Dow Jones futures set to release as market rally faces key test; Tesla’s upcoming earnings

Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures.

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The stock market rally had a mixed week, but it ended on a disappointing note. Major indexes initially rose but faced resistance, with the Nasdaq leading the losses on Friday. At the same time, market breadth was weak. The Russell 2000 has reversed lower toward 2023 lows. Technology leaders started out strong, but have pulled back, sometimes violently.

All of this was a break from expectations for a market rally. Investors should be cautious about new purchases as the market gets tougher and earnings season gets stronger. Selling some recent purchases may be warranted.

Tesla (TSLA) is set to report its worst earnings in two years, but TSLA stock is holding up as bulls eye potential future growth engines.

L Research (LRCX) And ASML (ASML) Start results for chip equipment makers, with a large number of customers Taiwan Semiconductor Co., Ltd (TSM) reports also. ASML stock is struggling, but so are LRCX and fellow chip equipment giants Applied materials (deaden), Kosovo Liberation Army Company (KLAC) is set up.

Oil services giant SLB (SLB) Energy Earnings Start as Energy Stocks Show Renewed Strength. SLB stock is close to early entry.

In addition to Tesla, Lam Research, Applied Materials, KLA, and SLB stocks, investors should also keep an eye on the tech leaders Arista Networks (network), Adobe (ADBE) And Nvidia (NVDA).

Nvidia, Tesla and Arista Networks shares are in play IBD Leaderboard. Nvidia, Adobe, and Tesla stock are in the market Bahraini dinar 50. ADBE, Tesla, Nvidia, and SLB stocks are in the market IBD Big Cap 20.

Lululemon Athletica (LuluIt will join the S&P 500 before Wednesday’s open, the S&P Dow Jones Indices announced late Friday. LULU stock jumped on Friday night, and will likely provide a buy signal on Monday.

Chinese state media reported that Beijing will boost debt spending to fuel the faltering economy, following a Bloomberg report last week.

Dow jones futures today

Dow Jones futures open at 6pm EST, along with S&P 500 futures and Nasdaq 100 futures.

Remember, an overnight move in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze leading stocks and the market on IBD Live

Breaker stock market rising forecasts

The stock market rally started the week strong, extending the Nasdaq’s follow-day gains on October 6, supported by a decline in Treasury yields. But major indexes stalled amid choppy moves for Treasuries, while the underlying market movement was weaker.

The Dow Jones Industrial Average rose 0.8% in stock market trading last week. The S&P 500 index advanced 0.45%. The Nasdaq Composite Index fell 0.2%, thanks to Friday’s 1.2% decline.

The Nasdaq crossed the 21-day line and then the 50-day line, but fell back below those key levels by the end of the week. The S&P 500 also closed below its 21-day average. The Dow Jones has faced resistance at the 200-day line several times.

The Russell 2000, which attempted to reclaim its fast-declining 21-day line, reversed for a weekly loss of 1.5%, ending at a five-month closing low.

Invesco S&P 500 Equal Weight Fund (RSP) rose 0.2%, but also pulled back from the 21-day line.

Leading technology stocks made upward movements, but then retreated. Some energy and pharmaceutical stocks performed well. Insurance companies continue to perform well, along with some other financials.

The yield on the 10-year Treasury note fell more than 15 basis points to 4.63%, but with some large daily fluctuations. It is worth noting that the US dollar continued its long series of weekly gains.

US crude oil futures jumped 5.9% to $87.69 per barrel during the week. Friday’s 5.8% rise was the biggest one-day gain in six months. Gasoline futures rose 3.3% during the week and 4.6% on Friday. Fighting between Israel and Hamas led to gains during the week, as tougher US sanctions in exchange for Russian crude helped spur Friday’s advance.

Overall, the stock market rally was a bust of expectations. At Wednesday’s close, with the Nasdaq above its 50-day line and blue-chip stocks showing positive movement in a confirmed uptrend, expectations were for further gains. Instead, the market saw significant losses late in the week.

One positive thing: The CBOE Volatility Index, a gauge of market fear, jumped on Friday, surpassing its highest level in nearly five months. Fear levels reaching new highs increase the odds of a rebound.

The overall move in stocks, crude oil and the VIX on Friday may reflect concerns about the looming Israeli ground offensive in Gaza, and the potential for a broader conflict in the Middle East.

ETFs

Among the growth ETFs is the Innovator IBD 50 ETF (FFTY) fell 0.5% last week. iShares Extended Technology Software Fund (ETF)IGV) rose 0.2%, but was far from the highest levels. VanEck Vectors Semiconductor ETF (Trait) finished essentially flat after Friday’s 2.5% decline. Nvidia and TSM stocks are huge SMH holdings, with LRCX, ASML, AMAT and KLAC as well.

Reflecting more speculative stocks, the ARK Innovation ETF (Ark) fell 3.7% last week to the lowest closing level in five months. The ARK Genomics ETF (Arkj) sold off 4.4% to the lowest level since the Covid low of March 2020. Tesla stock is the #1 stock in Ark Invest’s ETFs.

