Dow Jones Futures: Market Rally Unfolds to Key Test; Here’s what to do now

Futures on the Dow Jones will open Sunday night, along with futures on the S&P 500 and Nasdaq. The stock market rally had another strong week, passing a major test.




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A market pause would not be a surprise, and could be healthy, after strong price gains in generally light volume over the past few weeks. Investors should be careful before adding more exposure.

Diversified oil giant Exxon Mobil (XOM) is set up near possible entrances, while the energy actions regain the lead. Wholesale Costco (COST) has a cup base with handlealthough several key rivals are signaling this coming week. UnitedHealth (A H) traded tightly in a buy zone, creating another entry. Apple (AAPL) nears a breakout as AAPL stock outperforms other megacaps. Microsoft (MSFT) is approaching its 200-day line, which could offer a chance to start a position.

Electric start in China Li-Auto (LI) reports earnings before Monday’s opening. LI stock has been among the best EV stocks, outperforming the giants BYD (I’M GOING) and You’re here (TSLA), but must exceed its 50-day limit. BYD stock is below its 50-day line while Tesla is just below its 200-day line.

UNH stock is open IBD classification and it was friday IBD stock of the day. The MSFT action is a IBD Long Term Leader.

The video embedded in this article provides an in-depth look at the weekly market action, while also analyzing stocks from Exxon Mobil, UnitedHealth and Apple.

Dow Jones Futures Today

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

Remember that overnight action in Futures contracts on Dow and elsewhere does not necessarily translate into actual trading over the next stock Exchange session.


Join the experts at IBD as they analyze actionable stocks in the stock market rally on IBD Live


Stock market rally

The stock market rally closed at weekly highs despite some reversals during the week.

The Dow Jones Industrial Average rose 2.9% last week stock market trading. The S&P 500 index jumped 3.25%. The Nasdaq composite rose 3.1%. Small cap Russell 2000 jumped 5%.

The 10-year Treasury yield rose 1 basis point to 2.85%, but with some big moves during the week.

U.S. crude oil futures rose 3.5% to $92.09 a barrel last week, despite Friday’s pullback. Gasoline futures jumped 6.7%. Natural gas prices jumped 8.7% for the week.

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From best ETFsthe Innovator IBD 50 ETF (FFTY) gained 2.3% last week, while ETF Innovator IBD Breakout Opportunities (FIGHT) increased by 3.1%. The iShares Expanded Tech-Software Sector ETF (VAT) rose 3%, with MSFT leading IGV. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.7%, rebounding from heavy losses following the Nvidia (NVDA) and Micron (IN) warnings.

SPDR S&P Metals & Mining ETF (XME) jumped 8.3% last week. The Global X US Infrastructure Development ETF (PAVE) jumped 4.6%. US Global Jets ETF (JETS) increased by 3.5%. ETF SPDR S&P Home Builders (XHB) rose 4%, its eighth consecutive weekly gain. The SPDR Energy Select ETF (XLE) jumped 7.4%, with XOM stock weighing heavily on XLE. The SPDR Financial Select ETF (45) rebounded 5.4%. SPDR Healthcare Sector Fund (XLV) climbed 1.65%, with UNH stock a huge holding.

Reflecting more speculative history stocks, ARK Innovation ETF (ARKK) climbed 3.25% last week and ARK Genomics ETF (ARKG) 3.8%. Tesla stock is a major holding in Ark Invest’s ETFs. Cathie Wood’s Ark also owns BYD stock.


Five best Chinese stocks to watch now


Stocks close to buy points

XOM stock rebounded 6.3% to 93.99 last week, returning above the 50-day line. Shares of the energy giant have been closing on a trendline since peaking in early June. The official point of purchase is 105.67, but that would be significantly above the 50-day line. Volume was light last week and hasn’t been great over the past month as Exxon stock rebounded. Earnings growth continues to climb.

COST stock edged down 0.6% last week to 537.21. Stocks are drifting down in a handful with a buy point of 552.81, according to MarketSmith Analysis.

Keep in mind that smaller rival Wholesale BJ’s (B.J.) reports this next Thursday. walmart (WMT), owner of the Sam’s Club chain of warehouses, is due out Tuesday morning, with Target (TGT) report on Wednesday.

