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Netflix, Lululemon, DocuSign and more

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Check out the companies making the biggest moves midday:

Lululemon — Shares of Lululemon fell 12% after the athletic apparel company gave a weaker-than-expected fourth-quarter outlook. In the third quarter, the company beat Wall Street’s expectations on the top and bottom lines.

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Beyond Meat — Beyond Meat’s stock dropped more than 8% after being downgraded by Argus to sell from hold. The firm’s analyst cited falling demand amid weaker economic conditions.

Broadcom — Broadcom gained 3.1% after giving an upbeat revenue forecast and reporting better-than-expected quarterly results after the bell Thursday. The chipmaker also increased its dividend by 12.2% and said it would resume stock buybacks.

Tesla — Tesla’s stock was up more than 4%, paring some of the losses it suffered this week. Reuters reported on Friday the electric-vehicle maker will suspend Model Y assembly at its Shanghai plant between Dec. 25 and Jan. 1. Inventory levels at the plant had risen sharply over the summer.

Carvana — Shares of Carvana rose 2% after lenders told The Wall Street Journal that they don’t anticipate the online car seller will file for bankruptcy soon. These debtholders are joining together amid reports earlier this week that the company is looking to restructure its debt, the paper said. Carvana had seen success during the pandemic, but rising interest rates and weaker car demand have hurt its performance.

Netflix — Netflix gained 5% after being named a “best idea” for 2023 by Cowen and being upgraded by Wells Fargo to overweight from equal weight. Cowen said it sees free-cash flow ramping up next year, while Wells Fargo said content growth would lessen customer churn.

RH — RH, formerly known as Restoration Hardware, rose 4.5% after reporting third-quarter earnings-per-share and revenue that beat expectations. However, the retailer also said it expected business trends to deteriorate.

Coinbase — Shares of the crypto services firm fell 2.6% after Mizuho downgraded Coinbase and said its price could fall another 30%. Crypto equities such as Coinbase have been under pressure with cryptocurrency prices, as investors digest the macro picture and the latest developments on FTX.

DocuSign — Shares of DocuSign jumped 16% after the electronic signature company posted upbeat quarterly results. It also reported better-than-expected billings, subscription renewals and additional sales to existing customers.

Costco — The wholesaler gained 1.6% after Cowen named the stock a “best idea” heading into 2023, noting the company’s focus on value could be a winning strategy as consumers get more price conscious.

AmerisourceBergen — AmerisourceBergen fell 2.7% after Walgreens sold about $1 billion shares of the drug distributor. Walgreens remains its largest shareholder, with its stake now down to 17% from 20%.

Vale — The Brazil-based mining company gained 3.5% after Morgan Stanley upgraded the stock to overweight from equal weight, citing a “cocktail” of positive catalysts such as price momentum for iron ore and China exiting its Covid-zero policy.

Bath & Body Works — Shares of Bath & Body Works gained rose 2.1% after activist investor Dan Loeb boosted his stake in the retailer. Loeb said he might push for board charge to improve governance issues at the company.

— CNBC’s Carmen Reinicke, Alexander Harring, Tanaya Macheel and Christina Cheddar-Berk contributed reporting.

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Business

DOCU Stock Pops as DocuSign Earnings Fall But Top Estimates Amid Lowered Expectations

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DocuSign (DOCU) reported July-quarter earnings and revenue that topped estimates amid lowered expectations. The company’s outlook came in mixed, but DOCU stock surged on the news Friday.




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The San Francisco-based software maker reported earnings after the market close on Thursday. DocuSign earnings for its fiscal second quarter came in at 44 cents a share, down 6% from a year earlier, but ahead of estimates for 42 cents.

In addition, the maker of electronic signature software said revenue rose 22% to $622.2 million. Analysts had predicted revenue of $602 million. A year earlier, DocuSign earnings were 47 cents a share on sales of $512 million.

Billings, a sales growth metric, rose 9% to $647.7 million vs. estimates of $601.8 million.

DOCU stock popped 10.5% to close at 64.04 on the stock market today.

DOCU Stock: More In-Person Meetings Hit Business

For the current quarter ending in October, DocuSign forecast revenue of $626 million at the midpoint of its outlook and billings of $589 million. Analysts had predicted third-quarter revenue of $625 million and billings of $593.4 million.

Demand for DocuSign products surged during the early part of the coronavirus outbreak, but many businesses are resuming in-person meetings. In addition to accommodating electronic signatures, the company’s software also automates the filing of contracts over the internet.

DocuSign has a search underway for a new chief executive. Board Chair Mary Wilderotter was named interim CEO on June 21.

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“We thought the quarter/guide were better-than-feared but we came away less confident in a timely turnaround to healthy growth and remain in wait-and-see mode until a new CEO,” said RBC Capital analyst Rishi Jaluria in a report. “DocuSign noted the company is close to naming a new CEO, suggesting M&A is off the table for now.”

Thus far in 2022, DOCU stock had retreated 63% heading into the earnings report. DocuSign holds a Relative Strength Rating of only 5 out of a best-possible 99, according to IBD Stock Checkup.

If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns for issues such as DOCU stock is one key to the investment guidelines.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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Business

T-Mobile buyback, DocuSign jumps and more: Friday’s 5 things to know

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Stock market experts Nancy Tengler and Paul Hickey provide insight on what investors can add to their portfolios on ‘Making Money.’

Here are the key events taking place on Friday that could impact trading.

T-MOBILE: Shares of the wireless company are higher by 1.8% in premarket trading after the company announced a $14 billion share buyback program that will run till September next year.