SPDR S&P Metals and Mining Fund (XME) fell 0.7% last week. Energy Select SPDR ETF (XLE(Jumped 4.5% and the Healthcare Sector SPDR Fund)Forty-fifth) rose 0.1%, trimming its gains. Selected Industrial Sector SPDR Fund (forty-first) by 1%, but also far from the highest levels.

Financial Select SPDR ETF (XLF) by 0.5% and the SPDR S&P Regional Banking Fund (ETF)Cree) decreased by 1.6%.

The top five Chinese stocks to watch now

Tesla earnings

Tesla’s earnings are scheduled for Wednesday evening. Analysts have been cutting third-quarter forecasts all year, with further cuts since the electric car giant’s weak third-quarter deliveries. Wall Street currently expects EPS to fall 30% to 73 cents, which would be the lowest EPS in two years. Revenues are supposed to be up 10% year over year, but are down compared to the second quarter. Gross margins are expected to decline further amid ongoing price cuts.

But the focus will be on Tesla’s earnings call. Investors will want positive signs on gross margins, especially with rate cuts continuing into October. They’ll also want to know more about the Cybertruck, including the launch date and more. They’ll also want any hints about other potential growth drivers.

After shrugging off a string of bad news, Tesla stock fell 3.6% to 251.12 last week, testing its 50-day line on Friday. Stocks hold 278.98 cups with handle. Investors can use the October 10 high of 268.94 as an early entry.

Chip profits

ASML is scheduled to report earnings early Wednesday. Analysts expect the Dutch semiconductor equipment giant to report a 1% decline in earnings per share on a 7% increase in revenue.

Lam Research’s earnings were set for Wednesday night. EPS should decline 41% with revenue declining 30.5%.

The Taiwan Semiconductor Company’s earnings will be announced early Thursday. The foundry giant, which makes chips for Nvidia, Apple and several other companies, was seen posting a 35% drop in earnings per share with revenue down 14.5%. Taiwan Semi’s guidance and capital spending plans will be key to the sector, especially chip equipment makers.

ASML stock rose 0.4% last week, trying to break a three-month slide but still below key levels. The TSM rose 1.3% to 90.46 last week, reclaiming its 50-day and 200-day lines on Thursday but falling below Friday’s levels.

LRCX stock rose 2.7% to 645.12, but fell back below its 50-day line on Friday. Lam Research has a buy point of 711.91 from a double bottom base. Investors can use the move above Thursday’s high of 655 as a strong entry point, with the trend line entering around 685.

Meanwhile, shares of Applied Materials and KLA will not be announced over the next week, but both are building on the right side of the rules.

SLB Profits

SLB, formerly known as Schlumberger, reported Friday morning. Analysts expect SLB’s earnings to rise 22% with revenue up 17.5%. Both represent the second quarter of slowing growth as comparisons become tougher.

The SLB’s findings and guidance will be important for the energy sector, especially for the service companies, drillers and machinery companies that have been leaders.

SLB stock jumped 5.8% to 58.96 last week, reclaiming its 50-day line on Friday. The trend line, currently around 60.50, will provide an early entry into an emerging flat base.

Stocks to watch

Other stocks to watch include Nvidia, Arista Networks and Adobe.

Nvidia stock fell 0.7% to 454.61 last week, and was down 3.2% on Friday. The AI ​​chip giant has a buy point of 502.66 from a cup base. Early in the week, NVDA stock saw a strong entry. At this point, investors should focus on traditional entry, or see if Nvidia stock can form a handle. The Relative Strength line, which tracks a stock’s performance against the S&P 500 Index, has reached new highs on the weekly chart.

A significant decline in Nvidia stock would be a bad sign for the market to rise.

ADBE stock jumped 4.2% to 548.76 during the week, briefly surpassing a firm buy point of 570.24. The entry is still actionable, even though the simple reason may be constructive. The RS line is at its highest levels.

ANET stock fell 2.15% to 189.85, but found support at the 50-day line. Shares are not far from a 198.70 buy point from a flat base, according to MarketSmith. It is part of a base-on-base pattern. The RS line is close to the highs.

Time the market with IBD’s ETF market strategy

What are you doing now

The stock market is still on the rise, but there are worrying signs. She needs to stick to her guns and make some progress soon.

The Nasdaq and S&P 500 need to decisively cross the 50-day line, with range breadth improving. This is likely to coincide with a large number of new buying opportunities. So investors should have their watch lists ready. Focus on stocks that show relative strength.

But if the market shows further deterioration, investors should look to scale back. Some promising stocks fell sharply late in the week, already triggering sell signals.

So stay involved and stay flexible.

Read The Big Picture every day to stay on top of the market trend and leading stocks and sectors.

Please follow Ed Carson on X/Twitter at @IBD_ECarsonTopics in @edcarson1971 And Bluesky V @edcarson.bsky.social For stock market updates and more.

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