Stock Market Struggles Ahead of Looming Huge Earnings

The tech industry is experiencing a severe decline, which has been negatively impacting the stock market. In the upcoming week, GE Aerospace, Tesla, ServiceNow, and Alphabet, the parent company of Google, will all be releasing their earnings results. Amid issues with chips, the CrowdStrike IT failure, and other issues, the Nasdaq fell and the S&P 500 fell. Along with many other leaders, Nvidia sold off.

Although they are not within the purchase range, GE, Google, and ServiceNow are close to being actionable. Elon Musk’s endorsed previous president Donald Trump promised to take back EV standards, which sent Tesla stock plunging on Friday. For the tech industries—which include business software, cloud computing, internet advertising, and artificial intelligence—the earnings reports will be crucial.

During last week’s stock market trading, the Dow Jones saw a 0.7% increase, but after reaching a record intraday high on Thursday, it nearly dropped to weekly lows. The Russell 2000 small-cap index rose 1.7% on Wednesday, although it was still far behind its multiyear high. The S&P 500 index lost 2%, breaking below its 21-day trend line following Tuesday’s record high. The Nasdaq fell 3.65%, well below its 21-day moving average. It was 8.9% above that crucial level on July 10 and is currently only 1.7% above its 50-day moving average. Although the 50-day line might offer assistance, the Nasdaq is not guaranteed to stop there.

The Innovator IBD 50 ETF (FFTY), a growth ETF, saw a 4.7% selloff last week. ServiceNow stock was a major position in the iShares Expanded Tech-Software Sector ETF (IGV), which saw a 2.8% decline. CrowdStrike was also a member. The largest component of the 9.6% decline in the VanEck Vectors Semiconductor ETF (SMH) was Nvidia shares.

The ARK Innovation ETF decreased by 0.4% while the ARK Genomics ETF increased by 0.2% last week, respectively, reflecting more speculative story equities. The top holding in all of Ark Invest’s ETFs is Tesla shares.

Tesla’s stock closed at 239.20 on Friday, down 4% from its peak on July 2. Despite this, the price is still above its 21-day moving average. After a big run-up, the stock of Tesla saw a relatively mild weekly decline of 3.6%, trading inside the previous week and exhibiting positive movement. On a consolidation that spans many months to a year, Tesla has a 271 handle purchase point.

During his GOP nomination speech on Thursday night, former President Donald Trump promised to repeal the national EV mandate. Even if California and a few other blue states have their own EV mandates, eliminating the mandate would probably benefit Tesla by lessening competition. Trump has said in the past that he supports eliminating EV subsidies, which would probably be detrimental to Tesla.

EV behemoth BYD recovered a 30.84 buy point on Friday, rising 1.7% to 31.06. Musk has firmly backed Trump and is contributing large sums of money to a Super PAC that supports him. When Tesla reports on Tuesday night, revenue may slightly increase but profitability are expected to drop significantly.

In order to time the market using IBD’s ETF Market Strategy, now is not the best time to make any fresh purchases, particularly because earnings are starting to rise. Eliminate losers as soon as possible to help lower total exposure. The bright side is that there is more room for significant upward reactions now that tech leaders are not priced to perfection going into the busiest part of earnings season.