Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures, with earnings season still in full swing. But investors’ focus will also turn to an important Federal Reserve meeting, as well as the October jobs report.
The stock market rally has had a volatile week but has finally shown resilience and strength amid the sell-off. Microsoft (MSFT) Meta platforms (META) Amazon.com (AMZN) and the parent of Google the alphabet (GOOGL). The Dow Jones, Russell 2000 and finally, the S&P 500, cleared their 50-day lines. The Nasdaq did not, but rebounded for strong weekly gains Appl ( AAPL ) rose in quarterly results.
Earnings season remains packed with top companies reporting. Arista Network (a trap), Albemarle (ALB) CF industry (CF) Cheniere Energy (LNG) and Quanta Services (PWR) reports it next week. ANET stock, Albemarle, CF, Cheniere and Quanta services are all near potential buying points.
Here is the bonus stock: In a semiconductor (ON), often known as Onsemi, reports ahead of Monday’s opening. ON stock is close to trendline entry. But this EV chip maker has shown wild stock action over the past few months.
LNG stock is on the IBD leaderboard, while ALB stock and CF Industries are on the leaderboard watch list. Arista Networks and CF stocks are on the IBD 50 list.
The video embedded in this article highlighted the market’s key week, while also analyzing Arista Networks, Albemarle and LNG stocks.
The Federal Reserve meets on November 1-2, with policymakers set to raise rates again. Some relatively tame inflation data and various central bank moves and signals around the world have bolstered hopes that the Fed will soon lead to modest rate hikes.
Markets still strongly expect the Fed to raise rates by 75 basis points for the fourth straight meeting, while there is now only a slight chance of a half-point move. But for the December meeting, the bet has shifted to a half-point Fed rate hike.
So investors will be paying close attention to the Fed’s policy statement at 2pm ET on Wednesday, and especially Fed Chair Jerome Powell’s 2:30pm news conference, for any Fed pivot signals.
But before the year-end Fed meeting, there will still be moving Fed economic data, including two jobs reports. The October jobs report is due next Friday, three days after the September JOLTS survey. Signs of an easing labor market could bolster Fed pivot hopes. But strong hiring and falling unemployment could signal further price hikes and a higher bottom line.
Dow Jones futures today
Dow Jones futures open at 6pm ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Note that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Stock market rally
The stock market rally had some major earnings-related swings and deviations during the week, but ultimately the major indexes all rose strongly.
The Dow Jones Industrial Average rose 5.7% in stock market trading, its fourth straight weekly gain. The S&P 500 index gained nearly 4%. The Nasdaq composite rose 2.2%, including a 2.9% Friday spike. The small-cap Russell 2000 rose more than 6%.
Apple stock rose 5.75% last week, including a 7.6% gain on Friday. Shares of the Dow Jones, S&P 500 and Nasdaq titans closed above their 50-day line and below their 200-day. But AAPL stock needs to make further progress on the right side of the base. Microsoft stock, which fell 7.7% on Wednesday, ended the week down 2.6%. Google stock sank 4.8% this week while Meta fell 23%. Amazon stock fell 13%, even after paring Friday’s losses.
The 10-year Treasury yield fell 20 basis points to close at 4.01 on Friday, ending a 12-week winning streak. The 10-year yield has rebounded from Thursday’s intraday low of 3.91%, 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 recession signal than the 2-year/10-year inversion, which started a few weeks ago.
US crude oil futures rose 3.4% last week to $87.90 a barrel.
Among the top ETFs, the Innovative IBD 50 ETF ( FFTY ) rose 3% last week, while the Innovative IBD Breakout Opportunities ETF ( BOUT ) was up 4.8%. The iShares Expanded Tech-Software Sector ETF ( IGV ) popped 4%, an even larger holding with MSFT stock. The VanEck Vector Semiconductor ETF ( SMH ) advanced 3.45%, all this coming Friday.
The SPDR S&P Metals & Mining ETF ( XME ) rose 0.7% last week. Global X’s U.S. Infrastructure Development ETF ( PAVE ) rose 5.5%. The US Global Jets ETF ( JETS ) rose 5.6%. The SPDR S&P Home Builders ETF ( XHB ) rose 7.1%. The Energy Select SPDR ETF (XLE) and the Financials Select SPDR ETF (XLF) rose 2.7%. The health care select sector SPDR fund ( XLV ) popped 5%, retracing its 200-day line.
Reflecting the over-speculative stock story, the ARK Innovation ETF ( ARKK ) jumped 8.4% last week and the ARK Genomics ETF ( ARKG ) vaulted 10%.
