Investors.com:
Dow Jones futures open Sunday evening, along with S&P 500 futures and Nasdaq futures, heading into a huge earnings week. Tesla rolled back the latest FSD Beta software.
The stock market rally had solid gains last week, with the Dow Jones and S&P 500 hitting record highs. The Nasdaq composite moved closer to record levels despite rising Treasury yields and Friday’s big sell-offs by Intel (INTC) and Snap (SNAP). X
Earnings season hits full force this coming week, with hundreds of companies reporting. Apple stock, Microsoft (MSFT), Advanced Micro Devices (AMD), General Motors (GM), Upwork (UPWK), ServiceNow (NOW) and Google parent Alphabet (GOOGL) are seven big names on tap that are in or near buy zones.
These names could move markets by themselves, but they can also have a big impact on related stocks, as Snap stock’s impact on digital ad firms such as Google stock showed.
Investors should be ready to take advantage of earnings week. Don’t let earnings week take advantage of you.
Tesla FSD Beta Rollback
On Sunday, following widespread driver complains, CEO Elon Musk said the just-released Tesla FSD Beta 10.3 was seeing “some issues,” so the company was rolling back to Beta 10.2. There were reports that Tesla was disabling FSD Beta entirely temporarily, though that was not confirmed.
It’s also unclear if all FSD Beta drivers are agreeing to update their software and accept the rollback.
The FSD Beta rollback comes just days after the National Highway Traffic Safety Administration asked Tesla why it did not issue an official safety recall for a recent Autopilot software fix conducted over the air. The NHTSA letter also sought more documents regarding FSD Beta as it expands an Autopilot probe.
The NHTSA had set an Oct. 22 deadline on Tesla for a sweeping info regarding its self-driving systems. It’s unclear if Tesla had responded. Tesla executives said on Wednesday’s earnings call that the company would fully cooperate with regulators. Elon Musk, who has often mocked U.S. regulators, was not on the earnings call.
In other Tesla news, the company raided Model S and Model X prices in the U.S. by $5,000. That comes days after U.S. Model 3 and Model Y prices were hiked yet again, by $2,000.
Tesla stock surged 7.9% last week to 909.68, clearing a 900.50 cup-base buy point on Friday and hitting a record high. Tesla stock is in buy range and showing strong accumulation. But TSLA stock has rallied for nine straight weeks and is 18% above its 10-week moving average. https://research.investors.com/ibdchartswp.aspx?cht=pvc&type=daily&symbol=TSLA
Trump SPAC Stock
Meanwhile, expect Donald Trump’s SPAC to remain hotly traded this week. Digital World Acquisition (DWAC) exploded 357% Thursday on news that it would be the SPAC merger partner for Donald Trump’s new social media venture. DWAC stock then shot up 107% to 94.20 on Friday. But it closed far below Friday morning’s peak of 175, though not at session lows.
DWAC stock fell 14% in active trading Friday night.
Could DWAC stock go higher? Absolutely. But it could also plunge. Without a proper entry or any fundamentals, buying any meme stocks is fraught with peril. The political dimension potentially could give a Trump stock more staying power, but that thinking presumably helped turbocharge DWAC stock on Thursday and Friday.
Meme stocks can skyrocket, getting everyone’s attention. But on the second day of “everybody talking about it,” more-recent meme stocks have tended to peak.
In the meantime — “meme time? — DWAC stock may be sucking up the oxygen from “traditional” meme stocks such as GameStop (GME) and AMC Entertainment (AMC). Both AMC stock and GME stock fell nearly 7% on Friday as DWAC stock got the attention.
Microsoft, ServiceNow, Google, Tesla and AMD stock are on IBD Leaderboard. NOW stock is on SwingTrader. MSFT stock, ServiceNow, Google are on IBD Long-Term Leaders. AMD, Google and UPWK stock are on the IBD 50.
Apple (AAPL) and Microsoft stock are on the Dow Jones, S&P 500 and Nasdaq composite, and the only two members of the $2 trillion market-cap club.
The video embedded in this article reviewed the overall market action and discussed a game plan for the coming week. It also analyzed Google, UPWK stock and Cleveland-Cliffs (CLF).
Dow Jones Futures Today
Dow Jones futures open for trading at 6 p.m. ET, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Coronavirus News
Coronavirus cases worldwide reached 244.37 million. Covid-19 deaths topped 4.96 million.
Coronavirus cases in the U.S. have hit 46.30 million, with deaths above 756,000.
New Covid cases have fallen sharply in the U.S. and worldwide over the past several weeks. However, cases are rising across much of Europe, including the U.K., Germany and Russia, as well as Turkey. Australia, which largely isolated itself during the pandemic, is seeing its first big wave. China is reporting outbreaks in 11 regions. While very low by U.S. standards, China’s cases could spur another wave growth-snuffing restrictions.
Stock Market Rally
The stock market rally had a solid performance last week. The Dow Jones Industrial Average rose 1.1% in last week’s stock market trading. The S&P 500 index climbed 1.65%. The Nasdaq composite gained 1.3%. The small-cap Russell 2000 advanced nearly 1%.
