Dow Jones futures will open Sunday night, along with S&P 500 and Nasdaq futures. Tesla Stock, Apple (AAPL), caterpillar (CAT) and a new solar IPO are in or near the buy zones.
The stock market rally took a dramatic turnaround at the weekend, with the S&P 500 and Nasdaq composite rebounding from key Thursday morning tests to the highest resistance levels on Friday. A large number of leading stocks issued buy signals.
The market rally has yet to sustain and extend recent gains, but investors should look to regain exposure.
Recent solar IPO Next Tracker (NXT) broke out on Friday, while the Dow Jones giant caterpillar (CAT), EV chipset On semiconductor (ON), Royal Caribbean (RLC) and Chinese e-commerce giant DP Funds (PDD) all flash early or aggressive inputs.
You’re here (TSLA) continues to pause near a potential breakout, while Apple stock has recovered to key levels, perhaps offering early entry.
The video embedded in the article analyzed a pivotal week for the market, while reviewing NXT stocks, Alteryx (AYX) and Caterpillar.
Nextracker and AYX actions are underway IBD classification. CAT stock is on the IBD Big Cap 20. Nextracker was Friday IBD stock of the day. The last New America AYX stock profiles.
Dow Jones Futures Today
Dow Jones futures open Sunday at 6 p.m. ET, along with S&P 500 and Nasdaq 100 futures.
Remember that overnight action in Futures contracts on Dow and elsewhere does not necessarily translate into actual trading over the next sotck exchange session.
Join the experts at IBD as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally traded tight to start the week, dipped at Thursday’s open, but then roared to close with robust gains.
The Dow Jones Industrial Average rebounded 1.75% last week stock market trading. The S&P 500 index rose 1.9%. The Nasdaq composite jumped 2.6%. The small-cap Russell 2000 jumped 2%.
The 10-year Treasury yield rose 1 basis point to 3.96%, but after falling 11 basis points on Friday. The 10-year yield hit 4.09% at Thursday’s high. Fed Chief Jerome Powell testifies before Congress on Tuesday and Wednesday, while the February jobs report is due Friday morning.
U.S. crude oil futures jumped 4.4% to $79.68 a barrel last week. Copper prices jumped 3.2%.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 3.8% last week, while the Innovator IBD Breakout Opportunities ETF (FIGHT) gained 4%. The iShares Expanded Tech-Software Sector ETF (VIG) rose 3.7%. The VanEck Vectors Semiconductor ETF (SMH) increased by 2.8%.
SPDR S&P Metals & Mining ETF (XME) climbed 9.8% last week. The Global X US Infrastructure Development ETF (PAVE) jumped 4.5%. US Global Jets ETF (JETS) increased by 4%. ETF SPDR S&P Home Builders (XHB) increased by 3.1%. The SPDR Energy Select ETF (XLE) rose 3.1% and the Financial Select SPDR ETF (XLF) rose 0.9%. SPDR Healthcare Sector Fund (XLV) edged up 0.5%, ending a nine-week losing streak.
Reflecting more speculative history stocks, ARK Innovation ETF (ARKK) rebounded 5.25% last week and ARK Genomics ETF (ARKG) increased by 4.5%. Tesla stock is a major component of Ark Invest’s ETFs.
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Stocks close to buy points
Nextracker stock rebounded 4.6% to 33.35 on Friday, capping a weekly gain of 10%. NXT stock broke off a IPO basis buying point of 33.05 on Friday, according to MarketSmith Analysis. The solar tracking and software company, which went public at 24 per share in early February, is profitable with already strong sales.
Several solar stocks are doing well, with First Solar increasing its earnings last week. Rival Nextracker Network technologies (ARRY) is not far from being liable to prosecution, while Canadian Solar (CSIQ) flirted with a buy signal.
CAT stock jumped 8.1% to 255.1 last week, regaining its 50-day line, offering early entry. As of Friday’s close, Caterpillar has a new flat bottom just above previous consolidations. THE point of purchase is 266.14. Several other machinery stocks are also showing strength.