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Stock close to purchase points
ANET stock climbed 9.9% to 121.47 on its heaviest weekly volume in eight months, climbing above its 50-day and 200-day moving averages. Essentially all of these weekly gains came on Thursday, with Arista Networks seen as a significant beneficiary of the meta platforms’ metaverse spending splurge. ANET stock has cleared a short trend line, suggesting an early entry. A move above Thursday’s high of 126.53 may suggest another entry from the long trend line. But earnings are on tap Monday night.
ALB stock climbed 3.8% last week to 280.16, retracing its 50-day line. Price action has been encouraging over the past two weeks, but volume has been light. Albemarle stock has a buy point of 308.34. A strong move to 287.07 on October 26 could suggest an entry for the lithium giant. Albemarle’s earnings are scheduled for Wednesday night. Complicating matters: alive (LTHM) reports on Tuesday night. LTHM stock has a similar chart.
LNG stock fell 0.75% to 174.48 last week, but bounced back above the 21-day and 10-week lines. Cheniere Energy stock now has a short cup-hand base with a buy point of 178.69. Chenier’s earnings are scheduled for Thursday.
CF stock fell 1.6% last week to 105.68, retracing Friday’s lows after trying to make a decisive move above the 50-day line and short-term levels. But it has 10-, 21- and 50-day lines, which are closely aligned. Clearing Friday’s high of 110.59 could suggest an early entry with an official buy point of 119.70. CF earnings are on Wednesday. Friends are playing tricks nutrients (NTR) and Rude potash ( POT ) also reports Wednesday, but the stock doesn’t look healthy.
Quanta Services stock rose 5.8% to 141.18 last week, retracing its 50-day line. Shares are up 8.1% in the past week. PWR stock can make a hand on the daily chart, which is aligned with the short trend line. For now, Quanta stock has a cup base with an official buy point of 149.43, according to MarketSmith analysis. Quanta Services, which provides infrastructure services for the utility industry, reported Thursday.
“Bonus Stock” in Semiconductor rose 2.7% last week to 67.48, moving back above its 50-day moving average. This is not far from the downtrend from the end of August. Onsimi stock has shown some resilience with its fellow EV chip game Wolf’s Spade (WOLF) hit the directory last week.
So, semiconductor earnings will be visible early Monday. But ON stocks have such large daily and weekly movements that they may be called on and off stocks.
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Market rally analysis
The stock market rally showed resilience against big losses from tech megacaps. The S&P 500, after breaking through resistance at its 50-day moving average, pushed decisively higher on Friday. The Russell 2000 is moving toward its 200-day line while the Dow Jones actually broke above that level on Friday as its winning streak extends to six sessions and four weeks.
The Nasdaq lagged, but broke above its 21-day line on Friday and rose strongly for the week.
While last week was encouraging, we still don’t know if this is a bear market rally or something else.
Could the Nasdaq now move above the 50-day line, then make a run to the 200-day line and beyond?
While earnings grabbed the headlines, falling Treasury yields and a weaker dollar were key downsides for stocks this past week. This reflects the Fed’s pivot expectations.
A Fed rate hike this coming Wednesday and the October jobs report on Friday will be key to the market’s rally.
At the same time, in a bit of a turnaround, while the key indices rose, the leading stocks looked slightly better.
As Alpha Trends’ Brian Shannon said on IBD Live on Friday, it’s “pretty slim” out there when it comes to buying opportunities.
Energy names are still doing well, with LNG stocks nearing buy points. So are some defensive growth names in the healthcare space. Discounters, auto parts retailers, insurers and a few restaurants stand by with many of these defensive plays. But many names, incl Eli Lilly (LLY) and O’Reilly Automation (ORLY), have already expanded.
Traditional high growth names are not particularly good. There were some significant changes or sales at this location. Cloud computing weakness for Microsoft Azure and Amazon Web Services has dragged down cloud software stocks. But Meta’s spending splurge is helping ANET stock, Net stock (PSTG) and maybe some chip makers like Nvidia (NVDA). Intel (INTC) jumped on negative results and guidance, suggesting that bad news is bad news for INTC and chip stocks in general. But it is usually beaten.
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what to do now
The stock market rally had some major headwinds this week, and ultimately handled it well. But the Fed meeting is big this week, with a flood of ongoing earnings.
Investors can add some details, but may choose to wait at least until the Fed meeting. In the case of ALB stock, Arista Networks, CF Industries and many others, investors will have to wait for earnings results. The limited number of stocks that are currently actionable is a reason to be cautious about adding new positions. Ongoing intra-day and weekly volatility for major indices and individual stocks adds to the level of difficulty.
But, the stock market rally is doing well. Investors must participate. Create your own watch lists, making sure to have a diverse collection of quality stocks.
Read the big picture daily to stay in tune with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.
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