Dow Jones Futures: Market Rally Strong But Fed Taper On Tap; Google, Tesla Rival Xpeng Near Buy Points

Dow Jones futures open Sunday night along with S&P 500 futures and Nasdaq futures with earnings, economic data and a Fed cut in focus. Stock market growth rose sharply last week, with the Dow Jones, S&P 500 and Nasdaq composites all hitting record highs.




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Tesla (TSLA) rival Xpeng (XPEV), Edwards Lifesciences (EW) and Google parent Alphabet (GOOGL) are all in or near shopping zones.

EW shares and Google can be bought now and have just earned earnings down the road.

The XPEV stock is hovering just below a buy point, with Xpeng releasing October sales early next week, with earnings likely a week or two after that. Xpeng rivals Nio (NIO) and Li Auto (LI) will also report October deliveries on Monday or Tuesday with earnings in mid-November. Li Auto stock is also close to a buy point.

Tesla shares and Google are on IBD Leaderboard and IBD 50. EW shares are on SwingTrader. Google stock is on long-term leaders.

The video embedded in this article analyzed the market rise and took a look at Google, Edwards Lifesciences and Xpeng shares.

Fed Taper Decision

After many months of moving toward a downgrade decision from the Fed, politicians are expected to end this week’s two-day meeting on Wednesday by agreeing to downscale asset purchases. The actual policy would take effect by the end of the year. The $ 120 billion in monthly purchases – $ 80 billion in monthly treasury purchases and $ 40 billion in government-backed mortgage securities – would be cut to zero by mid-2022. Then the Fed rate hikes may be on the table.

Although a “taper tantrum” is always possible in the stock market, this Fed decision will certainly not be a surprise. With inflation expected to remain warm for some time, investors can look forward to a shift away from light monetary policies.

Dow Jones Futures today

Dow Jones futures opens Sunday night with the S&P 500 futures and Nasdaq 100 futures.

Keep in mind that overnight trading 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 powerful stocks in the stock market rally on IBD Live


News about coronavirus

Coronavirus cases worldwide reached 246.92 million. Covid-19 deaths topped 5 million.

Coronavirus cases in the United States have affected 46.77 million, with deaths above 765,000.

The FDA approved Friday Pfizer (PFE) and BioNTech (BNTX) vaccine for children aged 5-11, which paves the way for vaccination of millions of primary school children on their way into winter. The CDC will weigh in on Tuesday.

Stock market rally last week

The stock market rise ended with nice to strong rises despite some swings in the middle of the week. The Dow Jones Industrial Average rose 0.4% in last week’s trading. The S&P 500 index rose 1.3 per cent. The Nasdaq index rose 2.7 percent. Small-cap Russell 2000 rose 0.3 pct.

The 10-year government interest rate retreated significantly last week, down 10 basis points to 1.56%. The two-year government bond rate, more closely linked to Fed decisions, continued to rise last week, but withdrew several basis points from intraday Wednesday.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.9% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.9%. iShares Expanded Tech-Software Sector ETF (IGV) rose 1.35%. VanEck Vectors Semiconductor ETF (SMH) rose 2.4 pct.

SPDR S&P Metals & Mining ETF (XME) fell 2%, although several steelmakers showed positive action. Global X US Infrastructure Development ETF (PAVE) rose 0.9 per cent. US Global Jets ETF (JETS) fell 1.7 percent. SPDR S&P Homebuilders ETF (XHB) rose 0.5 percent. Energy Select SPDR ETF (XLE) and Financial Select SPDR ETF (XLF) both lost 0.9%

As an expression of more speculative history stocks, the ARK Innovation ETF (ARKK) rose 3%, while the ARK Genomics ETF (ARKG) rose 0.3%. The Tesla share remains No. 1 across ARK Invest’s ETFs.