The 10-year Treasury yield rose 8 basis points to 1.655%. But it pulled back from a five-month high of 1.69% intraday Friday. The 10-year yield hit a 21-month high of 1.765% in early April.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) popped 1.9% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) stepped up 1.6%. The iShares Expanded Tech-Software Sector ETF (IGV) advanced 2.2%, with Microsoft stock and ServiceNow major holdings. Snap stock also is an IGV component. The VanEck Vectors Semiconductor ETF (SMH) rose 1.7%. AMD stock is a key SMH component. https://research.investors.com/ibdchartswp.aspx?cht=pvc&type=daily&symbol=xlf
SPDR S&P Metals & Mining ETF (XME) dipped 0.6% and Global X U.S. Infrastructure Development ETF (PAVE) gained 2.3%. U.S. Global Jets ETF (JETS) tumbled 4.2%. SPDR S&P Homebuilders ETF (XHB) rallied 3.35%. The Energy Select SPDR ETF (XLE) moved up 1.1% and the Financial Select SPDR ETF (XLF) rallied 2.8%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) rose 1.7% but ARK Genomics ETF (ARKG) finished off 0.3%.
Apple Stock
Apple stock rose 2.7% last week to 148.69, reclaiming its 50-day line. That offered an early entry, but Apple earnings loom Thursday night. AAPL stock has an official buy point of 157.36 from a shallow cup base, according to MarketSmith analysis. https://research.investors.com/ibdchartswp.aspx?cht=pvc&type=daily&symbol=AAPL
GM Stock
GM stock has formed a 59.44 handle buy point in a double-bottom base. General Motors earnings are due Wednesday, the same day as Ford Motor (F). Ford stock is flirting with a new high and a cup-base buy point.
Investors will want to know how both automakers are handling the chip shortage and whether or not they expect to boost production substantially in the coming months. EV plans also are key, with both traditional auto giants rolling out several new EVs in the coming months.
Google Stock
Earlier this month, Google stock reclaimed its 50-day line and broke a trend line, offering an early entry. But shares fell 3% on Friday, back below their 50-day line, as Snap’s weak revenue and guidance hit the digital ad ecosystem. Google earnings are due Tuesday night. Some negative news may have been priced into Google stock, but that’s no guarantee.
While GOOGL stock has been a strong performer over the past year, the chart does show a number of high-volume declines in the last several weeks.
Google stock has a flat base with a 2,925.17 buy point. If GOOGL stock can get above last week’s high of 2,873.25 after earnings, or even a trend line break, that could offer an early entry. https://research.investors.com/ibdchartswp.aspx?cht=pvc&type=daily&symbol=GOOGL
Microsoft Stock
Microsoft stock rose 1.6% to 309.16 last week, clearing a 305.94 flat-base buy point. That’s not a lot of cushion heading into Tuesday night’s earnings, but longer-term MSFT stock investors should be in good shape.
Cloud-computing services are fueling Microsoft growth in the past few years. Along with Google and Thursday night’s Amazon.com (AMZN) earnings report, investors will get a good idea about cloud-computing demand.
ServiceNow Stock
NOW stock climbed 3.5% to 686.65 last week, clearing a 681.20 flat-base buy point. Investors might have wanted to take advantage of early entries a few days earlier. That would have provided a bit more of a cushion. ServiceNow earnings on Wednesday will provide an early read on business software. Atlassian (TEAM) reports Thursday night.
Upwork Stock
Upwork stock had a nasty sell-off in July but is setting up again with a cup-with-handle base. Shares fell 0.9% to 58.70 for the week. The UPWK stock buy point is 60.68. Earnings are due Wednesday night. UPWK stock has just been turning profitable while revenue growth is accelerating. https://research.investors.com/ibdchartswp.aspx?cht=pvc&type=daily&symbol=upwk
AMD Stock
AMD stock jumped 6.9% to 119.82 last week, following a 6.7% surge in the prior week. Shares rose past a 114.69 entry from a double-bottom base, and are now at the edge of the 5% buy zone. The better buy point might have been on Oct. 13, when AMD stock reclaimed its 50-day line and cleared some short-term resistance. AMD’s earnings also will be relevant for peer Nvidia (NVDA), which is flirting with an official breakout.
Market Rally Analysis
The stock market rally had a solid week, with the Dow Jones and S&P 500 hitting record highs. The Nasdaq composite rose solidly despite rising Treasury yields and big sell-offs Friday by Intel and Snap. While the Intel earnings report buoyed AMD stock and a number of chip-equipment makers, Snap’s sell-off triggered notable losses in a wide variety of digital ad firms, including Facebook (FB) and Google. The Nasdaq fell Friday, but came off lows.
There is breadth in this market, with a variety of sectors showing strength. From new IPOs to investment banks to software giants and steel plays, many leading stocks have broken out or flashed buy signals in recent weeks. Different sectors will take their turns from day to day or week to week.
Snap’s sell-off shows the danger of being too concentrated in a particular group or sector. And stocks can be in different groups, such as Snap and Trade Desk (TTD), and still trade on a similar “theme.”
Bottom line: The stock market rally, based on the major indexes and leading stocks, is looking healthy. But that could change quickly, especially with such a busy earnings week.
What To Do Now
You have to know which of your stocks are reporting earnings in the next couple of weeks. Do you have enough cushion to hold through earnings? While 5%-10% cushion is a good rule of thumb, you have to consider the size of your position, your conviction in the holding and the character of the stock.
It also doesn’t have to be an all-or-nothing decision. You can take partial profits ahead of earnings to minimize your risk while still holding a core position.
Also pay attention to companies reporting that are related to your holdings. That can provide a boost or big drag, as Snap and Intel rivals and suppliers showed Friday.
Build up your watchlist and pay close attention to those stocks near buy points that are reporting earnings. They could provide good buying opportunities.
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