The bear market intensified last week, amid growing concerns that the Federal Reserve will be forced to drive the economy into a recession in order to rein in inflation.
With the major indexes plunging toward their pre-Covid peaks, investors should be on the sidelines. Don’t get excited by one-day rebounds, such as Friday’s tech-led advance. Instead, prepare to take advantage of the next sustained uptrend.
Stocks Holding Up
Not many stocks are holding up, but here are five that are doing a reasonable job: Tesla (TSLA) rival BYD (BYDDF), Vertex Pharmaceuticals (VRTX), fertilizer and lithium play SQM (SQM), Eli Lilly (LLY), and Enphase Energy (ENPH).
All have relative strength lines at or near highs. The RS line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500 index.
BYD stock is near a traditional buy point. SQM stock is finding support at its 50-day line after round-tripping big gains. ENPH stock regained that key level on Friday. Vertex stock and Eli Lilly aren’t far below their 50-day lines.
LLY stock is on IBD Leaderboard. Eli Lilly and SQM stock are on the IBD 50. BYD was Friday’s IBD Stock Of The Day.
The video embedded in this article discussed the weekly market action and analyzed BYD, SQM, and Enphase stock.
Dow Jones Futures Today
Dow Jones futures rose 1.4% vs. fair value. S&P 500 futures climbed 1.5% and Nasdaq 100 futures jumped 1.7%.
The 10-year Treasury yield climbed 4 basis points to 3.28%.
Crude oil prices rose 2%.
U.S. markets were closed Monday in observance of the Juneteenth holiday, but other exchanges around the world are open.
Federal Reserve Gov. Christopher Waller said Saturday that he favors another 75-basis-point rate hike at the late July Fed meeting. Markets see a high likelihood of that currently, but it’s not fully priced in.
While the Fed is ramping up rates, it’s also starting to reduce its balance sheet. But St. Louis Fed President James Bullard said Monday that the central bank doesn’t have to as far with this quantitative tightening as some assume.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Bitcoin Above $20,000
The Bitcoin price traded above the psychologically key $20,000 level on Monday night. The most-popular cryptocurrency had rebounded to $21,000 in the morning.
On Saturday, Bitcoin plunged below $20,000 to $17,601.58, a fresh 18-month low. That also undercut its December 2017 peak of $18,942.
The price of Bitcoin peaked at $68,990.90 in November 2021.
Other cryptocurrencies have crashed as much or more than Bitcoin in the “crypto winter.”