Dow futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures.
The stock market had a mixed week. On the one hand, the S&P 500 advanced, especially the Nasdaq, snapping a three-week losing streak. But the major indices suffered ugly setbacks on Thursday despite the blowout nvidia (NVDA) earnings and guidance. Stocks rebounded on Friday despite Fed Chair Jerome Powell’s hawkishness, but many blue chips are still hurting.
The attempt to bullish the market continues, but investors should remain cautious in the current environment, especially with technology names.
Nvidia stock rose strongly for the week, but came off its Thursday morning highs and faces a major test. Meanwhile, other chip and artificial intelligence companies incurred sharp losses.
Tesla (TSLA) jumped last week, hitting key levels.
Other stocks to watch: Meta platforms (meta), a Google parent the alphabet (Google) as well as the giants of the Dow Jones index visa (Fifth), Larva (cat) And Salesforce.com (Customer relationship management). Salesforce leads another big week for software earnings.
The video embedded in this article discusses major market moves and analyzes Nvidia, CAT, and Marsh and McLennan (MMC).
Dow jones futures today
Dow futures open at 6pm EST on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Remember that an overnight move in Dow futures and elsewhere does not necessarily translate into an actual trade in the next regular stock market session.
Trying to climb the stock market
An attempted rally in the stock market started the week strongly, but then pulled back on Thursday, with all the major indices facing resistance at their 50-day moving averages. Stocks rebounded on Friday despite Fed Chairman Jerome Powell’s hawkish Jackson Hole rhetoric.
The Dow Jones Industrial Average fell 0.45% in stock market trading last week. The Standard & Poor’s 500 Index rose 0.8%, and the Nasdaq Composite Index rose 2.3%.
The Russell 2000 small index fell 0.35%.
The yield on the 10-year Treasury fell by 1 basis point, to 4.24%. The 10-year Treasury yield reached a 15-year high of 4.36% on Tuesday, then fell to a low of 4.19% on Wednesday.
The two-year yield, closely tied to the Fed’s policy outlook, rose 12 basis points to 5.05%. The markets are now leaning towards another rate hike by the Fed by November 1st.
US crude oil futures fell 1% to $79.83 a barrel during the week. Copper futures rose 1.65%, ending a three-week decline.
Exchange Traded Funds
Among the growth ETFs, the Innovator IBD 50 ETF (FFTY) by 1.1% last week. iShares Expanded Tech Software Sector Fund (ETF)IGV) down 3%, and CRM stock was a major component. VanEck Vectors Trading Semiconductors Corporation (Traitrose 2%. Nvidia stock is the #1 stock in SMH.
SPDR S&P Metals & Mining Fund (XME) fell 1.6% last week. Global X US Infrastructure Development Foundation (ETF)cradle) increased by 0.5%. US Global Gates ETF (Planes) decreased by 1.7%. SPDR S&P Homebuilders ETF (XHB) decreased by 0.3%. Energy Select SPDR ETF (xle(Down by 1.4% and the SPDR Fund for the healthcare sector)XLV) decreased by 0.1%. SPDR Fund for Selected Industrial Sector (xli) increased by 0.3%, and CAT was the top stock.
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NVDA rose to take a profit, retracing the 50-day line and showing blinking buy signals. Nvidia’s earnings crushed views as the AI chip maker rose sharply again.
But after rising to a record high of 502.66 at Thursday’s open, Nvidia stock closed essentially flat. On Friday, shares fell 2.4% to 460.18, but found support at the 21-day line, just above the 50-day line.
Finally, NVDA stock jumped 6.3% for the week.
Maintaining these levels will be important for Nvidia but perhaps even more so for other AI games as well as the general market. If the burgeoning AI leader is struggling, what is the chance for other growth stocks?
