Dow Jones futures fell modestly Monday night, along with S&P 500 futures and Nasdaq futures. Elon Musk and Tesla are in focus, along with Dow Jones giants Boeing and Apple.
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The stock market rally had a strong rebound last week after the major indexes and many leading stocks retreated to start 2024 but soon found support at key levels. A large number of stocks flashed buy signals, including a powerful breakout from Nvidia (NVDA), once again leading the overall market.
It’s been a good time to add exposure.
Nvidia stock is now extended, but fellow AI leader Microsoft (MSFT) is just above a buy point after a solid weekly gain, on the cusp of surpassing the market cap of fellow Dow giant Apple (AAPL).
Novo Nordisk (NVO) remains in a buy zone. MercadoLibre (MELI) and Tradeweb Markets (TW) flashed entries intraday.
Tesla (TSLA) had an ugly week, extending a recent sell-off and breaking key support levels. On Monday, Elon Musk suggested he wouldn’t develop “AI & robotics” at Tesla if he doesn’t get a lot more TSLA shares.
Apple is offering iPhone discounts of up to 5% in China, amid mounting concerns of slowing demand there.
Boeing (BA) said Monday it’s making new quality changes following the midair Alaska Airlines (ALK) incident on Jan. 5. The Dow giant faces new delays in 737 Max jets deliveries to China, The Wall Street Journal reported Monday, citing sources.
Nvidia and NVO stock are on IBD Leaderboard. MELI stock, Nvidia and Microsoft are on SwingTrader. MSFT stock is on IBD Long-Term Leaders. Nvidia stock, MercadoLibre, Novo Nordisk and Microsoft are on the IBD 50. Microsoft, Nvidia and MercadoLibre stock are on the IBD Big Cap 20.
The video embedded in the article discussed the market rally’s weekly action and analyzed Microsoft, MercadoLibre and NVO stock.
Dow Jones Futures Today
Dow Jones futures fell 0.3% vs. fair value. S&P 500 futures declined 0.4% and Nasdaq 100 futures lost 0.5%.
The 10-year Treasury yield rose several basis points to 4%.
Crude oil futures fell slightly.
A U.S.-owned cargo ship was struck by a missile off the coast of Yemen on Monday. That comes after U.S. and U.K. strikes on Houthi rebels in Yemen that have attacked vessels in the Red Sea, disrupting global shipping.
U.S. stock markets were closed Monday for the MLK holiday, but other exchanges around the world were open.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally got off to a strong start Monday and extended gains.
The Dow Jones Industrial Average edged up 0.3% in last week’s stock market trading, after briefly topping a record high on Friday. Boeing (BA), which tumbled nearly 13% on 737 Max woes, curbed the Dow’s gains.
The S&P 500 index popped 1.8%, hitting 52-week highs and coming within a few points of its all-time peak. The Nasdaq jumped 3.1%, rebounding from the 10-week line but hitting resistance at the 15,000 level. Neither is extended from the 50-day, suggesting they have room to run.
The small-cap Russell 2000 jumped Monday but ended the week flat, hitting resistance at the 21-day line. The Invesco S&P 500 Equal Weight ETF (RSP) held above the 21-day and near 52-week highs, but only rose 0.2% for the week.
That reflects weak breadth so far in 2024, the market rally’s most notable blemish.
But market leadership has been broad. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW), a rough proxy for growth, gained 2.1%. While lagging the Nasdaq 100, which jumped 3.2% thanks to Nvidia stock, Microsoft and other megacaps, QQEW had a solid performance.
The 10-year Treasury yield fell 9 basis points to 3.95%, back below the 4% level. The two-year Treasury yield, more closely tied to Fed policy, plunged 25 basis points to 4.14%. Fed rate-cut odds increased after the week’s big inflation reports.
U.S. crude oil futures fell 1.5% to $72.68 a barrel last week.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) rebounded 5.7%, with MSFT stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) rose 4.1%, with NVDA stock the largest holding. Both ETFs rebounded from their 10-week lines.
SPDR S&P Metals & Mining ETF (XME) fell 1.1% last week. U.S. Global Jets ETF (JETS) slumped 3.25%, plunging Friday on Delta Air Lines (DAL) guidance. SPDR S&P Homebuilders ETF (XHB) stepped up 2.2%. The Energy Select SPDR ETF (XLE) fell 2.4% and the Health Care Select Sector SPDR Fund (XLV) rose 1%, its ninth straight weekly gain.
The Industrial Select Sector SPDR Fund (XLI) edged up 0.6%. The Financial Select SPDR ETF (XLF) dipped 0.4%, continuing to trade tightly.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 3.1% last week and ARK Genomics ETF (ARKG) slumped 2.9%. Tesla stock is a major holding across Ark Invest’s ETFs. Cathie Wood bought more TSLA shares on Thursday.
Time The Market With IBD’s ETF Market Strategy
Stocks In Buy Zones
MSFT stock rallied 5.6% to 388.47 for the week, moving above a 384.30 buy point from a flat base, base-on-base pattern. During the week, Microsoft rebounded from the 10-week line and cleared some resistance to offer early entries.
Microsoft briefly topped Apple’s valuation on Thursday, but didn’t close ahead. Microsoft stock has a $2.887 trillion market cap vs. Apple’s $2.892 trillion. AAPL stock rose 2.6% last week, rebounding from the 200-day but below its 50-day.
NVO stock climbed 1.1% to 107.16, rising within a buy zone. Unlike most of the market, Novo Nordisk stock had a strong first week of 2024. Shares cleared the 105.69 flat-base buy point on Jan. 4. Fellow weight-loss drug giant Eli Lilly (LLY) also is in a buy zone.
MELI stock jumped 4.2% to 1,658.58, briefly clearing a 1,660 flat base, base-on-base buy point, according to MarketSmith analysis. For the week, MercadoLibre stock leapt 7.8%, rebounding from the 10-week line and offering some early entries.
TW stock rose 3.1% last week to 95.91, rebounding from the 10-week line. On Friday, shares hit 97 intraday, just shy of the 97.18 flat-base buy point. It’s actionable above 96.10.
EV King To Unveil Driver-Assist Systems, Enter Major Market
Tesla Stock
Tesla stock has had mammoth runs and could again. But it’s a bad stock now. Shares tumbled 7.8% to 218.89 for the week, knifing through the 50-day and 200-day lines. The relative strength line, which tracks a stock’s performance vs. the S&P 500, is at its lowest levels since May.
In the past week, Tesla cut prices in its strongest market and announced plans to suspend production at its Berlin plant for two weeks. Hertz (HTZ) is dumping many of its EVs at cut-rate prices, largely Tesla vehicles, citing weak demand and high repair costs.
On Monday, CEO Elon Musk said on his social site X that he is “uncomfortable” making Tesla “a leader in AI & robotics” unless he gets 25% voting control of TSLA stock. Musk tweeted recently that “Tesla is an AI/robotics company.”
Musk owns 13% of Tesla.
What To Do Now
The market rally has been acting great. Stocks fell to start 2024, but the S&P 500, Nasdaq and leading stocks found support where you’d expect. The pullback was enough to quickly forge some bullish pullbacks and handles, but not so deep as to cause serious damage.
Investors could have held through the early selling or taken some profits. Either way, there were a number of opportunities to add exposure last week.
Meanwhile, many stocks are setting up new consolidations, often just above or at the top of deep bases. So work on your watchlists.
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