The stock has jumped 25.3% for the year so far, compared with a 9.7% drop in rival AT&T and Verizon’s 20.5% slump.

The buyback announcement comes a day after T-Mobile announced the sale of its wireline business to Cogent Communications Holdings in order to focus more on 5G.

SPACEX PARTNERING WITH T-MOBILE TO ELIMINATE ‘DEAD ZONES’ IN RURAL AREAS VIA SATELLITES

The logo for T-Mobile appears on a screen at the Nasdaq MarketSite in New York.  (AP Photo/Richard Drew / AP Newsroom)

SMITH & WESSON: Shares are down 6% in premarket trading after the gunmaker posted quarterly results that underscored a drop in consumer demand following a surge two years ago.

The Springfield, Massachusetts, company said its profit tumbled from a year earlier in what it described as a “challenging” July fiscal quarter.

For its July fiscal quarter, Smith & Wesson reported GAAP net income of $3.3 million, dropping from $76.9 million in the year-ago period. Net sales slumped 69% to $84.4 million.

DOCUSIGN: Shares are surging 17% in premarket trading after earnings topped expectations.

The company reported a loss of $45.1 million in its fiscal second quarter.

DocuSign said it had a loss of 22 cents per share. Earnings, adjusted for one-time gains and costs, came to 44 cents per share.

The average estimate of six analysts surveyed by Zacks Investment Research was for earnings of 42 cents per share.

The provider of electronic signature technology posted revenue of $622.2 million in the period, also beating Street forecasts. Five analysts surveyed by Zacks expected $602.1 million.

The company expects full-year revenue in the range of $2.47 billion to $2.48 billion.

HERSHEY: The candy maker says it will spend $90 million to open two new production lines in a Mexican plant in the northern border state of Nuevo Leon.

An employee holds out a Hershey’s chocolate bar. (REUTERS/Fabrizio Bensch/File Photo / Reuters Photos)

The expansion of the plant will increase output by 25%, according to Reuters.

The state said the investment will also generate 300 new jobs in addition to the 2,500 already employed at the plant, which makes hundreds of products.

BIDEN ADMIN SETTLES WITH ECO GROUPS TO BLOCK MASSIVE OIL DRILLING LEASES

OIL LOSSES: Prices headed for a second straight losing week. Both benchmarks were down about 4% for the week.

Storage tanks are seen at Marathon Petroleum’s Los Angeles Refinery. (REUTERS/Bing Guan / Reuters Photos)

The market actually hit its lowest level since January at one point.

U.S. West Texas Intermediate crude futures traded around $83.00 a barrel, after climbing 2% in the previous session.

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Brent crude futures slipped to around $89.00 a barrel, after rising 1.3% on Thursday.

The concern remains central banks’ aggressive rate hikes and China’s COVID-19 curbing demand. 

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Business

DocuSign (DOCU) earnings Q1 2023

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Dan Springer, chief executive officer at DocuSign.

David Paul Morris | Bloomberg | Getty Images

DocuSign shares fell as much as 24% in extended trading on Thursday after the electronic signature software vendor reported weaker-than-expected earnings in its fiscal first quarter.

Here’s how the company did:

  • Earnings: 38 cents per share, adjusted, vs. 46 cents per share as expected by analysts, according to Refinitiv.
  • Revenue: $588.7 million, vs. $581.8 million as expected by analysts, according to Refinitiv.

For the quarter, which ended on April 30, DocuSign’s revenue grew 25% from a year earlier, according to a statement.

But as investors shift away from a focus on growth to profitability, DocuSign’s miss on earnings is overshadowing its beat on revenue. The stock is down 43% this year as of Thursday’s close, tumbling alongside the rest of the cloud software sector. On Thursday the company reported a net loss of $27.4 million, compared with a net loss of $8.3 million in the year-ago quarter.

DocuSign experienced a wave of growth when the coronavirus arrived and many transactions went online. That pace of business has slowed in recent quarters, and now it’s working to fix go-to-market challenges, CEO Dan Springer said on a conference call with analysts.

The company is moderating its hiring plan “to appropriately balance growth and profitability,” Springer said, noting that the Great Resignation trend of people leaving jobs has brought turnover in the company’s sales organization.

Plus, the macroeconomic environment became more challenging during the quarter, said Cynthia Gaylor, DocuSign’s finance chief.

For the second quarter, DocuSign called for revenue of $600 million to $604 million. The middle of the range, at $602 million, was just above the Refinitiv consensus of $601.7 million.

And for all of 2023, DocuSign sees $2.47 billion to $2.48 billion in revenue, compared to the $2.479 billion Refinitiv consensus.

Earlier this week DocuSign announced an expansion of its partnership with Microsoft.

This is breaking news. Please check back here for updates.

WATCH: DocuSign has potential for growth with Microsoft deal, says Laffer Tengler’s Nancy Tengler

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Business

DocuSign Stock Plunged on Soft Outlook

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Shares of

DocuSign Inc.

DOCU -20.10%

fell 20% Friday, wiping out the stock’s pandemic-era gains, after the e-signature software maker released softer-than-expected guidance for its fiscal 2023.

The company said Thursday evening that it expects full-year revenue to be between $2.47 billion to $2.48 billion, lower than the $2.61 billion that analysts surveyed by FactSet had been expecting.

The company also said it expects subscription revenue growth to slow, forecasting a range of $2.39 billion to $2.41 billion.

