Earnings season is still in full swing as Dow Jones futures open Sunday evening, along with S&P 500 futures and Nasdaq futures. But investor attention will also be focused on the key Federal Reserve meeting as well as the October jobs report.
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The stock market rally had a volatile week, but ultimately showed resilience and strength amid the selloff. Microsoft (MSFT), Meta platforms (PURPOSE), Amazon.com (AMZN) and Google parent the alphabet (GOOGLE). The Dow Jones, Russell 2000 and finally the S&P 500 cleared their 50-day lines. The Nasdaq did not, but bounced back for strong weekly gains apple (AAPL) rose according to the quarterly results.
Earnings season remains full of top-reporting companies. Arista Networks (ANET), Albemarle (ALB), CF Industries (CF), Cheniere Energy (LNG) and how many services (PWR) report next week. ANET shares, Albemarle, CF, Cheniere and Quanta Services are close to potential buy points.
Here is the bonus pool: About the semiconductor (ON), often known as Onsemi, reports before Monday’s opening. ON stock is close to the trend line. But this EV chip maker has seen wild stock movement over the past few months.
LNG stock is active IBD Leaderboard, ALB stock and CF Industries are on the Leaders list. Arista Networks and CF are on the stock The IBD 50 list.
The video embedded in this article highlighted a key market week when Arista Networks analyzed Albemarle and LNG stocks.
Fed Meeting
The Federal Reserve meets in November. 1-2, policymakers are set to raise rates again. Some relatively quiet inflation data and various central bank moves and signals around the world have bolstered hopes that the Fed will soon move to smaller rate hikes.
Markets still expect the Fed to raise rates by 75 basis points for the fourth meeting in a row, although there is now only a small chance of a half-point move. But the bet for the December meeting has shifted toward the Fed raising interest rates by half a point.
So, investors will be keeping an eye on the Fed policy statement at 2:00 PM ET on Wednesday and especially Fed Chair Jerome Powell’s press conference at 2:30 PM for any hints of a Fed turnaround.
But there will still be plenty of Fed moving economic data ahead of the year-end Fed meeting, including two jobs reports. The October jobs report will be released next Friday, three days after the September JOLTS survey. Signs of a softening labor market could bolster the Fed’s core hopes. But strong hiring and declining unemployment could point to larger rate increases and a higher bottom line.
Dow Jones Futures today
Dow Jones futures open at 6:00 PM ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Don’t forget that it’s a one night stand Dow futures and elsewhere does not necessarily become the actual trade on a regular basis Stock market session.
Join IBD’s experts as they analyze the stocks that made the most of the stock rally on IBD Live
Stock market rally
The stock market rally saw some big swings and divergences on earnings during the week, but overall the major indices all rallied strongly.
The Dow Jones Industrial Average rose 5.7% stock trading, its fourth consecutive weekly gain. The S&P 500 index gained about 4%. The Nasdaq composite rose 2.2%, including a 2.9% gain on Friday. The small-cap Russell 2000 rose more than 6%.
Apple shares rose 5.75% last week and 7.6% on Friday. The Dow Jones, S&P 500 and Nasdaq titans all hit 50-day highs and closed just below the 200-day mark. But AAPL stock should make more progress on the right side of the base. Microsoft shares, which lost 7.7% on Wednesday, ended the week down 2.6%. Last week, Google shares lost 4.8%, and Meta lost 23%. Amazon shares fell 13% even after paring losses on Friday.
The 10-year Treasury yield fell 20 basis points to 4.01 on Friday, ending a 12-week winning streak. The 10-year yield was down 3.91% on Thursday around the 21-day line.
Meanwhile, the 3-month Treasury yield is at 4.09%, now above the 10-year yield. This is a stronger bearish signal than the two-year/10-year inversion that started a few weeks ago.
US crude oil futures rose 3.4% last week to $87.90 per barrel.
ETFs
Between the best ETFsInnovator IBD 50 ETF (FFTY) rose 3% last week, while the Innovator IBD Breakout Opportunities ETF (ABOUT) increased by 4.8%. iShares Expanded Tech Software Sector ETF (IGV) gained 4% even as a major holding of MSFT stock. VanEck Vectors Semiconductor ETF (SMH) advanced 3.45%, all of which will come on Friday.
SPDR S&P Metals & Mining ETF (XME) rose 0.7% last week. Global X US Infrastructure Development ETF (HANG) increased by 5.5%. US Global Jets ETF (JETS) increased by 5.6%. SPDR S&P Homebuilders ETF (XHB) increased by 7.1%. Energy Select SPDR ETF (XLE) and Financial Select SPDR ETF (XLF) rose by 2.7%. Healthcare Select Sector SPDR Fund (XLV) rose 5%, retracing its 200-day line.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) rose 8.4% last week and the ARK Genomics ETF (ARKG) vaulted 10%.
