Dow Jones futures fell slightly on Monday morning, along with S&P 500 futures and Nasdaq futures, all from the bottom overnight. The Twitter offer of Tesla and CEO Elon Musk is in focus.
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The stock market rally suffered further losses last week, with the Nasdaq declining as government bond yields continued to rise. What is your game plan for next week? Be careful with new purchases, focusing on the leading sectors. The revenue season adds additional uncertainty.
Tesla (TSLA) is leading a big week with results, with the EV reported that the giant is moving towards the reopening of its factory in Shanghai. Meanwhile, Tesla CEO Elon Musk’s offer to Twitter (TWTR) took another turn on Friday as social media company introduced a “poison pill” provision to thwart it. Tesla shares are working on a point to buy a cup with a handle, but the chart is confused with profits, just one of many risks in focus.
Expedia (EXPE), Cheniere Energy (LNG), Merck (MRK), Edwards Lifesciences (EW) and Check Point Software (CHKP) are five stocks close to buying points in relatively strong market areas.
LNG and Tesla stocks are in the IBD rankings. Tesla shares are also on IBD 50. Check Point was IBD shares of the day.
The video embedded in the article discusses market actions for the week and analyzes the shares of EXPE, Cheniere Energy and Check Point Software.
Dow Jones futures today
Dow Jones futures were 0.2% below fair value. S&P 500 futures fell 0.3%. Nasdaq 100 futures fell 0.4%, but from the bottom overnight.
The yield on 10-year bonds increased by 1 basis point to 2.84%.
US stock markets closed on April 15 for Good Friday. Stock markets in Europe, Australia and Hong Kong, also closed on Friday, will remain closed on Monday.
China said GDP grew 4.8 percent in the first quarter from a year earlier, better than expected. Industrial production in March also surpassed views. But retail sales fell more than expected as unemployment in major cities rose to 6%. Economic activity collapsed in April due to widespread blockades.
The People’s Bank of China on Friday reduced banks’ required minimum reserves by 25 basis points as of April 25 to support the economy. But it kept its interest rate on the one-year medium-term loan at 2.85%, much to the surprise of most economists.
Remember that the action at night in Dow futures and elsewhere does not necessarily turn into actual trading in the next regular session of the stock market.
Join the IBD experts as they analyze the actions that can be taken in the stock market rally on IBD Live
Stock market rally
The stock market rally had some major daily and intraday movements for a short week, but the general trend remains downward. The Dow Jones industrial average sank 0.8 percent in stock trading last week. The S&P 500 index fell 2.1%. The composite Nasdaq lost 2.6%. Russell 2000 with a small capitalization grew by 0.5%.
The yield on 10-year government bonds increased by 12 basis points to 2.83%, reaching the highest level since the end of 2018.
U.S. crude futures rose nearly 9 percent to $ 106.95 a barrel last week. The European Union is drawing up plans to ban Russian crude oil, the New York Times reported on Thursday, a painful economic move that Germany in particular has resisted. It is reported that the EU will not formally discuss a ban on crude oil in Russia until the last round of the presidential election in France on April 24. If the EU continues, crude oil prices could rise. The EU relies even more on Russian natural gas.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) was down 0.2% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 0.8%, the iShares Expanded Tech-Software Sector (IGV) ETF ) sank by 2.1%. The VanEck Vectors Semiconductor ETF (SMH) fell 3.5%, threatening to hit 2022.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) and ARK Genomics ETF (ARKG) fell 2.7% last week. Tesla shares remain No. 1 in Ark Invest shares.
The SPDR S&P Metals & Mining ETF (XME) rose 7.3% last week to a new high. The Global X US Infrastructure Development ETF (PAVE) rose 1.4%. The US Global Jets ETF (JETS) rose 8%. The SPDR S&P Homebuilders ETF (XHB) closed just below profitability. The Energy Select SPDR ETF (XLE) rose 0.4% and the Financial Select SPDR ETF (XLF) withd 2.6%. The Health Care Select Sector SPDR Fund (XLV) lost 2.9%, but from the highest values of all time.
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Tesla shares
Shares of Tesla fell nearly 4% last week to 985 after losing more than 5% the previous week. The handle has some depth, probably shaking some weak holders after TSLA’s powerful late March. But the graphics are deep and messy. A longer handle with a tighter action would allow the basic averages to continue to catch up.
Shares of Tesla rose a little early on Monday.
Tesla’s profits are expected on Wednesday night. Investors can expect strong growth on an annual basis, but are likely to look ahead. They will be looking for new clues about Tesla Cybertruck, Semi and other products. But they may not get it.