Billings, which reflect new-customer sales, subscription renewals and add-on sales for existing customers, are expected to come in between $2.71 billion and $2.73 billion, also a substantial slowdown from 2021.

The company warned in December that its growth would likely be hampered as people returned to more normalized working and buying patterns as the pandemic faded. The company said at the time that it would invest in increasing its sales efforts, increase marketing spending and spend more on product innovation.

DocuSign fits into a category of companies that made working from home easier to manage and benefitted as businesses adapted to remote and paperless environments. But its business has taken a hit as the pandemic fades and more offices begin calling their employees back to in-person work.

Its share price tripled in 2020, but fell almost 32% last year. Shares closed Friday at $75.01 and are down 51% so far this year.

DocuSign CEO Dan Springer discussed the e-signature company in March 2019.



Photo:

David Paul Morris/Bloomberg News

Despite the forecasted slowdown, Chief Executive Officer

Dan Springer

said the company’s digital-signature business will continue to grow.

“As people begin to return to the office, they are not returning to paper,” Mr. Springer said. “eSignature and the broader Agreement Cloud will only continue to gain prominence in the evolving Anywhere Economy.”

The worse-than-expected guidance came even as DocuSign topped analysts’ expectations for revenue in the fiscal fourth quarter. The company reported adjusted earnings of 48 cents a share on revenue of $580.8 million. Analysts were expecting adjusted earnings of 48 cents a share on revenue of $562 million.

DocuSign also said its board has authorized it to buy back $200 million worth of shares. At the same time, the company said Chief Revenue Officer Loren Alhadeff intends to resign.

Still, analysts at Oppenheimer on Friday removed their $250 price target on the stock and downgraded DocuSign to perform from outperform.

“The guidance shows that the challenges seen then with respect to sales execution and resetting post-Covid consumption patterns remain near- to medium-term headwinds,” the analysts wrote.

Write to Will Feuer at will.feuer@wsj.com

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Business

Dow Jones Futures Jump As Putin Sees ‘Positive Shift’ In Ukraine Talks; Rivian, DocuSign Dive

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Dow Jones futures rose strongly Friday morning, along with S&P 500 futures and Nasdaq futures, jumping recently as Russian President Vladimir Putin reported some “certain positive shifts” in Ukraine talks.




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Putin’s comments came in a meeting with his Belarusian counterpart Alexander Lukashenko, adding that talks continued “practically on a daily basis.” But they come after high-level Russia-Ukraine talks appeared to go nowhere on Thursday. Russia has eased some of its demands as its Ukraine invasion has been much tougher than Putin expected, while sanctions vs. Russia are already taking a toll.

Meanwhile, Russia’s Ukraine invasion continues. Russian forces are still losing a lot of troops and equipment. It continues to shell and bomb Ukrainian cities, causing heavy civilian casualties. Russian claims of Ukrainian research into dirty nuclear bombs and bioweapons raise concerns that Putin may attempt a false flag operation in Ukraine or Russia.

The stock market rally attempt closed well off lows Thursday, holding the bulk of Wednesday’s big gains. Crude oil prices reversed lower while Treasury yields continued to rebound with inflation at a 40-year high.

Key Earnings

Tesla (TSLA) rival Rivian (RIVN) reported weaker-than-expected fourth-quarter earnings results. The EV pickup maker reported a big loss and slim revenue, while warning that supply-chain woes will “persist.”

RIVN stock sold off hard overnight after skidding to a record low in Thursday’s session. As for Tesla stock, shares fell from key resistance and back below its 200-day line.

Oracle (ORCL) missed earnings views, while the software giant’s revenue was in line. Oracle stock fell modestly early Friday.

DocuSign (DOCU) met on EPS and beat on sales, but its fiscal 2023 revenue guidance fell short. But DOCU stock, which crashed 42% after the prior earnings report, plunged in extended trade.

Ulta Beauty (ULTA) beat views and announced a new $2 billion ULTA stock buyback. ULTA stock rose slightly in overnight action, near an early entry after retaking the 50-day line Thursday and closing on a trendline.

Meanwhile, Costco Wholesale (COST), Regeneron Pharmaceuticals (REGN) and J.B. Hunt Transport Services (JBHT) are rebounding from key levels and not far from possible buy points.

TSLA stock is on IBD Leaderboard, with COST stock joined the Leaderboard watchlist on Thursday. Costco, Regeneron and JBHT stock are on the IBD 50. REGN stock was Thursday’s IBD 50 stock to watch.

Dow Jones Futures Today

Dow Jones futures rose 1.2% vs. fair value, though that’s backed off highs as Putin’s “positive shifts” comments first hit. S&P 500 futures climbed 1.3%. Nasdaq 100 futures advanced 1.6%. DOCU stock is on the Nasdaq 100.

Crude oil futures rose about 1%, well off morning highs following Putin’s Ukraine comments. The European Union announced a pause in Iran nuclear talks due to “external factors,” likely referring to Russia’s Ukraine invasion in some way.

The 10-year Treasury yield were flat at 2.01%, after being below 2% prior to Putin’s comments.

The Hong Kong tech index saw huge losses Friday amid renewed U.S. delisting fears. The SEC on Thursday identified five U.S.-listed Chinese stocks that it could delist, eventually, if they don’t comply with U.S. auditing laws. However, U.S.-listed China stocks are generally rising modestly Friday morning after Thursday tumbles.

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

Stock Market Rally

The stock market rally retreated Thursday, but the major indexes came off session lows. The Dow Jones Industrial Average gave up 0.3% in Thursday’s stock market trading. The S&P 500 index lost 0.43%. The Nasdaq composite retreated 0.95%. The small-cap Russell 2000 slid 0.5%.

