Covid Variant Fears A Breakdown Market Rally, What To Do; Tesla Rival Li Auto Due – .

Covid Variant Fears A Breakdown Market Rally, What To Do; Tesla Rival Li Auto Due – .

Dow Jones futures will open Sunday night, along with S&P 500 and Nasdaq futures. The stock rally was hit in all directions last week, with major indices falling below key levels on Friday on the new Omicron Covid variant, with crude oil prices and Treasury yields plunging. Manufacturers of coronavirus vaccines such as Modern (MRNA), BioNTech (BNTX) and Pfizer (PFE) were big winners.


Is this the start of a significant market decline, the continuation of recent see-saw action, or will stocks rebound quickly? The current uncertainty makes it difficult to navigate the stock market rally. Investors should play more defense than offense until conditions clearly improve.

Li Auto’s earnings are due before Monday’s opening. Later next week, Li Auto (LI) and Chinese electric vehicle startups Nio (NIO) and Xpeng (XPEV) are likely to release November delivery figures. Chinese electric vehicle giant BYD Co. (BYDDF) can come a bit later, with Tesla (TSLA) Sales figures in China will eventually follow.

Li Auto’s stock is close to possible buying points. Xpeng stock is holding above a buy point after increasing profits last week. Tesla and BYD shares may be working on further consolidations, both of which close on Friday near their 21-day lines. Nio stock fell back below its 200-day line.

Tesla stock is listed on the IBD and IBD 50 charts. Pfizer stock was the IBD stock of Friday.

The video embedded in this article analyzed a pivotal market week and discussed the PFE stock, Ovintiv (OVV) et Li Auto.

Dow Jones Futures Today

Dow Jones futures will open Sunday at 6 p.m. ET, along with S&P 500 and Nasdaq 100 futures. But the Dow Jones and S&P 500 ETFs traded slightly lower after the market closed on Friday, while Nasdaq futures fell slightly.

Keep in mind that overnight action on futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades in the next regular trading session.

Join the IBD experts as they analyze the exploitable stocks in the stock market rally on IBD Live

Coronavirus news

A new variant of the coronavirus with a large number of mutations, first detected in South Africa, is causing concern. It is not known whether the Covid B.1.1529 variant, dubbed the Omicron variant on Friday, is more deadly or infectious than previous strains, or whether vaccinations or a previous Covid infection offer substantial protection. But health officials are worried. The World Health Organization has noted that the Omicron variant appears to have a higher risk of re-infection for people who have previously had Covid-19. WHO has declared it a “variant of concern,” the first such designation since the delta variant a year ago.

The United States, United Kingdom, European Union, Israel and Singapore have suspended flights or entry from southern Africa.

Coronavirus cases have already been increasing around the world for several weeks, especially in Europe. Austria started a lockdown last week.

Coronavirus cases around the world have reached 260.87 million. Deaths from Covid-19 have exceeded 5.2 million.

In the United States, coronavirus cases have reached 49.05 million, with more than 799,000 deaths. Cases in the United States, after resuming for a few weeks, appeared to stabilize shortly before Thanksgiving. Will the vacation trip cause another upsurge in cases? Coronavirus deaths in the United States have continued to decline.

Pfizer and its partner BioNTech, along with rival mRNA coronavirus vaccine maker Moderna, have jumped on the Omicron Covid variant, also known as Nu Covid. Pfizer also benefits from Merck (MRK) reporting even lower effectiveness of its Covid antiviral pill. An oral medication from Pfizer Covid is much more effective.

PFE stock jumped 6.1% on Friday to 54, breaking a buy point of 51.96, according to MarketSmith analysis. However, Pfizer’s stock has jumped for six straight weeks from the bottom of its cup base. A pullback would not be a surprise.

MRNA stock broke its 50 day line, breaking a trendline with a gain of 21%. BNTX stock, which erased its 50-day line earlier in the week, climbed 14%. The actions of Moderna and BioNTech could be seen as early entries. But investors might want to see more strength from Moderna and some post-spread consolidation in BNTX stock.

Meanwhile, other medical pieces on coronaviruses such as Quest Diagnosis (DGX) and PerkinElmer (PKI) has also shown positive action.