Tesla shares jumped 10.7% to 238.59 last week, ending a three-week losing streak. The electric car giant is now sitting at the 21-day moving average. A move above the now declining 50-day line could provide an early entry in what could be a new base at the official buy point of 299.20. But a reversal off the 21-day line or the 50-day line may provide an opportunity to sell.
Buzz is developing an upgraded Model 3 and the next Tesla Cybertruck. But there are still a lot of unknowns about these vehicles, with Elon Musk pointing to production issues for the Cybertruck.
Meanwhile, Tesla continues to boost discounts in key markets, even as it restricted production somewhat in the third quarter. Finally, the National Highway Traffic Safety Administration says it’s close to ending its investigation into Tesla’s driver assistance systems, Autopilot and full self-driving, but it’s unclear if NHTSA regulators will take significant action against the electric car giant.
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Other stocks to watch
Google shares rose 0.1% to 129.88 last week, after briefly hitting a 52-week high. GOOGL stock is in a long range of 127.10 buying a cup with a handle, although investors may want to wait for a move above the past weeks of movement.
Meta rose 0.8% to 285.50, but hit resistance at the 50 day/10 week lines. META stock is now 4.2% below its 10-week line. This is a sell signal, although stocks haven’t completely reduced from the previous week’s lows. A decisive move above the 50 day line and the trend line would provide an early entry, but the Meta may need more time.
Visa shares rose 1.85% to 242.57 last week. The shares have a fresh buy point of 245.37 from a flat base that formed directly on top of another flat base. The fundamental pattern is especially bullish in volatile or weak markets. Investors can use the August 10 high of 243.95 as a slightly early entry.
Caterpillar fell 0.45% to 272.56, just below the 21-day line. Stocks have been consolidating this month, gradually declining in light volume after the strong breach. CAT could form a new base, and may find support at the 10-week line.
CRM rose 2.3% to 209.47 last week, but is facing resistance at the 21-day line, below the 50-day line. A decisive move above the 50-day line would create an early entry in what could be a new rule. Salesforce’s earnings are due Wednesday night.
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Market rally analysis
Thursday’s sharp reversal off the 50-day moving average was a serious blow to the market’s attempt to rally. However, Friday’s bounce was nice, but it continued the trend of upcoming gains due to light volume.
The picture looks a little better on the weekly charts. The Nasdaq made strong gains, albeit off its highs. The S&P 500 rose modestly and the Dow just fell.
However, the best that can be said is that the direction of the market is still not clear.
The attempt to rally in the stock market remains valid until the S&P 500 and Nasdaq indexes break their lows on August 18th. So investors should stay alert for the follow-up day. Ideally, the FTD would also include the retracement of the 50-day line after Thursday’s significant volume reversal from this key level.
The market breadth has weakened significantly in recent weeks.
And as space narrowed, so did leadership. Most of the tech growth processes look damaged and need at least a little repair time. Nvidia shares and key earnings from Salesforce.com, Broadcom (Avgo) and more will be key this week.
Home building companies are in danger of collapse.
Insurance brokers are doing well. Also, some construction, infrastructure, industrial, and medical product discounts are going well.
Energy is the best looking sector at the moment, but it’s on pause at the moment with Crude Oil prices.
Earnings reports and the September jobs report on Friday will be the headlines for the coming week. But stocks may continue to take cues from the bond markets.
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What are you doing now
Investors should have cut their exposure significantly in recent weeks, and there wasn’t much reason – or opportunity – for new buying.
This is the market show me. Until the attempt to rally the market proves itself with real force, investors should remain in wait-and-see mode.
A bounce to the 50-day line could herald buying or shorting opportunities, depending on what happens next.
So investors should prepare buy and short lists, as well as a broader list of stocks that are holding key levels and showing relative strength.
A market breakout below its recent lows would suggest that investors should reduce their exposure further, and even go entirely into the cash.
In other words, stay engaged, stay flexible, and be prepared.
Read the big picture every day to stay on top of the market trend, leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson For stock market updates and more.
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