U.S. crude oil prices fell 2.5% to $106.02 a barrel, rising solidly intraday. Crude oil futures tumbled 12% on Wednesday.

The 10-year Treasury yield popped 6 basis points to 2.01%, closing above 2% for the first time since Feb. 16. The 10-year yield is up 17 basis points this week.

The consumer price index shot up 7.9% vs. a year earlier, the hottest inflation in 40 years, though that was in line with views. The Federal Reserve is a lock to raise interest rates at the March 15-16 meeting, kicking off what will likely be a big tightening cycle.

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ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 1.6%. The iShares Expanded Tech-Software Sector ETF (IGV) sank 1.5%. The VanEck Vectors Semiconductor ETF (SMH) retreated 2.1%.

Reflecting stocks with more speculative stories, the ARK Innovation ETF (ARKK) skidded 3.5% and ARK Genomics (ARKG) shed 2.7%. Tesla stock remains the No. 1 holding across Ark Invest ETFs.

The SPDR S&P Metals & Mining ETF (XME) jumped 4.6%, and Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.7%. U.S. Global Jets (JETS) descended 0.8%. SPDR S&P Homebuilders (XHB) fell 0.7%. The Energy Select SPDR ETF (XLE) gained 3.1%, and the Financial Select SPDR ETF (XLF) declined 0.8%. The Health Care Select Sector SPDR Fund (XLV) was just below fair value.

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Rivian Earnings

Rivian lost $2.46 billion in Q4. The EV maker reported $54 million in revenue on 909 vehicles deliveries. As of March 8, Rivian says it’s produced 2,425 vehicles in total, vs. 1,015 at the end of last year.

Rivian expects supply-chain woes to “persist” through 2022.

Last week, Rivian hiked prices on its EV vehicles sharply, angering many customers.

Rivian stock fell nearly 10% early Friday. RIVN stock tumbled 6.35% on Thursday to 41.16, a fresh record low. Rivian came public at $78 a share in early November and ran up to 179.47 in its first five trading sessions. But it’s been all downhill since then.

Tesla stock fell 2.4% to 838.30 on Thursday, dipping back below its 200-day moving average.

Tesla raised the price of its made-in-China Model 3 and Y vehicles by $1,000 on Thursday. It’s also reportedly tripling Model Y delivery times in the U.S. unless buyers also opt for the $12,000 Full Self-Driving package.

On Wednesday, TSLA stock rose 4.2%, retaking the 200-day line but stopping just short of its 21-day moving average. That’s been a key resistance area for the EV giant and the major indexes.

Tesla stock remains well above its Feb. 24 low of 700.

IBD 50 Stocks To Watch

Costco stock rose nearly 1% to 532.72 on Thursday, once again finding support intraday at its 50-day moving average, which also essentially coincides with its 10-day and 21-day lines. Shares are in a cup base with a 571.59 buy point, according to MarketSmith analysis. But COST stock is working on a handle. Investors already could use 545.39 as an early entry.

The relative strength line is right at highs, reflecting Costco stock’s outperformance vs. the S&P 500 index. The RS line is the blue line in the charts provided.

Regeneron stock climbed 1.1% to 630.36 on Thursday, bouncing from its 50-day line, which is almost identical to its 10-day and 21-day lines. Earlier, the biotech giant found support at its 200-day line. Throughout 2022, REGN stock has shown extremely tight action on a weekly basis. The RS line is at the highest level since late August.

REGN stock has a 673.96 buy point from a flat base within a longer consolidation. Investors could use 645.10, just above the Feb. 11 high, or 636.46, just above Monday’s peak, as early entries. The lower entry would also serve as a trendline break, while still being close to the 50-day line.

JBHT stock rose 1.3% on Thursday to 201.88, rebounding from its 50-day and 21-day lines. The trucking operator nearly broke out of its flat base on Monday, but reversed lower that day and fell though its 50-day on Tuesday. The RS line remains at record highs while JBHT stock is still basing, giving it a “blue dot” on MarketSmith charts.

The current base is only 12% deep, and its lows are just above the highs of a prior consolidation. The buy point is 208.97.

Market Rally Analysis

Thursday was not a good day for the stock market rally. But it wasn’t that bad either. The major indexes sold off in the morning, with the Nasdaq down more than 2%. But the indexes came well off lows.

A pullback wasn’t a surprise after Wednesday’s big gains. So holding onto the bulk of the prior session’s advance and closing near session highs wasn’t too shabby.

A follow-through day could happen at any point to confirm the new market rally. But not all confirmed uptrends work, and a FTD right now would come with a lot of caveats.

The major indexes remain well below their 10-day moving averages. The 21-day line, a key resistance level in 2022, looms above that. Several other hurdles would follow.

In addition, a follow-through day should have stocks to buy. In Wednesday’s big rally, the big winners were beaten-down growth names that were far from any kind of entry. If there’s a follow-through day, you want stocks like Costco, Regeneron and J.B. Hunt participating.

So it’s encouraging that Costco, Regeneron and JBHT stock rose slightly. So did UnitedHealth (UNH), Vertex Pharmaceuticals (VRTX), Arista Networks (ANET), Nucor (NUE) and ULTA stock, at least fractionally, even as ARK-type stocks and the broader indexes lost ground.

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What To Do Now

A shaky stock market rally attempt continues within the context of a correction going back to early January or late November. There is no clear trend, and no reason to make a strong stand, long or short.

