Dow Jones Futures: Market Rally Gaining Strength; 9 stocks to watch

Dow Jones futures open on Sunday evening, along with S&P 500 futures and Nasdaq futures. The attempted rally in the stock market gained momentum, with key averages moving sharply higher Friday and for the week.


UnitedHealth (UNH), Shockwave Medical (SWAV), Ulta Beauty (ULTA), Enphase Energy (ENPH), Chemical and Mining Company (m²), Quanta Services (PWR), Northrop Grumman (NOC) are stocks to watch. They all have relative strength lines at or near highs.

Shockwave stock broke out Friday, with Ulta and PWR stock arguably offering early entries. UnitedHealth, Northrop, SQM and ENPH stocks are not far from buying points.

Also keep an eye on Google parent Alphabet (GOOGL) and EV giant Tesla (TSLA). Google stocks and Tesla are nowhere near old highs, but these megacaps are rising above key levels after staying above their May lows this month.

NOC shares are on the IBD Leaderboard, with PWR shares on the Leaderboard watchlist. GOOGL stocks are listed on IBD Long-Term Leaders. UnitedHealth, Ulta Beauty, SQM and ENPH shares are on the IBD 50. UNH shares and Ulta are on the IBD Big Cap 20.

UnitedHealth was Thursday’s IBD stock of the day. SQM was the stock of the day on Tuesday.

Dow Jones Futures Today

The Dow Jones futures open at 6 p.m. ET on Sunday, along with the S&P 500 futures and the Nasdaq 100 futures.

Keep in mind that an overnight action in Dow futures and elsewhere does not necessarily lead to actual trading in the next regular trading session.

Join IBD experts as they analyze actionable stocks during the stock market rally on IBD Live

stock market rally

The stock rally attempt delivered large weekly gains in a short week, with the major indices closing at their best levels on Friday.

The Dow Jones Industrial Average rose 5.4% in trading last week. The S&P 500 index gained 6.5%. The Nasdaq composite rose 7.5%. The small-cap Russell 2000 rose 6%.

The 10-year Treasury yield fell 11 basis points to 3.12%, recovering from just above 3% at Thursday’s lows.

US crude oil futures fell 0.3% last week to $104.27 a barrel, before recovering 3.2% on Friday.

One of the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.5% last week, with commodity-related names pushing FFTY. The Innovator IBD Breakout Opportunities ETF (BOUT) rose 1.7%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 10.3%. The VanEck Vectors Semiconductor ETF (SMH) rose 5.1%.

SPDR S&P Metals & Mining ETF (XME) fell 1% last week, even taking a big jump on Friday. The Global X US Infrastructure Development ETF (PAVE) gained 3.6%. US Global Jets ETF (JETS) rose 5%. SPDR S&P Homebuilders ETF (XHB) shot up 7.6%. The Energy Select SPDR ETF (XLE) fell 2.6% and the Financial Select SPDR ETF (XLF) climbed 4.6%. The Health Care Select Sector SPDR Fund (XLV) rose 7.8%, with UNH stocks leading the way.

As a result of more speculative story stocks, ARK Innovation ETF (ARKK) rose 18.25% and ARK Genomics ETF (ARKG) 18.1% last week, both above their 50-day lines. Tesla stocks remain a top spot in Ark Invest’s ETFs.

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Stocks near buying points

Shockwave shares were up 6.4% on Friday and 25% for the week to 197.69. That cleared a head-to-hand buy point of 194.41 with Friday’s move coming in above average volume for SWAV stocks. Shockwave Medical has been profitable for the past three quarters, while revenue growth has been in the triple digits for the past five quarters.

UnitedHealth shares jumped 9.6% for the week to 495.64 but bounced back below the 50-day line Friday. UNH shares are in a double bottom with a buy point of 507.35, just slightly above Thursday’s intraday high. Several other health insurers are setting up.

