Dow Jones futures fell early Monday morning, along with S&P 500 futures and Nasdaq futures. A newly confirmed stock market rally quickly turned “under pressure,” last week as major indexes sold off, despite Friday afternoon’s rally.
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Don’t feed the bear market. This is not a good time to buy new; investors should have little or no exposure. Instead, prepare for the next bull run.
Northrop Grumman (NOC), McKesson (MCK), Centene (CNC), AstraZeneca (AZN) and Shockwave Medical (SWAV) are being properly organized. All have relative strength lines at 52-week highs or consolidation.
Tesla (TSLA) is reported In the second quarter, 254,695 electric vehicles were delivered, which is slightly lower in views and significantly lower than Q1. China EV and battery giant BYD (BYDDF) reported June sales of 134,036 EVs, bringing Q2 sales to 355,021. Those results follow strong June delivery are from Li Auto (LIFE), Nio (NIO) and Xpeng (XPEV).
BYD stock is worth a look, trading right above the buy point. Tesla shares near a 2022 low.
NOC stock is on IBD Rankings. Shares of Li Auto, Centene, McKesson and AZN are on IBD 50. CNC and McKesson stocks are also on IBD Big Cap 20.
Video embedded in this article reviews BYD, AstraZeneca and Privia Health Group (PRVA).
Dow Jones Futures Today
Dow Jones futures contract is down 0.6% from fair value. S&P 500 futures fell 0.7% and Nasdaq 100 futures fell 0.8%.
US Stock Exchange is closed on Monday but other markets around the world remain open. Dow Jones futures will trade as usual on Monday, closing at 1 p.m. ET before reopening at 6 p.m. ET.
Remember that action overnight in Dow futures contract and elsewhere it doesn’t necessarily translate into actual trading the next week stock market meeting.
Join the IBD experts as they analyze the stocks that could act in the stock market rally on IBD Live
Rally stock market
The stock market rally once again suffered strong losses, with Friday’s gains only cutting the weekly decline.
The Dow Jones Industrial Average fell 1.3% last week stock market trading. The S&P 500 index lost 2.2%. The Nasdaq composite fell 4.1%. The Russell 2000 small-cap index fell 2.1%.
The yield on the 10-year Treasury note fell 24 basis points to 2.89%, falling below 3%.
US crude futures rose 0.8% to $108.43 a barrel last week, helped by Friday’s 2.5% gain. Gasoline futures rose Friday but fell for the week.
Among the Best ETFsThe Innovator IBD 50 ETF (FFTY) fell 1.1% last week, while the Innovator IBD Breakthrough Opportunity fund (BOUT) increased by 0.25%. iShares Expanded Technology-Software Sector ETF (IGV) decreased by 5.3%. VanEck Vectors Semiconductor ETF (SMH) decreased by 9.3%. The Micron Technology (MU) warning, following reports of Intel (INTC) PC chip price drop, semiconductor stock drop.
SPDR S&P Metals & Mining ETF (XME) fell 5.4% last week. The United States X Global Infrastructure Development Fund (SAVE) slipped 1.8%. US Global Jets ETF (JETS) gradually decreased by 3.4%. SPDR S&P Homebuilders ETF (XHB) rose 0.5% on Friday’s strong rally. SPDR Select Energy ETF (XLE) rose 1.4% and the financial SPDR ETF (XLF) decreased by 1.4%. SPDR Fund for the Healthcare Sector (XLV) increased by 0.4%.
Reflecting a more speculative narrative on stocks, the ARK Innovation ETF (ARKK) fell 10.1% last week and the ARK Genomics ETF (ARKG) slipped 5.3%. TSLA remains a leading institution on Ark Invest ETFs. Cathie Wood’s Ark also has small stakes in BYD, Xpeng and Nio.
The five best Chinese stocks to watch right now
Tesla Delivery
Tesla reported Q2 production and delivery figures on Saturday. Tesla delivered at 254,695, down nearly 18 percent from Q1’s record 310,048 but up 26.5% from a year earlier.
Tesla produced 258,580 vehicles in the second quarter compared with 305,407 vehicles in the first quarter, nearly all Model 3 sedans and Model Y crossovers.
Tesla Shanghai was shut down for much of April and only restored full production in early June. The recently opened Tesla Berlin and Austin factories are producing relatively few vehicles, in part due to problems about the supply chain. The EV giant said June was a record production month. That’s not surprising given that the Shanghai plant is running at full capacity and with two new plants operating, albeit at a low rate.
Tesla shares fell 7.5% to 681.79 last week after hitting 10-week resistance on Monday. Shares are not far from the May 24 low of 620.57. TSLA stock peaked in early November at 1,243.49.
Tesla Vs. BYD: Which EV Giant is better to buy?
BYD Sales
The electric and battery giant topped 100,000 new energy vehicles —EVs and hybrids — for the fourth straight month. June’s total was 134,036, up 224% from a year earlier and nearly 17% from May’s 114,943.