If you do take new positions, consider taking partial or full profits at 10% or even 5%. Too many stocks have flashed buy signals and run up briefly only to reverse lower.

Even if the technical picture brightens and quality stocks flash buy signals and start to work, investors should build exposure slowly.

In this news-driven market, a headline could send stock prices soaring or plunging, with little confidence in the news or market move. So stay safe.

At some point, a clear market uptrend will take hold. So be ready by staying engaged and refining your watchlists. Look for stocks such as Costco that are finding support at their 21- and 50-day lines instead of resistance.

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

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

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Business

Dow Jones Futures: Market Woes Intensify As DocuSign Craters; Apple, Adobe, Tesla At Key Levels

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Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market suffered sharp losses last week, with the major indexes shrugging off short-lived rebounds to close below key moving averages. Apple stock and Tesla are among key stocks to watch in the days ahead.




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DocuSign (DOCU), a key 2020 winner, crashed Friday as hard times hit the software sector. But the writing was already on the wall for the e-signature leader.

Adobe (ADBE), which had held up relatively well in recent weeks, finally tumbled on Friday. Microsoft (MSFT) and Nvidia stock are starting to show some strain. Tesla stock faces a key test as EV rivals such after Lucid (LCID), Rivian Automotive (RIVN), Xpeng (XPEV) and Li Auto (LI) plunged.

Apple (AAPL) continues to hold up, closing with a weekly gain.

A more-hawkish Fed and omicron variant fears are two catalysts for the recent sell-off, but what the market is doing matters far more than why. Investors should be playing defense in the current market environment, cutting exposure and not looking to make new buys.

Tesla (TSLA), Microsoft, Nvidia (NVDA) and Adobe stock are on IBD Leaderboard. MSFT stock and Adobe are on IBD Long-Term Leaders. Tesla, Nvidia, Microsoft and XPEV stock are on the IBD 50.

Dow Jones Futures Today

Dow Jones futures will open at 6 p.m. ET on Sunday, along with 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

Coronavirus News

Coronavirus cases worldwide reached 265.13 million. Covid-19 deaths topped 5.25 million.

Coronavirus cases in the U.S. have hit 49.87 million, with deaths above 808,000.

The omicron Covid variant has been identified in dozens of countries. Early indications are that it’s more infectious than previous strains, including the delta variant. But so far most cases have been mild. Many of those cases involve people who are vaccinated, suggesting that vaccines provide solid protection against hospitalizations and deaths. But all of this is speculative for now.

Stock Market Last Week

The stock market rally tried to rebound on Monday and Thursday, but the selling pressure continued, especially for techs and small caps.

The Dow Jones Industrial Average fell 0.9% in last week’s stock market trading. The S&P 500 index lost 1.2%. The Nasdaq composite skidded 2.6%. The small-cap Russell 2000 tumbled 3.7%

The 10-year Treasury yield gave up 14% basis points to 1.34%, with most of that decline on Friday. As recently as Nov. 24, the 10-year yield hit 1.69%, a seven-month high.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) tumbled 6.3% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) gave up 2.4%. The iShares Expanded Tech-Software Sector ETF (IGV) plunged 6.6%. Microsoft stock and Adobe are major IGV holdings, with DOCU stock also in the ETF. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.6%. Nvidia stock is a key SMH holding.

SPDR S&P Metals & Mining ETF (XME) retreated 4.6% and Global X U.S. Infrastructure Development ETF (PAVE) fell 1.85%%. U.S. Global Jets ETF (JETS) lost 2.1% for the week, even with Thursday’s 6.1% bounce. SPDR S&P Homebuilders ETF (XHB) edged up 0.4%, with actual builders looking strong. The Energy Select SPDR ETF (XLE) dipped 0.8% and the Financial Select SPDR ETF (XLF) slid 2%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) dived 12.7% and ARK Genomics ETF (ARKG) 9.7%, both at 52-week lows. Tesla stock is still the No. 1 holding across ARK Invest’s ETFs. But Cathie Wood has been selling TSLA and other high-priced holdings while continuing to load up on beaten-down highly valued techs, especially software. ARK also recently bought some XPEV stock.

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DocuSign Stock

DocuSign stock cratered 42% on Friday after giving weak guidance. But the highly valued software maker had flashed several sell signals along the way, whether you bought near traditional buy points or at an early entry in June. After spiking higher on earnings on Sept. 3, DOCU sold off hard, breaking decisively through its 50-day line. This was a clear signal for anyone buying near record highs. By early October, DocuSign had nearly round-tripped the early entry gain, but it did bounce off its 200-day line. Then in November, DOCU stock plunged through its 50-day line and eventually its 200-day line, wiping out all its recent gains heading into earnings, with other hot software stocks tumbling.

Adobe Stock

Adobe stock plunged Friday, down 8.2% to 616.53. Shares decisively broke the 659.29 cup-with-handle buy point and the 50-day line, according to MarketSmith analysis. ADBE stock broke out in early November, and struggled to make much headway, but its relative strength line trended higher during the month. But with markets weakening and software names crashing, it’s hard for even institutional leaders to hold up.

Adobe and DocuSign are competitors in some markets.

Microsoft Stock

Microsoft stock fell 2% on Friday and for the week, to 323.01, following a 3.9% slide the week before. MSFT stock is far from broken. But after a mid-October breakout, shares trended steadily higher, riding the 10-day or 21-day lines. Now it’s testing the 50-day and 10-week lines. Breaking those levels decisively would also nearly wipe out recent gains, a fairly strong sell signal for recent buyers.