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EW stock

EW stock returned from its 50-day line and broke a trend line on Friday, rising 2.8% to 119.82 in higher volume. It offered an early entrance into its flat base. Edwards Lifesciences had poor results and guidance late Wednesday, in part due to the latest Covid wave. The EW stock fell early Thursday to 110, which served as a nice shakeout before closing higher. Edwards Lifesciences shares have an official buy point of 123.37 according to MarketSmith analysis.

Google share

Google stock rose strongly on Wednesday, rising 7.6% last week to 2960.92, just above the 2925.17 buying point. It is also not far above some early registrations from Wednesday.

The Google stock is approaching a valuation of $ 2 trillion and ending Friday at $ 1.965 trillion.

Xpeng stock

Xpeng shares rose on Monday on a big day for the EV manufacturer and closed just above a buy point of 48.08 from a bottom base. The stock retreated to 46.63, still up 8.1% for the week. This XPEV stock entry is still valid, although investors could use Tuesday’s intraday-high or downward trend in this quasi-trade as alternative items. Aggressive investors could have bought the Xpeng stock as it broke a trend line and returned from its 50-day line in mid-October, just as the market rise became a confirmed uptrend.

October deliveries of electric cars in the coming week could be a catalyst for XPEV shares as well as Li Auto and Nio.

Li Auto shares are also close to a point of purchase and can form a handle. Nine have more work to do.

China EV giant BYD Co. (BYDDF) is likely to release October sales later next week. BYD shares fell at the end of last week after reporting declining EPS despite a booming sales of electric cars. Stocks are technically back in a buying zone and finding support on their 21-day line.

Total sales of electric cars in China, including for Tesla, are likely to come a week after that. Tesla China’s production in the first half of the quarter is largely exported, primarily to Europe. Tesla stock rose last week on a major Hertz rental car deal. The TSLA stock now boasts a market value of $ 1 trillion.

Analysis of market rally

The stock market rally had another strong performance during Halloween week with a few tricks but more treats. Tuesday’s and Wednesday’s turnarounds in the sessions were worrying as the Nasdaq briefly hit resistance at record levels, with some breakouts failing. But they turned out to be more PG-rated jump scares than a full-on slasher party.

While some outbursts in those days struggled or failed, it was not a big deal for investors who bought earlier in the rally. And the market rose rapidly again on Thursday, with the Nasdaq index reaching all-time levels. Technicians shrugged weakly Apple (AAPL) and Amazon (AMZN) results Friday.

New heights surpass new losers significantly.

The major indices have run up for four weeks in a row, with leading stocks breaking out early and often. The strong progress could continue. But it would not be a surprise to see the market upswing take a break at these levels. It could be positive, providing an opportunity for leading stocks to provide new buying opportunities, either from moving averages or the formation of handles or shelves after running up the right side of bases.

The earnings season will remain active with casinos, fertilizer producers, slate operators and several solar energy games on tap this week. Investors will also receive important financial data, including the job report from September on Friday.

Most of all, the Federal Reserve will hold its most recent political meeting on 2-3. November with the announcement of a bond reduction, which is expected at 14.00 ET Wednesday. Massive monetary stimuli have helped keep interest rates low and stock prices high, so the gradual cooling of new asset purchases can be a headwind. But perhaps the Fed tapping has already been priced.


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What should I do now

More than two weeks after the stock market rise had its follow-up day, investors should have built up a significant exposure, depending on your risk tolerance and your success rate. You can still make some step-by-step purchases, sometimes offset by trimming winners or reducing losers.

So keep working on your watchlists and look for new setups. Also keep an eye on sectors that may have been at a disadvantage but are now establishing themselves. Steel stocks have been doing so over the past week or so. Medical products companies, including Dexcom (DXCM), InMode (INMD) and EW shares showed some spark at the end of last week.

Stay disciplined. The last few weeks’ gains can disappear in just a few days, especially if you are far more invested on November 1 than you were on e.g. Oct. 15.

Read The Big Picture every day to stay in line with market trends and leading stocks and sectors.

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

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