BYD sold 133,762 passenger NEVs in June, including 69,544 EVs and 64,218 PHEVs. It sold 274 new energy commercial vehicles, such as buses.
Q2 sales rose to 355,021 NEVs, up 256% from a year earlier and 24% from Q1’s 286,329. As a result, BYD overtook Tesla in vehicle sales last quarter – just over 100,000 – is said to hold the EV . crown.
Tesla remains the leader in all-electric vehicles, with BYD selling 180,296 passenger EVs in the second quarter.
BYD stock cleared 39.81 buy points vs deep cup base with handle last week, it closed up 1.2% to 39.97 for the week. BYDDF is still 17% above the 50-day line. A high handle or a short, shallow base may be ideal.
Chinese EV Startups
On Friday, Nio reported record deliveries for June, while Xpeng and Li Auto had their best months since December. With past Covid closures and increased EV subsidies, all three companies Startups will see massive growth in the second half as they roll out new models.
Li Auto stock fell 1.6% to 37.70 on Friday and 7.6% for the week, testing a buy level of 37.55. LI stock has been extended far above the moving averages, so getting involved is always high risk. A new shallow base alongside a deep merge would be ideal.
Nio and Xpeng shares sold off 11.3% and 14.2%, respectively, last week, retreating from near 200-day levels after rising for several weeks.
BYD and Tesla will also see stronger Chinese output and demand in the coming months, with capacity expansion. BYD will also launch several models in the coming months, including the Seal sedan, a Model 3 rival.
Stocks to watch
Northrop shares rose 4.9% last week to 486.37, recovering from a 50-day high. The stock also moves above the technically invalid old 477.36 buy point. But a lot of trading has taken place around that level in recent months. In another week, NOC stock could move sideways.
McKesson stock rose 2.5% to 329.53 last week, trading just above its 50-day line. MCK stock has 340.04 flat sole buy points. But investors could use a move above Friday’s high of 330.16 as an early entry.
Centene shares rose 3.9% to 86.21 last week. Stock hits resistance this week at 87.44 double bottom buy points. But a pause in the current market could be good. Maybe CNC stock will form a rotation in the next few days, dropping the official import price a bit to 87.08.
AstraZeneca stock is also hitting resistance near a basic double bottom buy point, pulling back after only topping the 67.50 entry on Wednesday, according to a new report. MarketSmith Analysis. AZN stock fell 1.4% to 65.95 last week, but found support at the 50-day line on Friday.
Shockwave stock rose 0.5% last week to 198.62, consolidating after a 25% spike last week. The big move pushed SWAV stock above an underlying buy point at 194.41 tumbled-handle cups. Investors can use 203.03, just above Tuesday’s high, as an entry. That could be a replacement handle after Tuesday.
Market aggregation analysis
Once again, a newly confirmed stock market rally has quickly hit the ground running. On Monday, the Nasdaq composite hit resistance at the 10-week moving average and turned around.
On Tuesday, the Nasdaq and S&P 500 closed below their June 24 lows, a bearish signal that their rallies will eventually fail. The Dow Jones followed on Thursday.
The major indexes have fallen significantly for the week, despite a slight bullish reversal on Friday.
Technically, the market rally isn’t over yet, but it is “under pressure”.
Macroeconomic conditions are getting worse. The Atlanta Fed’s Q2 GDP tracker fell to -2.1% on Friday from -1% on Thursday and 0.3% on Wednesday. JPMorgan cut its growth forecast, saying the US is “dangerously close” to a recession.
Consumer spending is slowing, with inflation-adjusted spending falling. Manufacturing activity is still expanding at a slower pace, but the ISM new orders sub-index turned negative in June.
Companies are just beginning to acknowledge the negative impact, with warnings from Micron, RH (RH), Synthetic engine (GM) and Nike (NKE) in this week. That will likely continue through to and throughout earnings season over the next few weeks.
Of course, while investors should be aware of major business and economic trends, you should focus on what the market is doing right now. Currently, the market is in a severe downtrend from early 2022 or late last year. The latest rally seems to be heading for a quick exit.
Health stocks are showing strength, although they could lose ground if the bear market turns down. Defense stocks are on the rise again, with Northrop joining by several other players.
The BYD and Li Auto look interesting, but could use an extended snorkel. Most auto stocks, including Tesla, are unprofitable.
Market Timing with IBD’s ETF Market Strategy
What to do now
This is not a good time to invest. If you buy stocks in resilient sectors like healthcare or defense, be prepared to take in at least a quick partial profit. The market is trending down, volatility can quickly wipe out decent gains.
Instead of trying to pick a rare winner in a bear market, investors should look for the big leaders in the next sustained uptrend.
Build your watch list and do research on some promising companies.
Read Big picture every day to stay in sync with market trends and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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