Nvidia Stock

Nvidia stock also is far from broken. Shares fell 4.5% on Friday, though they found support at the 21-day line. The 50-day line is still a long way off. Investors could certainly choose to hold NVDA stock here. Depending on your conviction in the name or your investing style, you could choose to take partial profits, either here or with a decisive 21-day line break.

Meanwhile, Nvidia rival and chip leader peer Advanced Micro Devices (AMD) sank 7% last week, breaking through its 21-day line. AMD stock also is well above its 50-day line.

Tesla Stock

Tesla stock fell 6.4% to 1,014.97 on Friday, moving decisively below its 21-day line. It’s closing in on the 1,000 price level as well the 50-day and 10-week lines. Just below those areas is the Nov. 15 low. If TSLA stock can find support around here — perhaps briefly undercutting these levels to flush out weak holders — it would be a positive sign. Tesla stock could be well on its way to forming a new base. But with the market acting so poorly and other EV stocks breaking down, investors should be cautious. It would not be a shock if Tesla suffered a bigger sell-off, much like Adobe did Friday.

While it’s good for TSLA stock bulls that the EV giant is leading its group, it’s not exactly great news that EV startups are tumbling. Rivian stock sank 6.65% last week to 104.67, getting close to a post-IPO low. Lucid stock skidded 8.6%, though it’s not too far from recent highs. Xpeng stock and Li Auto stock plunged decisively below buy points on China delisting fears, with massive losses from Wednesday’s intraday highs.

Apple Stock

Apple stock fell back from Wednesday’s all-time high of 171.30, but still climbed 3.2% to 161.84 for the week. Shares haven’t even touched their 21-day moving average. AAPL stock is one of the last tech stocks to hold up well. Can that continue?

Stock Market Analysis

The stock market suffered another bout of selling, with the Nasdaq breaking back below the 50-day line and undercutting Wednesday’s lows. The S&P 500 also fell below its 50-day line and just undercut Wednesday’s low. The Dow Jones barely dipped Friday but fell for a fourth straight week. The Russell 2000 is well below its 200-day line, setting fresh multimonth lows.

The stock market has sold off sharply in the past few weeks. There have been a few rebound attempts along the way, luring investors back in. But those have lasted a day, or less, with the Nasdaq on Friday easily wiping out Thursday’s gains.

Huge sectors of the market are heavily damaged or broken. Even institutional quality names such as Microsoft and Nvidia stock are starting to buckle.

The advance-decline lines, after Thursday’s brief respite, resumed their precipitous retreat.

The macroenvironment could be a lose-lose situation. If omicron proves to be a major health threat, coronavirus restrictions, social distancing and people staying out of the labor force could chill the economy while exacerbating many shortages. If omicron turns out to be a blip, then the Fed may step up its bond taper to head off inflation.

Neither scenario seems particularly attractive for the stock market.

REITs are still holding up, while homebuilders and auto parts retailers are doing well. These are defensive and/or low interest plays. But they carry risks too. If the market sells off hard, they may not be able to hold up. If the market rebounds and Treasury yields rise, these sectors could lag.

But don’t try to guess how the market or various stock will behave. Pay attention to what the market and leading stocks are doing now. Right now, they are misbehaving.

Time The Market With IBD’s ETF Market Strategy

What To Do Now

The stock market has weakened considerably in the past few weeks. The near-term outlook for the broader market is poor. Breakouts and other entries have failed. Many former highfliers have crashed. Leading stocks are breaking down, with even remaining holdouts starting to show strain, including Tesla, Nvidia and Microsoft. Apple stock had a good week, despite pulling back from highs. But one good Apple can’t offset a rotten barrel.

This is not a time to be buying stocks, period. Don’t let a Monday bounce at the open or even all day draw you in, even to a big winner such as Tesla or Nvidia stock. The market needs to show real strength before investors should commit new money.

Going to cash or having a limited exposure to a few core holdings of winning stocks are sound strategies.

Perhaps as investors get more clarity on the omicron variant and Fed policy, the market will make a new run. So investors should be focusing on reworking their watchlists. If you haven’t updated those lists in a few weeks, get ready for a big makeover. Focus on stocks with strong or rising RS lines. And keep updating. Adobe stock was one to watch, until Friday.

Maybe Tesla stock, Microsoft or even Apple will break down in the weeks ahead, or they could hold up relatively well and be among the next crop of leaders. That’s why this is a time to watch, not buy.

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

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

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The 200-Day Average: The Last Line Of Support?



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Dow Jones Futures Await Jobs Report After Market Rallies; DocuSign Dives; Tesla Rival Reports Booming EV Sales

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Dow Jones futures tilted higher Friday morning, along with S&P 500 futures and Nasdaq futures, erasing overnight losses with the November jobs report due. More states reported some omicron Covid cases while DocuSign tanked on weak guidance.




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The major indexes got a much-needed bounce Thursday, reclaiming key levels and shrugging off early Apple stock weakness and an FTC lawsuit vs. Nvidia. But the stock market rally remains under pressure.

D.R. Horton (DHI) and some other homebuilders flashed buy signals but generally there were few quality stocks offering attractive entries.

Meanwhile Tesla (TSLA) pulled back modestly on a bad day for EV makers. Lucid (LCID) and Rivian (RIVN) fell solidly. China-based Nio (NIO), Xpeng (XPEV), and Li Auto stock tumbled, with XPEV stock and Li Auto (LI) falling well below recent buy points intraday. The SEC said Thursday it’s moving forward on a law that requires foreign companies to open up their books to U.S. review or face delisting.