The plant in Shanghai, closed due to Covid restrictions on March 28, will reportedly reopen on Monday, although the company itself has not offered confirmation. Some employees have entered a “closed” system, living on the spot. It is unclear when actual production will resume, with some indications that it will be in a few days. The output when it starts will be low initially. It may take weeks to return to full production. Suppliers and logistics challenges are also factors.
Tesla will see a sharp drop in production in the second quarter, even as plants in Berlin and Austin grow slowly. It is unclear whether the shutdown in Shanghai has affected or will affect production at Tesla Berlin, which receives batteries and some other parts of China.
Musk-Twitter news
Meanwhile, the informal offer of Tesla CEO Elon Musk for $ 43 billion and $ 54.20 per share for Twitter (TWTR) is also a potential headwind. If Musk buys Twitter, he could sell another stake in TSLA to pay for it.
On Friday, the Twitter board passed a “poison pill” provision to make it difficult for Musk to buy the company. The provision states that if an individual or company buys more than 15% of the shares of TWTR, other shareholders may purchase additional shares at a discount. Musk currently owns 9.1% of TWTR.
While Musk’s offer is well above where TWTR traded before revealing its stake, it is well below Twitter’s all-time high of 80.75 set in February 2021.
Musk continues to blow up Twitter’s board, management and practices through tweets. According to numerous reports, he is considering attracting partners for his offer on Twitter. This could reduce how many Tesla shares it will need to fund the purchase.
Meanwhile, private investment company Thoma Bravo has turned to Twitter for a takeover.
Shares of TWTR rose moderately before opening on Monday.
Watching actions
Shares of EXPE jumped 6.5% to 191.55 last week, regaining its 50-day line. Expedia shares have a buying point for a cup with a handle of 204.08, according to MarketSmith analysis. Investors can use a downtrend line from the top of the base to find an early entry around 195.
Expedia shares have a three-digit price / earnings ratio. Highly valued PE stocks have not performed well in recent months. However, with Expedia’s revenue expected to grow by 364%, this may be an exception.
Shares of travel companies rose late last week after Delta Air Lines (DAL) said in a declaration of earnings that passengers were not subject to higher fares. Hilton Worldwide (HLT) and Marriott International (MAR) cleared the official points of purchase on Thursday, at least during the day, after passing early entrances on Wednesday.
The line of relative strength of EXPE shares is good from the top of the consolidation, which is a potential problem. The RS lines for Marriott and Hilton are at or near high values. The relative strength lines, the blue lines in the graphs provided, track the performance of stocks against the S&P 500 index.
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LNG stock
LNG stocks fell 3.2% to 139.53 last week, but recovered from their 21-day moving average and 10-week line. This is the second or possibly the third 10-week test of the Cheniere Energy stock line, but investors can use it to start a small position or add a few more stocks. LNG reserves may be in the process of forming a new base. The RS line is just below the peaks.
Cheniere Energy is expected to make huge profits in 2022 as demand for liquefied natural gas skyrockets around the world, especially in Europe. The Russia-Ukraine crisis is attracting additional interest, although no Russian gas embargo has been discussed so far.
Merck Stock
Shares of Merck fell 0.9% to 86.91 last week, stopping after rising steadily on the right side of the base of the glass. Shares of MRK currently have a buying point of 91.50, but may have control over the daily chart after Monday, giving them an entry of 89.58. Merck shares have control over the weekly chart, but this is barely noticeable. Ideally, Merck shares would form a longer, slightly deeper handle to shake off weak holders. But the RS line is already at its peak in 52 weeks.
EW Stock
Shares of Edwards Lifesciences fell 3.15% to 120.02 last week. On the daily chart, EW shares have a base for a glass with 131.83 points to buy. After Monday, there may be a handle with an official buying point of 125.21. This handle is already there on a weekly schedule. The RS line for EW stocks is also at a record high.
Manufacturers of medical devices and products need to see greater demand as electrical procedures return with the reduction of Covid.
CHKP Stock
Shares of Check Point Software lost 4 cents to 142.78 last week, trading relatively high over the past few weeks. The butt of CHKP is in consolidation, which can be considered as a flat or shallow base with a cup with a handle. The point of purchase of a cup with a handle is 145.64. A downward trend line from the March peak would offer a slightly lower entry.
The current base followed a long consolidation, probably going back to early 2021.
Check Point’s revenue growth is weak. But CHKP stocks have a low PE ratio. Palo Alto Networks (PANW), a faster-growing, higher-cost PE cybersecurity game, also looks good.
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