The Dow Jones futures will open Sunday evening, along with the S&P 500 and Nasdaq futures. The stock market’s attempt to rebound picked up momentum, with major averages rising sharply on Friday and during the week.
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UnitedHealth (UNH), Shockwave Medical (SWAV), Ulta Beauty (ULTA), Enphase Energy (ENPH), Chemical and Mining Society (SQM), Quanta Services (PWR), Northrop Grumman (NOC) are actions to watch out for. They all have lines of force relative to or near maximums.
Shares of Shockwave exploded on Friday, with shares of Ulta and PWR likely offering early tickets. The shares of UnitedHealth, Northrop, SQM and ENPH are not far from the buying points.
Stay tuned to Google Alphabet (GOOGL) and EV Tesla Giant (TSLA). Shares of Google and Tesla are not approaching the old highs, but these megacaps are recovering above key levels after staying above the May lows of this month.
NOC shares are in the IBD classification, with PWR shares on the classification watch list. GOOGL shares are in IBD Long Term Leaders. Shares of UnitedHealth, Ulta Beauty, SQM and ENPH are on IBD 50. Shares of UNH and Ulta are on IBD Big Cap 20.
UnitedHealth was the stock of IBD on Thursday. SQM was stock on Tuesday.
Dow Jones futures today
The Dow Jones futures open at 6 p.m. ET, along with the S&P 500 and Nasdaq 100 futures.
Remember that overnight action on Dow futures and elsewhere does not necessarily translate into actual trading at the next normal stock market session.
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Stock market meeting
The stock market’s attempt to rebound produced big weekly gains in a short week, with major indices closing at their best levels on Friday.
The Dow Jones Industrial Average rose 5.4% on the stock market last week. The S&P 500 index gained 6.5%. The Nasdaq compound rose 7.5%. The small capitalization Russell 2000 increased by 6%.
The 10-year Treasury yield fell 11 basis points to 3.12%, recovering from just over 3% to Thursday’s lows.
U.S. crude futures fell 0.3% to $ 104.27 a barrel last week and rose 3.2% on Friday.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.5% last week, and commodity-related names weighed on FFTY. The Innovator IBD Breakout Opportunities (BOUT) ETF rose 1.7%. The ETF of the iShares Extended Technology Software (IGV) sector increased 10.3%. The VanEck Vectors Semiconductor ETF (SMH) was out 5.1%.
SPDR S&P Metals & Mining ETF (XME) fell 1% last week, even with a big rebound on Friday. The Global X US Infrastructure Development ETF (PAVE) gained 3.6%. US Global Jets ETFs (JETS) rose 5%. SPDR S&P Homebuilders ETF (XHB) was up 7.6%. The Energy Select SPDR ETF (XLE) fell 2.6% and the Financial Select SPDR ETF (XLF) rose 4.6%. The SPDR Fund for the Selected Health Sector (XLV) increased by 7.8%, with UNH shares as a major stake.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) rose 18.25% last week and ARK Genomics ETF (ARKG) 18.1%, both surpassing their 50-day line. Tesla shares remain one of the main holdings of Ark Invest’s ETFs.
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Actions near points of purchase
Shares of Shockwave rose 6.4% on Friday and 25% during the week to 197.69. This clarified a buy point of 194.41 cups with handle, with Friday’s move with a higher-than-average volume for SWAV shares. Shockwave Medical has been profitable over the past three quarters, while revenue growth has been three-digit over the past five quarters.
Shares of UnitedHealth rose 9.6% during the week to 495.64, but fell below its 50-day line on Friday. UNH shares have a double-bottomed base with a 507.35 buy point, just slightly above Thursday’s intraday high. Several other health insurance actions are being created.
Shares of Ulta Beauty rose 3.7% on Friday and during the week to 410.70. On Friday, shares regained their 50-day line. Undoubtedly, this offered an aggressive entry. ULTA shares have a weird looking cup base with an official buy point of 429.58.