China EV giant BYD Co. (BYDDF) released booming November sales figures, dwarfing the sales of Nio, Xpeng and Li Auto. Unlike Nio stock, Li Auto and Xpeng, BYD trades over the counter in the U.S.

FTC Sues To Block Nvidia-ARM Deal

The Federal Trade Commission said Thursday afternoon that it will sue to block the $40 billion Nvidia (NVDA) takeover of U.K.-based ARM Holdings. Nvidia stock took the FTC-ARM news in stride, rising 2.2%. ARM designs wireless chips for Apple (AAPL) and many of Nvidia’s rivals.

Investors may have seen a high chance that regulators around the world would object to the biggest-ever chip deal.

DocuSign Dives, Marvell Rallies

After the close, Marvell Technology (MRVL), a chipmaker that’s been holding up well, reported earnings. So did Ulta Beauty (ULTA) and two former software leaders, Asana (ASAN) and DocuSign (DOCU). MRVL stock surged overnight, signaling a new high, while ULTA stock moved toward possible buy points. But ASAN stock and DocuSign tumbled in extended trade on weak guidance. Asana lost more than 10% while DOCU stock dived more than 30%.

Tesla and Nvidia stock are on IBD Leaderboard. Tesla stock, Nvidia and D.R. Horton are on the IBD 50. D.R. Horton also was Thursday’s IBD Stock Of The Day.

The video embedded in this article discussed Thursday’s market action and analyzed DHI stock, XPEV stock and Airbnb (ABNB).

Jobs Report

The Labor Department will release the November jobs report at 8:30 a.m. ET. Economists expect to see nonfarm payrolls up by 543,000 with the jobless rate edging down to 4.5%. It’s unclear if economists or investors want a “strong” or “weak” jobs report.

The most important job report data point may be labor force participation. If Americans stream back into the work force, that could ease labor shortages that are limiting economic growth while pushing up inflation via higher wages. The labor force participation rate is expected to tick up to 61.7% of all Americans age 16 and up.

Concerns about lasting inflation are a big reason why Fed chief Jerome Powell and other policymakers are signaling they could step up the pace of the bond taper, perhaps as soon as the Dec. 14-15 meeting.

The jobs report, based on mid-month surveys, won’t show any impact of the omicron Covid variant.

Even if omicron turns out to be no big deal from a health perspective, if it deters people from re-entering the labor force, it could have a meaningful impact on the economy.

In a best-case scenario, the omicron variant has little impact while workers flood into the labor force.

Dow Jones Futures Today

Dow Jones futures were 0.1% above fair value. S&P 500 futures rose slightly and Nasdaq 100 futures climbed 0.1%. All erased modest overnight lows.

Futures turned lower Thursday evening after New York reported five omicron Covid variant cases. Hawaii reported an omicron case Thursday night, saying it was the result of “community spread,” with the infected person not a recent traveler.

Minnesota reported an omicron case earlier Thursday after the CDC reported the first U.S. case, in California, on Wednesday.

Crude oil prices rose nearly 3% Friday morning.

The November jobs report will surely move Dow Jones futures and Treasury yields shortly before Friday’s open.

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

Stock Market Rally Thursday

The stock market rally had some early wobbles, at least on the Nasdaq, but picked up steam and closed near session highs.

The Dow Jones Industrial Average jumped 1.8% in Thursday’s stock market trading. The S&P 500 index climbed 1.4%. The Nasdaq composite advanced 0.8%. The small-cap Russell 2000 rose 2.8%.

Apple stock fell as low as 157.80 Thursday morning — well off Wednesday’s intraday peak of 170.30 — on a report that the Dow Jones tech titan warned suppliers that iPhone demand was weakening. But AAPL stock pared losses, closing off just 0.6% to 163.76.

U.S. crude oil futures rose 1.4% to $66.50 a barrel, rebounding from intraday losses as OPEC+ signaled it’ll go ahead with plans to slowly increase production vs. pausing due to the omicron variant impact. But the the cartel is ready to meet ahead of schedule if conditions change.  Still, oil prices have plunged since Thanksgiving.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 1.6%, as did the Innovator IBD Breakout Opportunities ETF (BOUT). The iShares Expanded Tech-Software Sector ETF (IGV) bounced 1.7%. DOCU stock and Asana are IGV holdings. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.3% as key holding Nvidia stock’s rise offset some other chip losses. MRVL stock also is an SMH holding.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) edged up 0.4% and ARK Genomics ETF (ARKG) 1.5%. Tesla stock remains the top holding across ARK Invest’s ETFs. ARK Invest also holds some BYD stock and has taken a new position in Xpeng.

SPDR S&P Metals & Mining ETF (XME) rebounded 2.3% and Global X U.S. Infrastructure Development ETF (PAVE) just over 3%. U.S. Global Jets ETF (JETS) soared 6.1% in a big day for travel-related stocks. SPDR S&P Homebuilders ETF (XHB) ran up 3.4%, with DHI stock and other builders powering higher. The Energy Select SPDR ETF (XLE) rose 2.9% and the Financial Select SPDR ETF (XLF) 3%.

Five Best Chinese Stocks To Watch Now

D.R. Horton Stock

DHI stock rose 5.1% to 102.78. Shares are now back in buy range after breaking out of a double-bottom base with a 99.75 buy point, according to MarketSmith analysis. Investors could view 104.44 as a handle entry as well.