UNH stock rose 1.6% to 543.70. The health insurance giant is still in the range of a buy point of 518.80 cups with handle, while remaining below the April 14 high. UnitedHealth stock hasn’t quite forged a tight three-week pattern, just breaching the weekly movement limit. But investors could still use 545.84 as an alternative buy point.

Apple stock rose 4.1% to 172.12 last week. It was the sixth consecutive weekly gain, but all saw light volume. On the rise, the relative force line hit several new highs, reflecting AAPL stock’s outperformance against the S&P 500. Apple stock is heading towards 179.71 double bottom point of purchase. Technically, stocks are just reaching a trendline entry. Ideally, the AAPL stock would forge a handle.

MSFT stock climbed 3.2% to 291.91, but unlike Apple, it is still below its 200-day moving average. A big move above the 200-day line could offer a chance to enter the MSFT stock as a long-term leader. The RS line is not far off the 2022 high, even with MSFT stock significantly lower than its late November high of 349.67.

Li Auto Earnings

Wall Street expects a net loss of 2 cents per share on sales of $1.4 billion in the second quarter, according to FactSet. That’s up from a year-ago loss of 1 cent on $780.4 million.

Li Auto has been profitable for the past three quarters, but Covid shutdowns weighed on production and deliveries in the second quarter. Li Auto currently only has one model, the Li One hybrid SUV.

But sales of the L9 premium hybrid SUV have started, with deliveries expected to begin later this month. Pre-orders have been strong, with Li Auto predicting L9 shipments of 10,000 or more in September.

LI stock fell 3.4% to 32.49 last week, creating more space from its 50-day line and extending a downtrend that began in late June, which followed a huge race from the beginning of May. The shares closed in the upper half of its weekly range. Li Auto stock would have a new base with a buy point of 41.59, if it started to build the right side. A strong move above the 50-day high could offer an early entry.


Tesla vs. BYD: electric vehicle giants are now enemy enemies


Tesla and BYD stocks

Tesla stock rebounded 4.1% to 900.09 last week. This is moving back above its 200-day moving average, reclaiming its 40-week line on Friday. Breaking above its 200-day line and the August 4 high at 940.82 would offer an aggressive entry for TSLA stocks. The official buy point is 1,208.10.

BYD stock fell 0.2% last week to 36.69, trading tight but below the 50-day line. The Chinese electric vehicle and battery giant has a base with a buy point of 43.71. A decisive move above 50 days would offer early entry.

BYD is supplying Blade batteries to Tesla Berlin, according to some reports. Blade-engined Model Ys should start rolling off the production line in a few weeks. Meanwhile, BYD will begin deliveries of the Seal sedan, a much cheaper Model 3 rival, in the coming weeks. BYD also begins deliveries of the Atto 3 in Australia within days, entering a new market as part of a huge international expansion.

Market rally analysis

The stock market rally saw a few unsightly intraday reversals on Monday and Thursday, but ultimately saw solid gains across major indexes.

The Dow Jones, S&P 500 and Russell 2000 decisively broke their early June highs, joining the Nasdaq. The Russell 2000 is just above its 200-day line, closely followed by the S&P 500 and the Dow Jones. The Nasdaq has a little more work to do to reach this long-term level as it hits the 13,000 level.

Breaking above the 200-day line would be proof that the current uptrend is more than a major bearish rally. A pause or pullback would not come as a surprise after the major indices surged, largely on lackluster volume. Friday’s rebound, an inside day for the S&P 500 and Nasdaq, came on very light volume.

A pause or slight pullback over several days or weeks could be constructive, but the market will do what it will.

Energy stocks continue to look strong, but will rise or fall depending on underlying oil and natural gas prices.

A wide range of doctors are doing well. Chipmakers, lithium games, some steel games, transportation and many more are showing positive action.


Time the Market with IBD’s ETF Market Strategy


What to do now

As Scott Bennett of Invest with Rules told IBD Live on Friday, investors don’t need to put the brakes on, but they might want to let off the gas.

Be careful when adding very short-term exposure as the market rally may be stretched and facing another key resistance area. Taking partial profits is always a smart strategy and a way to prevent increased exposure from new purchases.

Still, some quality stocks continue to give signals to buy or settle. Investors should participate in this market and look for new opportunities. So keep building those watchlists.

Lily The big picture every day to stay in tune with market direction and key stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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