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Stocks Close to Buy Points
ANET shares rose 9.9% to 121.47 on the heaviest weekly volume in eight months, breaking above the 50-day and 200-day moving averages. Essentially all of this weekly gain came on Thursday, with Arista Networks seen as a significant beneficiary of Meta Platforms’ metaverse spending. ANET fund cleared a short trend line by offering early entry. A move above Thursday’s high of 126.53 could suggest another entry from a longer trend line. But the payoff is found on Monday night.
ALB shares recovered 3.8% last week to reach 280.16 50-day line. While price action has been encouraging over the past two weeks, volume has been light. Albemarle stock value 308.34 point of purchase. A strong move over the month of October. 287.07 high could suggest an entry for the lithium giant. Albemarle earnings are due Wednesday night. Complicating matters: alive (LTHM) reports Tuesday night. LTHM shares have a similar chart.
The LNG stock fell 0.75% last week to 174.48, but rebounded from the 21-day and 10-week lines. Cheniere Energy is now short on the stock market base with cup handle 178.69 with a buy point. Cheniere’s earnings are on Thursday.
CF shares were modestly lower on Friday after trying to make a decisive move above the 50-day line and near-term levels, falling 1.6% last week to 105.68. However, it held the 10, 21 and 50 day lines tightly packed together. A clear of Friday’s high of 110.59 could suggest an early entry with 119.70 an official buy point. CF earnings are due on Tuesday. Comrade plays fertilizer food (NTR) and Dauntless potassium (POT) reports on Wednesday as well, but those stocks don’t look so healthy.
Shares of Quanta Services retook its 50-day line at 141.18, up 5.8% last week. Shares rose 8.1% in the previous week. PWR stock can form a handle on the daily chart, which is lined up with a short trend line. For now, how many reserves do you have? main cup 149.43 with an official purchase point MarketSmith analysis. Quanta Services, which provides infrastructure services for the utility industry, reports Thursday.
“Bonus stock” On Semiconductor rose 2.7% last week to 67.48, above its 50-day moving average. It’s not far off the downward sloping trend line from its late August peak. Onsemi’s stock showed some resilience given its other EV chip performance monster speed (WOLF) crashed with management last week.
So, On Semiconductor’s earnings are worth watching early Monday. But the ON stock has such large daily and weekly movements that perhaps it should be called an On-and-Off Stock.
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Market rally analysis
The stock market rally has shown resilience in the face of big losses from tech megacaps. The S&P 500 rallied strongly on Friday after hitting resistance at its 50-day moving average. The Russell 2000 is moving toward its 200-day line, while the Dow Jones crossed that level on Friday as its winning streak extends to six sessions and four weeks.
The Nasdaq is in decline, but broke above its 21-day line on Friday and has rallied strongly for the week.
While last week was encouraging, we still don’t know if it was a bear market rally or something else.
Could the Nasdaq move above the 50-day line now, then run through the 200-day line and beyond?
While earnings grabbed the headlines, falling Treasury yields and a weaker dollar were the main headwinds for stocks last week. These reflect the main expectations of the Fed.
This coming Wednesday’s Fed rate hike and Friday’s October jobs report will be key to the market rally.
Meanwhile, with a bit of a reversal, leading stocks looked a little better, with the major indexes spinning higher.
As AlphaTrends’ Brian Shannon said on IBD Live Friday, it’s “pretty thin” out there when it comes to buying opportunities.
Energy names are still doing well, with LNG stocks close to a buy point. So are some of the defense growth names in the health field. Discounts, auto parts retailers, insurers, and a few restaurants stand out with many of these defensive plays. But many of those names, including Eli Lilly (LLY) and O’Reilly Automotive (ORLY), has already been extended.
Traditional high-growth names don’t do particularly well. There were some notable turnarounds or sales in this space. Cloud computing vulnerabilities for Microsoft’s Azure and Amazon Web Services have soured cloud software stocks. But Meta spending helps the ANET fund, Clean Storage (PSTG) and possibly some chip manufacturers Nvidia (NVDA). Intel (INTC) jumped to bad results and management, suggesting that the bad news is generally bad news for INTC and chip stocks. But these are generally beaten.
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What to do now
The stock market rally had some major headwinds last week and managed them well as a result. But the Fed meeting looms large this week, along with the continued deluge of earnings.
Investors can add some risk, but at least they can choose to wait for the Fed meeting. For ALB stock, Arista Networks, CF Industries and many others, investors should likely wait for earnings results. The fact that there is still a limited number of stocks currently active is also a reason to be cautious about adding new positions. Continued intraday, daily and weekly volatility for major indices and individual stocks adds to the level of difficulty.
But the stock market rally is moving well. Investors must participate. Build your watchlists by ensuring a diverse collection of quality stocks.
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Follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.
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