Shares of ENPH rose 7.4% to 198.39 last week. This is above a recent 193 point of purchase that is no longer valid, although investors might see an early entry here. Enphase stock is working on a 217.33 handling entry. Although solar stocks have been strong in recent weeks, Enphase and its peers tend to have large daily fluctuations.
Shares of SQM fell 1.1% during the week to 89.28, but bounced back on Friday to regain its 50-day line. The lithium giant, which also has significant exposure to the fertilizer market, recently gained 27% back and forth. But a strong move above the 50-day line, perhaps crossing the 21-day, would offer an aggressive entry. SQM’s earnings and revenue growth are exploding.
Shares of Quanta Services rose 10.65% to 125.98, recovering from the 200-day line and above 50 days. Undoubtedly, this offers an aggressive entry inside a cup base with handle. The official buy point is 138.56 for PWR shares, according to MarketSmith analysis. Quanta offers infrastructure services to electricity companies.
Shares of Northrop rose 4.45% last week to 463.70, almost every Friday. This returns above the 50-day line. NOC shares are beginning a new consolidation after a failed rupture of a cup base with handle. A strong move from the 50-day line would offer early entry. The old 477.36 point of purchase is no longer valid, but many negotiations have been made near there over the past four months.
Northrop and Raytheon Technologies (RTX) won separate contracts from the Pentagon to continue developing missiles to intercept hypersonic weapons, Reuters reported Friday.
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Tesla stock
Shares of Tesla rose 13.35% during the week to 735.15, above its 21-day moving average. TSLA shares are modestly below their 50-day line and early June peak, which roughly coincide right now. The electric vehicle giant has a long way to go to reach its 200-day line. But, relative to most megacap names, Tesla’s shares show some cracks of hope.
By the end of next week, Tesla will likely release second-quarter production and delivery figures.
Google Stock
Google shares are even better, recovering from its 50-day line on Friday, near its peak in early June. Shares rose 10.1% during the week to 2,359.50. Google shares have a long way to go to reach their 200-day line. This roughly coincides with a downward trend line from the February 2 peak of 3,030.93. This could offer an early or long-term leader entry.
Analysis of market concentration
The main indices recovered after heavy losses for much of the month. It was the best week for the Nasdaq since mid-March, while the S&P 500 and Dow had their best week since the last full week of May. Note that after this rebound in late May, the market moved sideways for several sessions before falling to new lows.
The Nasdaq showed strong action on Thursday, but the volume eventually dropped. In addition, the gain did not really stand out amid recent recent market movements, while much of the market struggled.
On Friday, all major indices had large price gains in a broad and powerful advance. The volume, which fell slightly on the Nasdaq and the NYSE for most of the session, soared to close thanks to Russell’s annual rebalancing.
The Nasdaq compound jumped above its 21-day moving average on Friday, along with the Dow Jones and the S&P 500. Above that, the 50-day line and early June highs are shaping up as resistance.
Breaking above these levels decisively would provide stronger evidence that the recent rise is more than a negotiable rise.
High inflation, Fed rate hikes and fears of a recession remain important to the market.
The medical sector seems to be the strongest. Health insurers and some product makers like UnitedHealth and Shockwave are popping up after several drug plays showed signs of buying. Shares in China have risen in recent weeks, but generally appear to be long or still recovering.
Commodity games have been hit hard, despite Friday’s rebound, reflecting fears of recession.
Many of last week’s winners were defeated growth plays
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What to do now
With the market rebound gaining momentum, investors could choose to add some exposure, either through individual stocks or a broad market ETF.
There’s nothing wrong with waiting for a follow-up day.
Of course, the market has had several confirmed market concentrations in 2022 that quickly reversed. Even after a day of tracking, investors should still look for partial profits and reduce losses quickly.
Work on your watchlists. Focus on actions that are actionable or near-actionable, but have a broader list of names that show relative strength, even if they are out of position.
Read The Big Picture every day to keep in sync with market leadership and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.
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