These sectors drive massive sales as a new variant of Covid emerges

Stock exchange rally

The stock rally had a shortened vacation week, with widespread losses.

The Dow Jones Industrial Average fell 2% in stock trading last week, all dragged down by Friday’s 2.5% drop. The S&P 500 index lost 2.2%. The Nasdaq composite slipped 3.5%. The Russell 2000 small cap fell 4.6%.

Crude oil futures plunged 13% on Friday. The 10-year Treasury yield lost 4 basis points to 1.49% on the week. But the benchmark yield plunged 15 basis points on Friday after nearly hitting a six-month high on Wednesday intraday.

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 5.9%, while the Innovator IBD Breakout Opportunities (BOUT) ETF fell 3.5%. The iShares Expanded Tech-Software Sector (IGV) ETF fell 5%. The ETF VanEck Vectors Semiconductor (SMH) fell 4.1%.

The SPDR S&P Metals & Mining ETF (XME) fell 3.2% and the Global X US Infrastructure Development ETF (PAVE) fell 2.1%. The US Global Jets ETF (JETS) fell 7%. The SPDR S&P Homebuilders ETF (XHB) slipped 2%. The Energy Select SPDR (XLE) ETF rose 1.3%, but fell 4.3% on Friday, with many Shale games faring much worse. The Financial Select SPDR ETF (XLF) lost 1%, sliding 3.7% on Friday.

Reflecting more speculative historical stocks, ARK Innovation ETF (ARKK) plunged 5.3% and ARK Genomics ETF (ARKG) fell 5.7%. Tesla shares remain the number 1 stock among ARK Invest ETFs.

Five best Chinese stocks to watch right now

Market rally analysis

Over the past week, the market rally sparked a sell off in highly valued growth stocks, especially software, as energy stocks and banks rebounded. The new variant of Covid drove stocks down sharply on Friday, especially oil and financials, as crude prices and Treasury yields fell. Travel inventories were also hit hard, as retailers extended their recent decline. Coronavirus games have bounced back, while software names have held up relatively well.

The Nasdaq composite and the S&P 500 moved below their 21-day lines after both finding support at this key level earlier in the week. The Dow Jones, which was slightly higher until Wednesday, fell below its 50-day line on Friday.

The Russell 2000 has fallen below its 50 and 200 day moving averages. The Small Cap Index is a good indicator of the size of the market, which has weakened considerably. The losers beat the winners 4 to 1 on the Nasdaq on Friday and 5 to 1 on the NYSE. The forward / down lines have deteriorated over the past few weeks.

There is a lot of uncertainty right now regarding the market rally and which sectors will be leading and lagging behind. Much has to do with whether or not the Omicron Covid variant is noticeably more infectious or fatal. This will inform governments’ decisions on travel bans and restrictions and whether people adjust their behavior again. A major epidemic could trigger further shutdowns of governments and businesses, disrupting supply chains again and pushing commodity prices down. Maybe all of these fears are overblown, but it may not be apparent for some time.

The CBOE Volatility Index, or VIX, climbed 54% to 28.62, hitting a 10-month high. Extreme movements in the so-called market fear gauge could increase the chances of at least a short-term market low. But it doesn’t have to happen right away and it doesn’t have to last.

Time the market with IBD’s ETF market strategy

What to do now

Sham, bearish action in major indices, various sectors and major stocks are not conducive to further buying. Of course, if the overall stock market recovery or specific sectors rebound, buying now is likely to turn out well. But with so much uncertainty surrounding the new variant of Covid, inflation, supply chains and more, the odds are not particularly favorable.

It’s entirely possible that oil, banking or tourism stocks will try to rebound early next week, just as software stocks did on Wednesday. But that doesn’t mean the rebound will continue.

Investors should review their holdings and ditch the losers. If you got caught in Friday’s losses and didn’t take action, don’t continue to freeze.

Take a more defensive stance with all of your holdings and wallet. Don’t necessarily be in a rush to sell everything, unless all of your inventory is triggering losses.

When market conditions strengthen, whether it’s next week or next year, you want to be financially and mentally prepared to take advantage of them.

Read The Big Picture every day to stay in tune with the market direction and major stocks and sectors.

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


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