Dow Jones futures open Sunday evening, along with S&P 500 futures and Nasdaq futures. Massive Hamas attacks on Israel and the prospect of a major Israeli retaliation could weigh on futures and financial markets on Monday.
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After some struggles for much of the past week, a new stock market rally led to a rally on Friday. Major indices turned upside down and many stocks exhibited buy signals.
nvidia stock, Meta platforms (Meta), Arista Networks (Aneta), Qualis (QLYS), Rat Lily (LLY), CME Group (CME), Vertive Holdings (VRT), CrowdStrike Holdings (CRUD), Cadence design settings (CDNS) and Palo Alto Networks (PANW) is one of those who remove buying points or initial entries. All have relative strength lines at or near highs, reflecting strong performance against the S&P 500.
With those 10 shares, Tesla (D.S.L.A) rebounded from key support on Friday and rose for the week despite a flurry of bad news.
Investors should prepare their watch lists this weekend and gradually add exposure if the market continues to perform well.
Nvidia (NVDA), LLY Stack, Arista Networks, Vertiv and Meta platforms are in operation IBD Leaderboard, Tesla stock is on the leaderboard watch list. PANW stock and meta platforms are available on SwingTrader. CDNS stock is among IBD’s long-term leaders. Meta Stack, Nvidia, Qualis, Arista Networks, Cadence Design, Palo Alto Networks, Tesla and Eli Lilly IBD 50. Nvidia, Tesla, Palo Alto and ANET have shares IBD Big Cap 20.
Eli Lilly Friday’s IBD Stock of the Day, Crowdstrike, Arista Networks and PANW stocks were also picked for the week.
Hamas attacks Israel
The Palestinian group Hamas launched a series of brutal attacks on Israel on Saturday, firing thousands of missiles and forces across much of the country’s south, deliberately killing hundreds of civilians and taking dozens of hostages. Israeli Prime Minister Benjamin Netanyahu has declared war on Hamas, with the possibility of a major retaliation in the coming days and weeks.
This will strain relations between Israel and Saudi Arabia. Saudi Arabia has told U.S. officials it could increase oil production next year as part of Saudi Arabia’s recognition of Israel as part of a possible goodwill gesture to fix a U.S.-Saudi defense deal with Congress.
All this could shake up financial markets on Monday, especially crude oil.
Dow Jones Futures Today
Dow Jones futures open Sunday at 6 PM ET, 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.
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Stock market rally
The stock market struggled for much of the week as the Dow Jones and S&P 500 pared recent lows and ended their rally attempts. But the Nasdaq rally effort continued. On Friday, the major indices turned upside down with higher gains, with leading stocks gaining momentum.
The Dow Jones Industrial Average fell 0.3% in last week’s stock market trading. The Dow fell again on Friday morning, but later rallied to a 0.9% gain. The S&P 500 index rose 0.5%, recovering from a 40-week line on Friday. The Nasdaq composite rose 1.6% on Friday and for the week, pushing above a 21-day line. The small-cap Russell 2000 fell 2.1% after hitting a five-month low on Tuesday.
Market breadth was positive on Friday, but the general trend has been very weak for weeks or months.
The 10-year Treasury yield rose 21 basis points to 4.78%, but touched a peak of 4.89% early Friday. The 10-year bond yield rose several basis points on Friday, but the dollar retreated for a third straight session.
US crude oil futures fell 8.8% last week to settle at $82.79 a barrel. Gasoline futures fell 8.6% last week and have fallen more than 19% over the past three weeks. They hit their all-time low in 2023 during the week.
ETFs
Among growth ETFs, the innovator IBD 50 ETF (FFTY) advanced 0.5% last week. iShares Expanded Technology-Software Sector ETF (VAT) rose 2.2% and retook the 50-day line. Cybersecurity CRWD plays a role, Qualis and Palo Alto are all IGV members. VanEck Vectors Semiconductor ETF (SMH) rose 2.3%, with Nvidia shares the No. 1 holding. CDNS stock is in SMH and IGV.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) fell 1.2% last week and the ARK Genomics ETF (ARKGfell 5.7%. Tesla shares are the No. 1 holding across Arc Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) fell 3.2% last week. Global X US Infrastructure Development ETF (sidewalkdecreased by 0.4%. US Global Jets ETF (JETS) decreased by 1.5%. SPDR S&P Homebuilders ETF (XHBdecreased by 2.1%. Energy Select SPDR ETF (XLE) sold 5.2% and the Health Care Sector SPDR Fund (XLV) rose 1%, with LLY stock being a notable member. Industrial Select Sector SPDR Fund (XLI) fell 0.6%.
