March 29, 2023

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What to do when the S&P 500 breaks the ultimate support; Elon Musk is ‘open’ to buying SVB Financial | Business Investor Daily

The stock market suffered huge losses last week SVB Finance (SIVB) crashed and eventually collapsed. SIVB stock, along with Crypto Bank Silvergate Financial (SI), caused huge losses to bank stocks.

West Coast Finance Like First Republic Bank (FRC) And Western Alliance Bancorp (WAL) were particularly hard hit, however signature bank (SBNY) And Charles Schwab (SCHW) was a big loser, too. c. B. Morgan Chase (JPM) Found support on Friday.

Major indices were sold off hard, and broke several support areas during the week as many blue-chip stocks were also pressured. Treasury yields fell, with a significant change in the pace of the Fed’s rate hikes.

Dow futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures.

Amidst a weak, volatile and uncertain market, investors should not make new bargain deals and should be largely or entirely in cash. But watch for stocks that are holding close to buy points. Palo Alto Networks (Banu), the parent on Facebook Meta platforms (meta), Ulta Beauty (Ulta), Harmonious energy systems (MPWR) And United Airlines (UAL) are five stocks showing strength near buy points. PANW stock formed the handle of a long consolidation process, while META stock has a new flat base. ULTA stock is finding support on the key levels. Monolithic Power is working on a long cup base with a handle while UAL stock has pulled back from overbought territory.

while, apple (AAPL) has a new flat base too. Tesla (TSLA) sold off heavily last week, but found support at the 10-week line on Friday. TSLA stock is far from a viable one.

But keep an eye on the financials, such as FRC stocks, WAL, SBNY, and SCHW, as well as the XLF Financial ETF and the KRE Bank Regional ETF. But also pay attention to corporate giants like JPMorgan. JPM stock fell sharply last week, but rebounded on Friday.

Insulate (PODD) will replace SIVB stock in the S&P 500 before Wednesday’s open. PODD stock jumped Friday night.

PANW inventory is on file IBD Leaderboard Watchlist. The MPWR stock is listed on the IBD Long-Term Leaders Watch List. Monolithic Power, United Airlines, and ULTA stocks are in defect 50. Meta Platforms was IBD Stock for Friday.

The video embedded in this article discussed market action in depth while analyzing JPMorgan Chase, Palo Alto Networks, and META stocks.

FDIC’s Big SVB Weekend

The Federal Deposit Insurance Corporation, state regulators SVB and Silicon Valley Bank closed on Friday. Now the FDIC has a weekend to see what comes next. Will there be a quick buyer for SVB? Presumably, insured depositors will regain access to their funds on Monday. But what about uninsured deposits?

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About 87.5% of the $126 billion in Silicon Valley bank deposits as of December 31 exceeded the FDIC insurance limits. late friday, Rocco (ROKU) that $487 million, or 26% of the cash, is held with SVB, with these “largely uninsured” deposits. Roku stock fell hours later.

Hundreds of companies, including many venture capital and technology startups, have deposits or business relationships with Silicon Valley Bank.

Tesla CEO Elon Musk tweeted that he was “open to the idea” of buying a Twitter SVB and turning it into a digital bank. Musk said he wants to make Twitter a big payments player.

Dow jones futures today

Dow Jones futures 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 does not necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze leading stocks and market conditions on IBD Live

Weekly stock market action

The stock market started bullish but quickly reversed lower with big losses on fears of a Fed rate hike and later the closing of SVB Financial and Silvergate.

Stocks rebounded twice on Friday as Treasury Secretary Janet Yellen expressed confidence in a “resilient” banking system. But the positive momentum quickly faded.

The Dow Jones Industrial Average fell 4.4% in trading last week. The S&P 500 sold 4.55%. The Nasdaq Composite fell 4.7%. Small Capital Russell 2000 decreased by 8%.

Apple stock fell only 1.7% during the week to 148.50, and settled above the 200-day line. But this is after reversing from Monday’s high of 156.30, to roughly hit 157.48 AAPL buy point.

The 10-year Treasury yield fell 29 basis points to 3.69% last week, after hitting a 2023 high of 4.09% on March 2. points on Thursday and Friday.

US crude oil futures fell 3.8 percent to $76.68 a barrel last week, but rose on Friday.