Ulta Beauty stock rose 3.7% on Friday and to 410.70 for the week. On Friday, stocks regained their 50-day line. No doubt that presented an aggressive entry. ULTA stock has an odd-looking cup-and-handle base with an official buy point of 429.58.

ENPH shares were up 7.4% last week to 198.39. That’s more than a recent buy point of 193 that is no longer valid, although investors could see an early entry here. Enphase stock is working at an entry of 217.33. While solar stocks have been strong in recent weeks, Enphase and his colleagues tend to have large daily swings.

SQM shares fell 1.1% for the week to 89.28 but bounced Friday to regain the 50-day line. The lithium giant, which also has significant exposure to the fertilizer market, recently posted a 27% gain. But a strong move above the 50-day line, perhaps crossing the 21-day line, would provide an aggressive entry. SQM’s earnings and revenue growth are exploding.

Quanta Services shares jumped 10.65% to 125.98, recovering from the 200-day line and above the 50-day line. That arguably offers an aggressive entry within a cup-with-handle base. The official buy point is 138.56 for PWR stock, according to MarketSmith’s analysis. Quanta provides infrastructure services to electricity companies.

Northrop shares rose 4.45% to 463.70 last week, almost all of it on Friday. That is again above the 50-day limit. NOC stock begins another consolidation after a botched cup-with-handle base breakout. A strong move from the 50-day line would provide an early entry. The old 477.36 buy point is no longer valid, but there has been a lot of trading in the area in the past four months.

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Tesla stock

Tesla stock rose 13.35% to 735.15 this week, above the 21-day moving average. TSLA stocks are modestly below the 50-day line and the early June peak, which now roughly coincides. The EV giant still has a long way to go to reach its 200-day mark. But compared to most mega-cap names, Tesla stock shows a glimmer of hope.

Tesla is expected to release production and delivery figures for the second quarter at the end of this coming week.

Google Stock

Google stocks are doing even better, regaining the 50-day line on Friday, close to the early June high. Shares rose 10.1% to 2,359.50 this week. Google stock still has a long way to go to reach the 200-day mark. That roughly coincides with a downward trendline from the February 2 peak of 3,030.93. That could make for an early or long term leader.

Market rally analysis

Major indices recovered after significant losses for much of the month. It was the best week for the Nasdaq since mid-March, while the S&P 500 and Dow had their best week since the last full week of May. Keep in mind that after that late May bounce, the market moved sideways for several sessions before plunging to new lows.

The Nasdaq saw strong action on Thursday, but volume came out fractionally lower. Also, gains haven’t really stood out amid recent major market moves, while much of the market has struggled.

On Friday, all major indices saw huge gains in a broad, strong rally. Volume shot up thanks to Russell’s annual rebalancing at the close.

The Nasdaq composite jumped above the 21-day moving average on Friday along with the Dow Jones and S&P 500. Above that, the 50-day line and early June highs loom as resistance.

A decisive break above those levels would provide stronger evidence that the recent rebound is more than a tradable rally.

High inflation, Fed rate hikes and fears of a recession remain major headwinds for the market.

The medical sector seems the strongest. Health insurers and some product makers such as UnitedHealth and Shockwave are coming together after several drug plays flashed buy signals. Chinese stocks have risen in recent weeks, but overall they are looking long or still recovering.

Commodity prices have been hit hard, despite Friday’s rebound, amid fears of a recession.

Many of last week’s winners were growth games defeated

Time the Market with IBD .’s ETF Market Strategy

What to do now

With the market rally gaining momentum, investors may choose to add a little exposure, either through individual stocks or through a broad-market ETF.

There is nothing wrong with waiting for a follow-up day.

Of course, the market has had several confirmed market rallies in 2022 that quickly reversed. Even after a going day, investors should still strive to take partial gains and reduce losses quickly.

Work on your watchlists. Focus on stocks that are practical or nearly usable, but have a broader list of names that show relative strength even when out of position.

Read The Big Picture every day to stay informed about market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.


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