The Market Rally Is Threatened; Buffett, Musk, and S&P 500 Futures Open Sunday EveningFutures on the Dow Jones, S&P 500, and Nasdaq are also available.Elon Musk’s most recent move against Twitter, Warren Buffett’s holdings of Occidental Petroleum, and three popular video games are all under discussion.

The stock market’s rally appears to be picking up steam this week. The 10-year government bond yields, however, are steadily increasing to long-term highs, which could hinder the market’s uptrend. On Tuesday morning, the August consumer price index will be made public.

With Berkshire Hathaway (BRKB) announcing a 26.8% equity investment in Occidental Petroleum (OXY) at the end of Friday, Warren Buffett has more to do with the stock of the company. After a recent breakout last week, OXY stock prices increased late on Friday.

Elon Musk, CEO of Tesla (TSLA), has presented a fresh justification for walking away from the $44 billion purchase of Twitter. Shareholders of Twitter (TWTR) will vote on Musk’s proposal this week. Despite significant gains made during the brief holiday week, TWTR shares modestly declined late on Friday. Tesla stock increased above important levels once again, perhaps providing an aggressive entry.

Meanwhile, three software stocks—Cadence Design Systems (CDNS), Palo Alto Networks (PANW), and Pay Location (PCTY)—show strength, establish buy signals, or blink.

PCTY shares are on the Leaderboard watchlist while PANW shares are on the IBD Leaderboard. Listed on IBD Long-Term Leaders are CDNS equities. The TSLA stock is listed on the IBD 50. On the IBD Big Cap 20, Cadence Design Systems and OXY shares are listed.

Today’s Dow Jones Futures

At six o’clock, Dow Jones futures are open. Sunday’s S& P 500 futures, Nasdaq 100 futures, and ET.

Remember that overnight trading in Dow futures and other markets does not always translate into actual trading during the following regular trading session.

The stock market is rising.

In last week’s stock market trade, the Dow Jones Industrial Average increased 2.7%. The S &P 500 index increased by 3.65%. 4.1% more people bought Nasdaq stock. The Russell 2000 small-cap index increased 4%.

On Friday, the S& P 500, the Nasdaq composite, and Russell 2000 all crossed that critical level, but the Dow Jones finished slightly below the 50-day moving average.

The major indices have some time left until they encounter the 200-day moving average. Leading stocks could therefore see significant gains during that time.

The major indices should all quickly fall back below their 50-day lines or last week’s lows, though.

https://research.investors.com/ibdchartswp.aspx?cht=pvc&type=daily&symbol=0ndqc

 

Treasury Proceeds

The interest rate on government bonds is a significant issue. Last week, the 10-year Treasury yield increased 13 basis points to 3.32%. The benchmark index has increased for six weeks running, hitting an 11-year high on June 16 of 3.48%.

Despite rising government bond yields, the market continued to advance, but it is clear that equities will have trouble in 2022 as yields climb. Some of that can be attributed to higher rates, which increased demand for the dollar, which on Friday fell from long-term highs.

On Tuesday, the Ministry of Labor will publish the consumer price index for August. After being unchanged in July, analysts anticipated that consumer prices would decrease by 0.1% from the prior month, with declining fuel costs playing a significant role. From 8.5% in July, the overall CPI inflation rate should drop to 8%. For a second month, an increase in core consumer prices of 0.3% is anticipated. Core inflation, which is driven by fast rising rents, may increase to 6.1% from 5.9% in July.

The Federal Reserve will likely raise interest rates by 75 basis points for a third straight meeting on September 21 despite a weak inflation report. But it might raise hopes for future rate increases to proceed more slowly. On the other hand, a strong inflation poll might raise expectations for rate rises and government bond yields.

Elon Musk’s New Reason To End The Twitter Deal

Elon Musk, the CEO of Tesla, added a new justification on Friday evening to justify keeping the $44 billion Twitter takeover agreement in place. He contends that the severance payment made to Peiter “Mudge” Zatko, a whistleblower, was unusual.

The five-day Musk-Twitter trial is scheduled to start on October 17, although it’s uncertain if that assertion will have any success in Delaware’s Chancery Court.

Late on Friday, shares of Twitter fell 1.3%. However, this comes after TWTR stock increased 9.2% to 42.19 last week, which is still significantly less than the $54.20 Musk promised to pay.

On Tuesday, shareholders of Twitter will vote on Elon Musk’s proposal.

Tesla stock increased 10.9% last week to reach 299.68, bouncing back from the 50-day line and regaining the 200-day line. Shares of the EV behemoth may be a risky entry. Investors may want to hold out until TSLA stock prices surge over 300 or reach the recent high of 314.64 on August 16.

Warren Buffett Buys More Occidental Petroleum Stock

Berkshire Hathaway, owned by Warren Buffett, increased its position in Occidental Petroleum (OXY) from 20.2% to 26.8%. In a filing with the SEC on Friday night, Berkshire made the declaration.

Late on Friday, OXY shares increased.

Berkshire has been granted permission by the Federal Energy Regulatory Commission to acquire up to 50% of Occidental Petroleum. Occidental shares increased from a buy price of 66.26 to 77.13 following the news on August 19. But late last week, the stock reversed that breakout. OXY stock increased 1.55% on Friday to reach 65.61, finding support at the 50-day line.

Software stocks to monitor

Shares of CDNS increased 3.9% last week to reach 174.68, overtaking the 50-day moving average from Friday but remaining well below the 10-week line. From mid-June to mid-August, the price of the chip design software maker’s shares increased significantly, clearing early registrations beyond the 200-day threshold. But since reaching 194.97 on August 16, shares of Cadence Design have dropped. This week, a move over the 21-day line might signal a chance to purchase from the 50-day moving average.

Palo Alto’s stock increased 4.7% last week to reach $564.77, finding support at the 50-day line and reclaiming the 200-day line. MarketSmith’s analysis shows that PANW stocks are moving toward a 578.89 head-to-hand purchase point. But on Friday, the cybersecurity company reversed a downward trend in the handle, making it possible now.

The price of Paylocity equities increased 9.6% last week, taking back the 21-day line after briefly rising over the 10-week line. It is now able to be executed. After a profit gap, the current consolidation may be seen by investors as a handle in a broad 10-month base. That handle might serve as a solid base for PCTY stocks in a week. The official point of sale is $276.98, though.

  • For daily updates on market direction, top stocks, and industry sectors, see The Big Picture.
  • For market updates and other information, follow Ed Carson on Twitter at @IBD_ECarson.

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