Fund Selection SPDR ETF (45CME shares fell 0.4%, with one member.
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Nvidia shares rose 2.4% to 457.62 on Friday, up 5.2% for the week, clearing the 50-day line and providing an early entry. At Friday’s close, NVDA stock hit a new low of 502.66 with a buy point. Shares fell on Friday night, The Information reported Microsoft (MSFT) Nvidia will introduce an AI chip next month to reduce reliance on GPUs.
Meta stock rose 3.5% to 315.43 on Friday, off a 310.64 cup-with-handle buy point and a 312.87 entry.
Arista shares rose 3.2% on Friday and 45.5% for the week to 194.02. Shares allowed an initial entry of 189.90. ANET stock now has a flat base with a buy point of 198.70.
Eli Lilly stock rose 4.4% from its 50-day line on Friday to 565.22 and moved above its 21-day moving average. This provided a new buying opportunity. LLY stock fell below its 50-day line on Tuesday but recovered it on Thursday. Eli Lilly staged a bullish outing for the week.
Qualys stock rose 4% to 160.97 on Friday, touching short-term resistance at 155 and a recent 52-week high of 157.88. That latest area could be seen as a flat floor in effect or a handle for the floor going into September 2022.
CrowdStrike stock rose 6.9% to a high of 176.69 on Friday, snapping months of confusing consolidation from a 21-day streak. However, CRWD stock closed 11.4% above its 50-day line.
Palo Alto stock rose 4.2% to 246.69 on Friday, bouncing back from near the 50-day line and clearing some short-term positions. PANW stock has a consensus buy point of 258.88. However, investors can use a trendline around 254.23 or 250 as further early entries.
CME stock rose 4.85% to 211.93 in a big week that dipped in the past two months of trading. On Thursday, the stock broke above the 50-day line. On Friday, shares cleared a flat-base buy point of 209.31, according to MarketSmith analysis.
Vertiv shares rose 6.9% on the week to 39.77, including a 4.2% gain on Friday. Shares rose from the 21-day and 10-week lines, while clearing short-term positions, providing an early entry. VRT stock, one of the big winners of 2023, now has a new flat base with a buy point of 40.41.
Cadence Design stock rose 3.9% to 243.95 on Friday, rebounding from a 50-day line and breaking a bearish decline, giving it an early entry. CDNS stock is working on a 247.50 cup-with-handle buy point.
Tesla stock
Tesla shares rose 4.1% on the week to 260.53. On Wednesday, the stock rose 5.9% and rose above the 50-day line, giving an early entry. Shares fell back to the 50-day line on Friday morning, but rebounded for a small gain. A move above Thursday’s intraday high of 263.20 could provide a fresh early entry from breaking a bearish on the handle. Tesla stock has a cup-with-handle base of 278.98.
Tesla showed surprising strength, delivering seemingly bad news. Earlier Monday, Tesla’s third-quarter deliveries fell more than expected. On Monday night, Tesla introduced a new, lower-priced Model Y that’s $3,750 cheaper than the previous base variant. Late Thursday, Tesla cut Model 3 and Model Y prices in the U.S., along with Model Y cuts in Norway.
Bulls look to the updated Model 3, which will begin deliveries soon in China and Europe, as well as the upcoming Cybertruck and more speculative long-term bets on self-driving, AI and robotics.
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What to do now
The stock market’s rally attempt showed decent action to close the week, with major indices turning upside down on Friday and a large number of leading stocks flashing buy signals.
Investors may have added some exposure on Friday. If the market continues to perform well, continue to move out of cash, but do so gradually.
Remember that stocks rallied on Friday as Treasury yields came higher, but the rally in market rates continues. If the 10-year Treasury bond yield closes at 5%, it’s easy to imagine the major indexes bending again.
So be ready to pull back if the market or your positions start to falter.
But this weekend is the time to prepare. Make sure your watch lists are up to date. Pay special attention to stocks that are viable or nearly so.
In the coming week, investors will receive CPI and PPI inflation reports. Earnings season begins, with JP Morgan Chase (JPM), United Health (UNH) and Delta Air Lines (DAL) among leaders.
Read the big picture every day to stay in tune with market direction and leading stocks and sectors.
Follow Ed Carson on X/Twitter @IBD_ECarson and texts @edcarson1971 For stock market updates and more.
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