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The major indexes broke below their support levels. It was worse under the surface. Leading stocks and sectors that had held up well were showing strain. Buying opportunities were reversed quickly. Growth stocks continued to fall.
Apple, Microsoft, Amazon.com,Alphabet, Exxon Mobil, Caterpillar and General Dynamics are some of the companies that will report their earnings this week.
The flood of earnings gives investors another reason to stay out of the market. Keep an eye on the market reaction to Apple, Exxon and General Dynamics earnings reports.
The Big Cap 20 list is filled with energy and commodity plays.
The market action is reviewed in detail in the video embedded in the article.
The futures of the Joneses are today.
The futures are open at 6 p.m. S&P 500 futures are scheduled to be traded on Sunday.
The S&P 500 and the Dow Jones fell on Friday. The QQQ exchange traded fund dipped by 0.35%.
The next stock market session doesn’t necessarily correspond to overnight action in the futures market.
The stock market rally is analyzed on IBD Live.
The stock market is active.
The stock market fell to weekly lows after it tried to rally. The sell-off from Thursday’s highs masked the weekly losses.
The stock market fell last week. The S&P 500 fell. The index fell 3.8%. The small-cap Russell 2000 fell.
The yield on the 10-year Treasury increased. A 50-basis point Fed rate hike at the early May meeting is a virtual lock, along with the start of balance sheet cuts. Markets have largely priced in a 75-basis point hike at the June meeting.
The price of crude oil fell last week.
The Innovator IBD 50ETF plunged 6.3% last week, while the IBD Breakout OpportunitiesETF retreated just over 4%. The IGV skidded 5.5%. The VanEck Vectors Semiconductor ETF gave up some of its gains this week.
The S&P metals and mining exchange traded fund dived 11.3% last week. The Global X U.S. Infrastructure Development fund retreated. The U.S. Global Jets Exchange Traded Fund popped 2.5%. The S&P HomebuildersETF dipped. Exxon stock and Chevron were the top two holdings in the Energy Select SPDR. The Financial Select SPDR is down 2%. The Health Care Select Sector SPDR Fund gave up 3.5%.
Reflecting more-speculative story stocks, the ARK Innovation Exchange Traded Fund plunged 11.1% last week.
There are five best Chinese stocks to watch.
Apple stock is traded on the New York Stock Exchange.
Thursday night is when Apple earnings are due. Revenue is expected to be up modestly compared to a year earlier. The production problems for Q2 and the current Q3 are likely to be highlighted by the company. Analysts are expecting a dividend hike and a stock buy back for the tech titan.
Apple stock fell back to its 50-day line after flashing some buy signals in late March. It was down 2% last week to 161.79. The handle buy point for Apple stock is just above the March 30 high.
The relative strength line is not far from record highs. That is a sign of weakness in the S&P 500. If Apple earnings are good and the market improves, AAPL stock could be a leader.
Exxon stock is traded on the New York Stock Exchange.
Exxon earnings are due on Friday.
After a strong run-up, XOM stock is working on a shallow cup base, finding support along the 21-day moving average. After some wedging action in the prior weeks, Exxon stock fell 3.1% to 85.13 last week.
That’s close to a buy point on a daily chart. Xom stock has a handle with an entry on the weekly chart. Until after earnings are announced, investors should not make new buys.
Also Friday, another oil major, Chevron, reports. In recent weeks and months, CVX stock has shown similar chart action.
General Dynamics stock is traded.
General Dynamics earnings are due on Wednesday. General Dynamics stock dipped below its 21-day moving average in the past week. There is support on a weekly chart forGD stock.
The defense giant has a flat base with a buy point. General Dynamics stock has a tight four-weeks-tight, just missing a fifth week. There is a chance that investors could use 249.79 as an early entry.
The stocks in flat bases near their 10-week lines will have earnings this coming week. The chart action is similar to that of Lockheed Martin.
Stock market analysis
The stock market has suffered significant weekly losses as Treasury yields continue to move higher. The major indexes came up to or above key levels, but then fell sharply, closing at weekly lows. The S&P 500 broke below the prior week’s lows.
One bad day from undercutting the March lows of the Nasdaq. The S&P 500 and Russell 2000 are close to their worst levels.
The March lows have already been lowered by the two companies. The levels of the twoKKs are just above them.
Leading stocks were sending negative signals.
Several mining stocks sold off as they warned of rising costs and weaker production updates. Rio Tinto and Newmont Mining were both below their 50-day moving averages.
Two stocks in relative pockets of market strength suffered vicious negative reversals. Hotels fell back despite more bullish news from airlines.
HCA crashed Friday, dragging down the group on its profit warning. HCA, along with cautious guidance from ISRG, hit several medical products makers.
This past week, drugmakers and biotechs suffered losses. Eli Lilly has fallen for nine straight sessions to undermine buy points. Lilly earnings are due next week.
Steel stocks skidded Friday, but still look strong. The energy stocks are doing well. General Dynamics is holding up in bases. Insurers are relatively safe. While the broader market sells off hard, pockets of strength are getting smaller.
Time the market with IBD’s market strategy.
What should we do now?
The stock market has deteriorated. Areas of strength are starting to suffer and are subject to violent sell-offs.
There is no reason to have a lot of exposure in the current market, with the exception of long-term big winners. It makes sense to be completely in cash.
Market conditions will improve eventually, but they could get worse before that happens. There is no guarantee that your current holdings will lead the next advance.
Financial and mental capital should be preserved by investors. You don’t want to be fighting a negative market trend and be too exhausted to take advantage of the next sustained uptrend.
Do not get sucked into a strong market open. Big gains in bad markets should be looked at with suspicion.
Continue to work on your watchlists. Even if the stocks aren’t in position, focus on relative strength.
Stay in tune with the market direction and leading stocks and sectors by reading The Big Picture every day.
You can follow Ed Carson on social media for stock market updates.
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