Exchange Traded Funds

Among the ETFs, the Innovator IBD 50 ETF (fifty(down just over 6% last week, while the Innovator IBD Breakout Opportunities ETF)fit) decreased by 3.4%. iShares Expanded Technology and Software ETF (IGV) gave up 5.7%. VanEck Vectors Semiconductor Corporation (SMH) fell 3%, with MPWR SMH owning shares.

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Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark) down 10.9% last week and the ARK Genomics ETF (ARKG) 11.4%. Tesla stock is a major holding via Ark Invest ETFs. The TSLA index fell 12.3% for the week, amid fresh rate cuts and safety investigations. But stocks rose on Friday.

SPDR S&P Metals & Mining ETFs (XME) sold by 11.1% last week. Global Infrastructure Development Fund X US (cradle) declined 7.1%. US Global Gates Foundation ETF (Planes) was down 4.8, with UAL stocks being a major component. SPDR S&P Homebuilders ETF (XHB) stepped down 4.85%. Energy Defined Fund SPDR ETF (xle) gave up 5.3%. SPDR Health Care Sector Selection Fund (XLV) rose by 3.85%, to the lowest level since October.

SPDR Financial Choice Fund (XLF) fell 8.5%, with large holdings of JPMorgan and SCHW shares. SPDR S&P Regional Banking ETF (KRE) by 15.7%, the worst weekly loss since the Covid crash in March 2020. Notable components are SIVB stock and Western Alliance.

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Market analysis

The stock market suffered devastating losses last week, as major indices sold off hard and broke through multiple support levels. Indicators attempted to bounce back from early losses on Friday, turning positive briefly, before retracing to fresh lows.

The S&P 500, Nasdaq Composite, and Russell 2000 fell through the 21-day lines early in the week and finished decisively below the 50-day and 200-day moving averages. The S&P 500 and Russell 2000 finished Friday without closing the follow-up day on January 6.

The Dow Jones index was at its worst level since early November.

Federal Reserve Chairman Jerome Powell’s signal that he favors “faster” rate hikes hit the market on Tuesday and Wednesday. But SVB financial and cryptocurrency bank Silvergate Capital rocked the banks late in the week.

A recovery attempt failed on Friday morning as the FDIC declared SVB Financial a failure.

If bank contagion fears grow, it will be grim for Wall Street and the economy. However, if SVB Financial’s problems are seen as isolated and broader banking concerns quickly dissipate, it could restore overall market confidence. But that would also likely send Treasury yields and the dollar higher, while also increasing the odds of a Fed rate hike.

The odds of a half-point rate hike from the Fed rose from 30% on Monday to more than 80% following Fed Chair Powell’s testimony, then fell below 40% on Friday.

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All this uncertainty adds to fears of a hard landing, either by a banking crisis or because the Fed overdid it on interest rate increases.

Blue-chip stocks were also sold off aggressively. A number of names were held up for most of the week, but most of those were struggling by Friday’s close.

Until Thursday, Friday’s jobs report and the highly anticipated March 14 CPI inflation report looked like headline events. And they are still important. The relatively weak CPI inflation rate may give Fed Chairman Powell and his colleagues the excuse they need to raise interest rates by just a quarter point.

But in the very near term, Wall Street is likely to follow suit from the banking sector. So pay attention to the banks, from the biggest recent losers like First Republic to large-scale ETFs and relative dealers like JPM Stock.

JPMorgan was the second best stock in the S&P 500 on Friday, though SBNY, First Republic and Schwab were the worst performers. This is a sign that investors see JPMorgan as being relatively safe. But if JPM stock breaks its lows last week, that would be worrisome.

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What are you doing now

The stock market is selling off amid bad news and heightened uncertainty.

This is not a healthy environment. Investors will have to be largely or entirely on the sidelines, waiting to see how that plays out. If conditions clear up in a few days or weeks, new buying opportunities will emerge.

Build your watchlists with a focus on stocks that show strong relative strength. If they’re near potential buy points like META stock, Monolithic Power, or Palo Alto, great. But this is not the priority now.

Read the big picture every day to stay in sync with the market trend, leading stocks and sectors.

Please follow Ed Carson on Twitter at @tweet For stock market updates and more.

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