Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. The major indexes and leading stocks suffered heavy losses last week, prompting a shift in the market direction to “correction.”
Investors are still on Tesla (TSLA) deliveries watch. The EV maker could release third-quarter production and sales figures this weekend or early next week.
The S&P 500 and Nasdaq plunged below their 50-day lines and undercut their Sept. 20 lows. Growth stocks had their worst week since the coronavirus crash. While stocks rebounded Friday, the marks day one of a market rally attempt. For now, the market remains in a downtrend.
In such an environment, investors should have limited market exposure or be entirely in cash. Look for stocks with strong relative strength lines.
Netflix (NFLX), Datadog (DDOG), Mosaic (MOS), American Express (AXP), Bill.com (BILL), Quanta Services (PWR) and Paychex (PAYX) all have RS lines at or near highs, reflecting their outperformance vs. the S&P 500 index.
Netflix stock is in a buy zone now. In a healthy stock market rally, investors could buy NFLX, or see early entries on Datadog, Mosaic, Paychex and AXP stock.
Also keep an eye on Microsoft (MSFT) and Google (GOOGL). These tech megacaps’ RS lines aren’t far from highs. If MSFT stock and Google can reclaim their 50-day lines, it’s a good sign for the Nasdaq.
As for TSLA stock, it’s holding in a buy zone. The RS line for Tesla isn’t at a new high, but is at its best levels in nearly six months.
Tesla stock, Microsoft and Google are on IBD Leaderboard. Microsoft stock and Google also are on IBD Long-Term Leaders. American Express and PWR stock are on SwingTrader. Google stock is on the IBD 50.
The video embedded in this article analyzed the overall stock market action and reviewed Netflix, Mosaic and DDOG stock.
Why This IBD Tool Simplifies The Search For Top Stocks
Infrastructure Bill Still In Flux
Meanwhile, the fate of the $1.2 trillion infrastructure bill remains unclear. House progressives are demanding significant progress, at minimum, on a multi-trillion dollar reconciliation tax-and-spend package before voting for the bipartisan infrastructure bill. But Democratic leaders now appear to be trying to get centrist Democrats to agree to a $2 trillion reconciliation package vs. the long-touted $3.5 billion package. President Biden met with Democratic lawmakers Friday, telling them the infrastructure bill won’t pass until there’s “agreement” on the reconciliation bill.
Also, while Congress last week extended government funding into early December, lawmakers still must approve a debt limit hike. Treasury Janet Yellen has pegged Oct. 18 as the likely government default date. Raising the debt limit without Republican votes could complicate the reconciliation package, which in turn could keep the infrastructure bill in a holding
Dow Jones futures will begin trading at 6 p.m. ET on Sunday. So will S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live