Dow futures: bear market eyeing new low; Apple and Eli Lilly show relative strength

Dow futures will open Sunday evening, along with S&P 500 and Nasdaq futures contracts.

The stock market suffered heavy losses again last week as the hawkish Federal Reserve sent Treasury yields higher again. The Dow Jones cut its June lows on Friday as other major indexes approached. The ultimate growth leaders are beginning to unravel.

With the market correction intensifying, it’s time for investors to be on the sidelines, but looking for potential leaders. Some medicinal stocks show relative strength, including Eli Lilly (LLY). Chinese e-commerce giant Bindudu (PDD) back off somewhat quietly. apple (AAPL), Tesla (TSLA), Energy Enphase (ENPH) and Albemarle (ALB) is under increasing pressure, but it is still worth pursuing in the future.

Tesla, Enphase Energy and Albemarle stock is in IBD 50. Enphase and ALB stock is in IBD Big Cap 20. Eli Lilly was Friday’s stock in IBD.

Dow jones futures contracts today

Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Remember that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.


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stock market work

The stock market suffered heavy losses again last week, closing near weekly lows despite a mini bounce near Friday’s close.

The Dow Jones Industrial Average fell 4% in stock trading last week. The S&P 500 lost 4.6%. The Nasdaq Composite tumbled 5.1%. Small cap Russell 2000 fell 6.5%.

The 10-year Treasury yield rose 25 basis points to 3.7%, capping the eighth consecutive weekly gain.

US crude oil futures tumbled 7.1 percent to $78.74 a barrel last week, their lowest since January.

ETFs

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) is down 10.8% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) is down 6.5%. The iShares Expanded Tech-Software ETF (IGV) index fell 5.4%. The VanEck Vectors Semiconductor Index (SMH) lost 5.7%.

The SPDR S&P Metals & Mining ETF (XME) indexes fell 8.3% last week. The index of the Global Infrastructure Development Fund (PAVE) of the US company Global X decreased by 5.3%. The US Global Jets ETF (JETS) fell 9.1%. The SPDR S&P Homebuilders ETF (XHB) is down 4.2%. The Energy Select SPDR ETF (XLE) lost 10.15% and the Financial Select SPDR ETF (XLF) lost 6.1%. SPDR Healthcare Sector Selection Fund (XLV) down 3.6%

Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) is down 11.2% last week and the ARK Genomics ETF (ARKG) is down 10.1%. TSLA’s stock remains among the top holdings across Ark Invest ETFs.


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Apple stock

Apple stock closed near weekly lows, but closed just 0.1% lower at 150.54. On Wednesday, AAPL stock hit resistance near its 10 and 40-week lines and returned near its recent lows. But the RSI reached a new high on Friday. Apple stock still has a buy point of 176.25, but the first test will be to get its 50-day and 200-day lines back.

Stock LLY

Eli Lilly’s stock actually rose 0.9% to 311.60 last week. Shares jumped about 5% Thursday, after positive news about the drug and the promotion of analysts. LLY is the stocks on the wrong side of the 50-day line, hitting resistance there on Friday. But the RS line is racing higher. According to MarketSmith analysis, the pharmaceutical giant has 335.43 fixed-base buying points. There is a potential entry in the trend line just above the 50 day line, but this is not the time to make any buying.

ENPH stock

Enphase stock fell 12.1% last week to 279.49, modestly lowering its 50-day streak and lowering its recent lows. Ideally, the ENPH stock will be consolidated for some time, possibly forming a new base.

PDD Stock

Pinduoduo stock fell 8.5% to 60.08, breaking below the 21-day line and approaching the 50-day mark. PDD stock has given up nearly all of its gains since the Chinese e-commerce giant reported the results of the explosion in late August, where it exploded briefly.

But the RS line is still near 52-week highs. A pullback to the 50-day line could be bullish, with a new base likely to form.

Of course, China’s stakes are always high, while PDD stocks are far from e-commerce names or Chinese stocks in general.

ALB stock

Albemarle stock fell 6.1% to 269.69 last week, but found support at the 50-day line on Friday. ALB stock is still above 250.25 buying pips from a small handle in early August, while the stumbling round gains from an alternate entry 273.78 from a huge handle cup base. There is no clear entry for ALB stock at the moment.

Lithium prices are high and likely to remain so indefinitely as demand for electric vehicles rises and lithium production is restricted. But there is no doubt that ALB stocks and other lithium toys can be very volatile, and subject to a major sell-off.

Tesla Stock

Tesla stock fell 9.2% to 275.36, with losses larger than Wednesday’s peak. TSLA stock broke below the 200-day and 50-day lines, but settled above recent lows. The electric vehicle giant now has a legitimate consolidation with 316.74 buy points within a much deeper consolidation. On the weekly chart, Tesla stock has a handle entry at 313.90.

The RS line was trending higher until late last week.

Weekly sales data in China, likely by Tuesday, may ease or bolster Tesla demand concerns. Global production and delivery data for the third quarter will follow in early October.

stock market analysis

The stock market suffered another week of heavy losses. Dow Jones cut June lows on Friday, along with NYSE Composite. The Nasdaq, S&P 500, and Russell 2000 didn’t, but it just needs another bad day to come down.

Can we bounce? Sure, the market appears to be oversold by various measures, while the June lows are a logical place to try for a bounce. The CBOE volatility index rose to a three-month high on Friday, although the gauge of market fear is not at extreme levels.

Of course, the bounce doesn’t have to come right away. A good day or two will not mean much if the indicators resume selling quickly.

Any bounce in the stock market will likely need Treasury yields and the US dollar to pause or pull back.

In the past few weeks, market rallies, including intraday, have been lackluster and lower in volume, followed by heavy selling.

There is a strong chance that the bear market is heading down again. Even when the market finally reaches the bottom, it may take a long time to reach a higher level.

What can change the dynamic? On September 30, the Fed will get its personal consumption expenditures index for August, its preferred measure of inflation. The September jobs report will follow in a week. Positive readings may be a relief, but the Fed wants to see continued declines in core inflation and labor market weakness.

In the meantime, expect big warnings over the next few weeks. Rising labor costs, supply chain problems, rising interest rates, a rising dollar, and a struggling economy are a recipe for disappointment in earnings.

Some sectors are doing relatively well, but the focus is relative.

This includes pharmaceutical giants such as LLY Stock, as well as other drugs including some biotech and medical names. Pollution control still looks fine. But even many stocks with RS lines that are rising or at new highs falter and are on the wrong side of the 50-day and 200-day lines.

Just because the stock has been holding up doesn’t mean it will continue to do so in a market correction. A large number of flexible stocks suddenly sold off strongly in the past week. That includes growth constraints that are starting to sell hard, such as Enphase and TSLA stocks.

If these stocks suffer significant additional damage, this could mean an extended repair time, at best. Then again, the same can be said about the market as a whole.


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What are you doing now

Investors should be on the sidelines. Very few stocks are holding out, even the relative winners are reeling from the market correction.

Continue to build your watch lists with an emphasis on relative strength. Almost all charts, with a few exceptions like the LLY stock, will look awful, but that’s fine for now.

If you are looking for short positions, it is better to wait for a rebound, with major stocks or indices returning to key levels and hitting resistance. But work on those potential lists, too.

Remember that it is very difficult to make money in a bear market. The time for big gains will be followed by the next strong rally in the market. Staying in touch and preparing for this upside is key.

Read the big picture every day to stay in sync with market trend, stocks and leading sectors.

Please follow Ed Carson on Twitter at Tweet embed For stock market updates and more.

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