Dow Jones Futures Bench, Bitcoin Returns to $20,000;  Beware of the Bear Market

Dow Jones Futures Bench, Bitcoin Returns to $20,000; Beware of the Bear Market

Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Bitcoin price rallied to $20,000 on Sunday after falling far below this key level on Saturday.




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The bear market intensified last week amid growing concerns that the Federal Reserve will have to put the economy into recession to rein in inflation.

Investors should stay on the sidelines as major indices plummet towards their pre-Covid highs. Don’t get excited with one-day rebounds like Friday’s tech-led progress. Instead, prepare to take advantage of the next sustained uptrend.

It’s not based on many stocks, but here are five stocks that do a decent job: tesla (TSLA) rival BYD (BYDDF), Vertex Pharmaceuticals (VRTX), fertilizer and lithium game square meters (SQM), Eli Lilly (LLY) and Enphase Energy (ENPH).

All have lines of relative strength at or near the heights. The RS line, the blue line on the charts provided, tracks a stock’s performance against the S&P 500 index.

BYD stock is close to a traditional buyout point. SQM stock finds support at its 50-day line after posting big gains. ENPH stock regained that key level on Friday. Vertex stock and Eli Lilly are not far below their 50-day lines.

LLY stock is in the IBD Leaderboard. Eli Lilly and SQM stock in IBD 50. BYD was Friday’s IBD Stock.

The video attached to this article discussed the weekly market action and analyzed BYD, SQM and Enphase stock.

Bitcoin Plunges

Bitcoin slumped well below the psychologically key $20,000 level on Saturday. $17,601.58 on Saturday afternoon is below a new 18-month low and December 2017 high of $18,942.

However, on Sunday afternoon, the Bitcoin price rallied above $20,000. That’s still well below the November 2021 high of $68,990.90, and it’s down roughly a third from June 11.

Other cryptocurrencies have experienced the same or more declines during what has been described as the “crypto winter.”

Dogecoin, which skyrocketed to 74 cents in early 2021 and fell below 5 cents on Saturday, recovered somewhat on Sunday. Tesla CEO Elon Musk tweeted on Sunday that he is still buying.

Investors have often shunned risky assets amid fears of inflation and recession, but crypto appears to be trending bearish against speculative growth stocks. After Bitcoin and Nasdaq peaked in November, the cryptocurrency followed closely the ARK Innovation ETF (ARKK) for several months. However, ARKK did not break the lows of late May and accelerated Bitcoin losses. In recent weeks, so-called stablecoins have become free while several crypto lenders have stopped withdrawals.

Dow Jones Futures Today

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

US markets will be closed on Monday for the June holiday, but other stock markets around the world will be open. Dow futures will trade as normal on Monday.

Federal Reserve Administrator Christopher Waller said on Saturday he favors a 75 basis point rate hike at the Fed meeting in late July. Markets see a high probability for this right now, but it’s not exactly priced in.

Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.


Join IBD experts as they analyze stock rally tradable stocks on IBD Live


Exchange

The stock market has once again suffered massive weekly losses and major indexes have fallen to their worst levels in more than a year.

The Dow Jones Industrial Average fell 4.8% in last week’s stock market trading. The S&P 500 index fell 5.8%. The Nasdaq composite fell 4.8%. The small-cap Russell 2000 fell 7.5%.

The 10-year Treasury rate rose 8 basis points to 3.24%. On Tuesday, the 10-year yield rose to an 11-year high of 3.48%.

US crude futures fell more than 9% to $109.56 a barrel last week, ending a seven-week streak. Gasoline futures also fell sharply. Natural gas prices fell.


Stock Market Forecast for the Next Six Months


ETFs

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) is down just over 12% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) is down 9.1%. The iShares Extended Technology-Software Industry ETF (IGV) fell 5.1%. The VanEck Vectors Semiconductor ETF (SMH) lost 8.1%.

The SPDR S&P Metals & Mining ETF (XME) sold 10.4% last week. The Global X US Infrastructure Development ETF (PAVE) fell 8.6%. The US Global Jets ETF (JETS) fell 8.9%. The SPDR S&P Homebuilders ETF (XHB) fell 11.4%. The Energy Select SPDR ETF (XLE) was down 17.2% and the Financial Select SPDR ETF (XLF) was down 4.8%. Health Care Select Sector SPDR Fund (XLV) lost 4.5% with both shares of Lilly and VRTX stock.

Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) is down 3.3%, rebounding well from lows and still not lowering its late-May lows. The ARK Genomics ETF (ARKG) fell just under 1% after hitting a two-year low. Tesla remains a major holding in Ark Invest ETFs. Ark has a minor position in BYD stock.