Toll Brothers (TOL) and Century Communities (CCS) also cleared entries on Thursday, though luxury builder Toll reports next week. Lower interest rates are supporting builders, along with solid job and wage gains.

EV Stocks

Tesla stock lost nearly 1% to 1084.60 on Thursday, closing a fraction below its 21-day line. Shares reversed lower on Wednesday, losing 4.35%. But TSLA stock seems to be several weeks into a possible base. On Thursday, Elon Musk sold more than 934,000 Tesla shares worth just over $1 billion, according to overnight filings.

Rivian stock slid 4.25% to 110.77. It’s working on an IPO base, but is a long way from the 179.57 buy point. Lucid stock, after more than doubling from late October to the Nov. 17 peak, skidded 5.3% to 48.41, but found support near its 21-day. Fisker (FSR) sank nearly 4% to 18.99. FSR stock’s breakout from a 20.71 buy point has now failed.

China EV startups also weakened. Xpeng stock, which broke out on earnings late last month and hit a nine-month high Wednesday morning, tumbled 5.6% to 48.29. Shares closed just above their 48.08 buy point after rebounding near their 50-day moving average. Li Auto stock, another recent breakout that reversed from a nine-month high on Dec. 1, slumped 3.4% to 33.91. It’s now below a 34.93 entry, though it found support at its 21-day line.

Nio stock, the laggard, skidded 5.5%, losing sight of its 200-day line.

A move by the SEC on a delisting law, which essentially only affects U.S.-listed Chinese stocks, could have helped spur selling in Nio, Xpeng and Li Auto. The SEC announcement comes days after Beijing denied a report that it was gearing up to largely end the structure of most overseas listings of Chinese firms. As a practical matter, it could be years before delistings are an imminent threat.

BYD Sales Keep Soaring

China EV giant BYD reported 91,219 new energy vehicles sold in November, up 241% vs. a year earlier. That includes 46,137 EVs, up 153%, while plug-in hybrids shot up 500% to 43,984. That’s the sixth straight month that BYD has increased EV/hybrid sales by roughly 10,000.

Nio, Xpeng and Li Auto reported strong November deliveries on Dec. 1 but that didn’t help the stocks.

Toyota also reportedly will make a small EV car for the China market, using BYD Blade batteries.

BYD stock was not yet active Friday morning. On Thursday, BYDDF stock dipped 0.6%, still holding near record highs.

BYD stock, which is Hong Kong listed, largely moves during Hong Kong trading. However, the over-the-counter BYDDF stock presumably wouldn’t be affected by delisting concerns. XPEV stock and Li Auto both have a secondary listing in Hong Kong, with Nio soon to join them.

In related news, China ride-hailing giant Didi Global (DIDI) said late Thursday that it will delist from U.S. exchanges and list instead in Hong Kong. Didi came public in late June, but Chinese regulators almost immediately imposed major restrictions on Didi’s operations, part of an overall crackdown on private enterprise, but especially data-centric firms. Didi stock rose early Friday.

Why This IBD Tool Simplifies The Search For Top Stocks

Market Rally Analysis

The stock market rally got a bounce. The Dow Jones rallied back above its 200-day line while the Nasdaq and S&P 500 reclaimed their 50-day lines. The Russell 2000 remains below its 200-day.

A rebound wasn’t a huge a surprise, given the spike in volatility Wednesday.

It’s nice for stocks to go up and close near session highs. But it’s unclear how meaningful Thursday’s action was. After all, the market rebounded Monday following Black Friday’s initial omicron sell-off and volatility surge, but selling quickly resumed. If the major indexes were to fall back through Wednesday’s lows, it would be a very bad sign for the stock market rally.

Market breadth improved Thursday, but has deteriorated over the past few weeks.

There aren’t many good-looking charts right now after the recent whipsaw selling.

Energy and financial stocks bounced back, but are generally damaged. Travel-related stocks were big winners Thursday, but after huge losses in recent weeks.

Wednesday morning’s chip breakouts have largely fizzled, though they aren’t broken per se. Xpeng and Li Auto stock have had a chilly start to December.

Homebuilders and REITs look healthy, but if the market rally turns into a correction they’ll likely come under pressure. Alternatively, if the market rally strengthens and Treasury yields power higher, DHI stock and REITs may lag or even decline.

Software stocks are a mess. While Snowflake (SNOW) rebounded on earnings, many more have extended big sell-offs. DocuSign and ASAN stock are just the latest examples.

Time The Market With IBD’s ETF Market Strategy

What To Do Now

It’s still a market rally, albeit “under pressure,” and not a market correction, so investors don’t need to see a follow-through day. But the general concept — waiting for clear strength before moving seriously into the market — makes sense in the current environment.

One good day doesn’t signal a fundamental shift from the weakening market trend of the past few weeks. It’s better to wait for some follow up. For investors who waited for the mid-October follow-through to confirm the new market rally, there were still several weeks to take advantage of the solid uptrend.

As a practical matter, few stocks are flashing buy signals right now. And could you trust a morning breakout or buy signal to hold up by the close? On the flip side, you can’t count on stocks finding support, even though Apple stock did on Thursday.

It’s also unclear if some of the groups and sectors holding up the best right now would lead if the market revs highs.

Holding onto some long-term winners with overall modest exposure is a sound strategy for now. But overall, investors should still be thinking defensively.

The goal for active investors isn’t to try to make money in all markets, but to take advantage of rallies and minimize losses in corrections. If you want to be a big winner, be a small loser.

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

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

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