RCL stock rose 5.5% to 74.02 last week, rebounding from the 21-day moving average. Royal Caribbean shares are highly valued deep base with handle dates back to last April. The buy point is 76.40, but Friday offered early entry. One problem: volume was light on Friday and for the week. A large number of travel stocks are showing bullish action.
ON shares jumped 3.49% to 78.94 for the week, but it was a wild ride. On Semiconductor, also known as Onsemi, dipped in its 50-day line on Thursday after key customer Tesla said it was aiming to reduce the use of silicon carbide in its next-generation vehicle. But ON stock only closed down 1.9%, then climbed higher on Friday to retake the 21-day line. On Semiconductor stock is back above a buy point of 77.38 and has yet to break above its 50-day/10-week lines. But investors should be aware that this is a volatile stock.
PDD stock jumped 14.3% over the week to 95.69, bouncing above the 50-day line in above-average volume. PDD Holdings is the parent company of Chinese e-commerce giant Pinduoduo as well as the new Temu site in the United States. Shares fell on February 21 as the biggest rival JD.com (J.D.) said it would increase spending to compete with the value-oriented Pinduoduo.
PDD stock offers an early entry into an emerging consolidation, which needs another week to build a proper base.
Apple stock rose 2.9% to 151.03 for the week, including Friday’s 3.5% gain to recover the 200 and 21 day lines. The iPhone giant has a buy point of 157.48 on a basis dating back to August. Aggressive investors could buy AAPL stock from its 200-day rally. But with a relatively low RS rating and uninspiring growth estimates, there may be a number of better choices. Nonetheless, Apple shares’ participation in the market rally is a positive for major indices.
Tesla stock fell below its 21-day line for the first time in weeks on Thursday but rebounded on Friday, ending the week up 0.5% at 197.86. TSLA stock stalled for a few weeks below the 200-day line after a huge run to start the year. Arguably, investors could use 217.75 as a handle buy point, although they should probably wait for Tesla stock to also clear the 200-day line, which is now below 221.
The electric vehicle giant has announced that it will build a factory in Mexico, which will produce its next-generation vehicle. But Tesla did not unveil a new electric vehicle at Wednesday’s Investor Day, saying that will come “later.”
Meanwhile, demand for Tesla appears to be waning again after an initial boost on January’s steep price cuts. Over the past few days, the electric vehicle giant has slashed European prices for in-stock Model 3 and Y vehicles by a further 6%.
Tuesday’s weekly electric vehicle registration data from China will be important in gauging demand in the world’s biggest electric vehicle market, which is in the midst of a massive price war launched by Tesla.
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Market rally analysis
The stock market rally marked a key turning point, with a big upside reversal at the end of the week.
On Thursday morning, the S&P 500 broke above its 200-day line. The Nasdaq was approaching its 50-day line while the Dow Jones was at a 2023 low. It’s no exaggeration to say that the market recovery appeared to be on its last legs.
By Friday’s close, the S&P 500, Nasdaq and Russell 2000 had moved above their 21-day moving averages, which had served as resistance for the past two weeks. The Nasdaq finally had an edge, outside of the week, adding to the change in bullishness.
Many leading stocks across various sectors issued buy signals late in the week, while others either positioned themselves or extended their earlier moves.
Chips, building materials, travel, housing, software, healthcare, machinery, e-commerce, automakers (not just Tesla stock), auto parts makers and more all do proof of strength.
Of note, the upward reversal of the market rally began with the 10-year Treasury yield well above 4%. That yield fell back below 4% on Friday, but has spiked over the past month.
It wouldn’t take much for the S&P 500 and Nasdaq to fall back below their 21-day lines and test major support. On the upside, the early February highs are the next big resistance area.
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What to do now
The market rally staged a dramatic comeback to end the week. Major indices are showing momentum, while major stocks are advancing. Broad participation and leadership is another bullish sign.
This is a good time for investors to open new positions. Don’t rush to increase exposure and make sure you’re not too focused. The market rally could easily falter again, so you don’t want to get caught making big bets on a single day or a single action. If this uptrend has real legs, it won’t take long to become “gradually” fully invested.
This is an important weekend to build your watch lists. Yes, many top stocks broke or posted early entries. But several are still within reach, while dozens more are about to be exploited.
Read The big picture every day to stay in tune with market direction and key stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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