Top Five China Stocks to Watch Now


BYD Stock

BYD stock rose 4% on Friday, but fell 4.1% for the week to 37.45, hitting a five-week winning streak. The stock maintained its position on the weekly chart, giving 39.81 buy points. With such a deep base – 48% – the risk of a failed fracture is higher. A long stem will be constructive, especially one long enough to have its own tight base.

But as Chinese EV stocks – and US-listed Chinese stocks in general – rally, BYD shares may not be in the park for long. Nio (NIO), xpeng (XPEV) and li car (LI) is rising and Li Auto is approaching the heights. Li Auto will unveil its second hybrid SUV, the L9, on Tuesday.

BYD’s massive capital expenditures over the past 18 months, along with its in-house battery and chip operations, fueled massive sales growth and allowed the company to avoid supply chain and China Covid lockdown issues. Sales of EVs and plug-in hybrids will surpass Tesla’s EV-only sales in the second quarter, and that lead could continue.

Tesla stock fell 6.7% last week to 650.28, almost falling below its late-May lows.


Tesla Vs. BYD: Which EV Giant is Better to Buy?


Execution Stock

Enfaz shares fell 5.8% to 184.90 last week. Friday’s 8.9% gain pushed ENPH stock above the 50-day and 200-day lines. An exit from a double-bottomed bottom in early June quickly turned out to be a fiasco as the 193 buy points were no longer viable. But now a balance has been formed with the buy point of 217.33 just above the June 8 high. Note that Enphase stock has big daily moves. That may not be for long, as solar shares bolster the sell-off in the oil and gas names on Friday.

Still, ENPH stock and SolarEdge Technologies (SEDG) were among the S&P 500’s top performers on Friday. SEDG stock retraced its 50-day mark by working on the handle cup bottom.

Corner Stock

Vertex stock climbed 3.2% to 253.09 last week and nearly recaptured the 50-day mark with 4.8% popularity on Friday. The 276.10 cup purchase point is no longer valid, so the official entry is 292.85. However, traders can use 279.23 as an early entry.

Eli Lilly Stock

Eli Lilly stock fell 2.15 to 390.90 last week and hit resistance at the 50-day line on Friday. A strong move above the 50-day line could provide an early entry for LLY stock. The previous flat-bottom buy point of 314.10 is no longer worth, but Lilly stock is in the process of forming another consolidation alongside it.

SQM Stock

SQM stock fell 6% to 90.29 last week, but rose after finding support at the 50-day line on Friday. The stock has wiped out a 27% gain from 90.97 buy points over the past few weeks. However, a strong rebound from the 50-day line could provide an entry for SQM stock.

SQM and BYD stock, along with Tesla, are key components of the Global X Lithium & Battery Tech ETF (LIT).

the market research

The severe market correction – the bear market for the S&P 500 and Nasdaq – continued to worsen over the past week.

Friday’s mixed action wasn’t very inspiring. Yes, the Nasdaq and S&P 500 rose on Friday, so it’s technically the first day of a stock market rally attempt for these two indices. But they only reduced the weekly losses.

The S&P 500, Dow Jones and S&P 500 saw their worst levels since the end of 2020.

Even if the market climbs and phases out the next day in the near future, there will still be plenty of reasons to be skeptical and few stocks to buy.

The oil and gas sector, the only area where market power is permanent, tumbled last week as several big winners gave sell signals. The sector may not have been finished, but the charts were a damaged character change.

While some stocks like BYD and SQM are close to buying points, and other names like Vertex, Lilly or Enphase might be of interest with a few solid sessions, many potential leaders can take weeks to repair. And this is in a scenario where a new market rally is holding firm.

Currently, the stock market is much more likely to continue falling. An economy staggering into a recession isn’t a great environment for stocks while the Federal Reserve is at the beginning of an aggressive tightening cycle.

All of the major indices are close to their pre-Covid peaks. This could offer a potential level of support, but it need not hold. The Russell 2000 is already falling below this key level.


Time the Market with IBD’s ETF Market Strategy


what to do now

Investors have no reason to invest when even energy stocks are giving sell signals. The only possible exception would be modest exposure in long-term winners.

Still, it’s important to stay committed, watch the market movement, and prepare for the next uptrend.

It’s time to get your pens, not yours, to update your watch lists. Look for relatively strong stocks, especially if they hold key support levels. But many stocks with strong RS lines will have ugly charts right now.

Read the Big Picture daily to stay in tune with the market direction and leading stocks and industries.

Please follow Ed Carson on Twitter at: @IBD_ECarson for stock market updates and more.

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