-term challenges, such as a tight labor supply due to demographics, that could prompt the Fed to keep rates higher in the coming years.
Sep. Markets are divided on whether the Fed will raise interest rates for a third time by 75 basis points at its 20-21 meeting or opt for a half-point move.
After his speech, there will be several key economic reports ahead of the September Fed meeting, including the August jobs report and the consumer price index.
Bitcoin collapsed Around $21,000 on Friday after an already modest pullback for the week. It traded above $21,000 on Saturday morning. After falling below $18,000 in June, the price of Bitcoin rose to nearly $25,000 on August 14. Speculative growth stocks, like bitcoin and cryptocurrencies, struggle with Treasury yields. Higher yields boost the dollar.
Like Bitcoin related stocks Coinbase (currency) fell sharply last week as well.
Dow Jones Futures Today
Dow Jones futures open Sunday at 6 PM ET, along with S&P 500 futures and Nasdaq 100 futures.
Stock market rally
The stock market rally began moving toward or above key resistance during the week, but eventually pulled back, mostly or entirely on Friday.
The Dow Jones Industrial Average fell 0.2% last week Stock market trading. The S&P 500 index fell 1.2%. The Nasdaq composite fell 2.6%. The small-cap Russell 2000 slipped 2.9%.
The 10-year Treasury yield rose 14 basis points, including 11 basis points on Friday, to 2.99%.
U.S. crude futures fell 1.4% to $90.77 a barrel last week, but rebounded from weekly lows. Natural gas futures traded at their highest in nearly 14 years.
in the middle Best ETFsInnovator IBD 50 ETF (FFTY) fell 2.9% last week, while the Innovator IBD Breakout Opportunities ETF (Bot) fell 0.4%, erasing strong weekly gains. iShares Expanded Technology-Software Sector ETF (IGV) fell 3.9%. VanEck Vectors Semiconductor ETF (SMH) fell 4.2%, with MPWR stock a hold.
SPDR S&P Metals & Mining ETF (XME) fell 4.2% last week. Global X US Infrastructure Development ETF (sidewalkfell 1.4%. US Global Jets ETF (JETSdecreased by 4.2%. SPDR S&P Homebuilders ETF (XHB) reversed lower, sinking 3%, ending an eight-week winning streak. Energy Select SPDR ETF (XLE) OXY stock rose a remarkable 1.3%. Fund Selection SPDR ETF (XLFGave up to 1.8%. Health Care Select Sector SPDR Fund (XLV) fell 0.5% last week, but rose on Friday.
Tesla shares are a major holding across ArcInvest’s ETFs.
Warren Buffett shares
OXY shares rose 9.9% to 71.29 on Friday, surpassing the 66.26 cup-with-handle buy point by three times normal levels. MarketSmith analysis. Shares are now slightly extended from 5% Buy zoneSo investors may want to wait for a pullback.
Occidental Petroleum has outperformed many oil stocks as Warren Buffett’s Berkshire OXY stock has piled up more than 20% in recent months.
On Friday, Berkshire said the Federal Energy Regulatory Commission approved a request to buy 50% of Occidental Petroleum, which triggered the breakout. Berkshire filed the claim on July 11, the company said Friday.
Berkshire’s No. 1 position is in Apple, which has outperformed other megacaps and the broader market over the past two months. Apple shares fell 1.7% to 171.55 on Friday. The Dow Jones tech giant ended a six-week winning streak, but fell only 0.3%. AAPL shares are below a downward sloping trendline, currently around 173, which would be an early entry point. The official buy point is 183.04. Ideally, Apple stock will soon make a handful.
Other Stocks to Watch
Tesla shares fell 1.1% to 890, retreating below the 200-day line. On Tuesday, TSLA stock hit 944, a three-month high and capped an aggressive entry. Tesla overall fared better than rival EV makers and arc-type stocks last week, but remains far from the official buy point of 1,208.10.
On August 25, TSLA shares will be split 3-for-1. Whether this will be a positive or negative catalyst is not clear. Tesla proposed the split months ago when shareholders approved it on Aug. 4.
CELH stock fell 6.5% last week to 98.28, but has found support around its 21-day moving average. A brief reduction of the 21-day tax will be effective. After rising since late May, Celsius stock has now formed a handle on a deep, nine-month consolidation, offering a 109.84 buy point.
AZN stock rose 0.8% last week to 67.17, retrieving an old 67.50 buy point after rebounding from the 50-day line the previous week. The Relative strength line As AstraZeneca stock consolidated in recent weeks, the broader market advanced. But AZN stock and other defensive growth names may be poised to outperform once again.
Shares of MPWR fell over 3% in the latest week to 511.65, up one week against the previous week. Monolithic Power Stack 541.49 Handle with cup A buy point after the chipmaker rose from early July to early August. A drop to the 21-day moving average would correspond to the 500 level and close the bearish handle.
PODD stock fell 1.2% last week to 267.42. Shares of the diabetes products maker have a buy point of 276.48 on a deep Double bottom. Insulate stock could use a little more shakeout than its 21-day moving average.
Market rally analysis
The stock market rally hit resistance around the 200-day moving average last week. The S&P 500 came within a point of that key level, while the Dow Jones and Russell moved above it during the week of 2000, but ultimately ended lower.
Major indices were suspended early, with ARKK and high-value growth names resisting the pullback despite sharp losses. But on Friday, the Nasdaq finally broke below its 10-day moving average and moved toward its 21-day line.
The major indices ran for weeks, with many former leaders rising 50%, 100% or more from the bottom. So the 200-day line was a logical place to pull back.
Rising Treasury yields helped provide the message for last week’s pullback. Higher rates are a drag on stocks, especially high-value growth names. If energy prices hold up, the decline in inflation may be contained or halted, while also leading to longer periods of large central bank rate hikes.
However, higher energy prices are good news for oil and gas stocks, such as Occidental Petroleum, which were among the big winners last week.
Drugmakers and defense growth stocks fared relatively well, including AZN stock and Hershey (H.S.Y)
A pullback to the 21-day line would be good news for the market rally, allowing stocks like Monolithic and Celsius to carve out deeper handles for a proper shakeout. But you never know if a modest setback will turn into something more serious or which sectors might have a tough time.
What to do now
Investors should be wary of adding net exposure now, while the stock market rally is retreating. If you decide to buy a new stock, you can offset it by taking part or all of the profit in other stocks.
There is no need to reduce exposure yet, but do not allow decent gains to fall to zero and quickly reduce losing positions.
This is a great time to work on watch lists. There is still a lot of leadership or potential leadership in the market. A lot of stocks are likely to carve handles, bases or pullbacks in the coming days, creating buying opportunities.
According to Big picture Each day should be in sync with the direction of the market and the leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.
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