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Dow Jones Futures: Bullish market trend, but Fed meeting approaching; See Tesla, Nvidia, Biogen




Dow Jones futures open Sunday night, along with S&P 500 futures and Nasdaq futures. Tesla, Nvidia, On Holding, Biogenic (BIB), Oracle (ORCL), Boeing (BA) and larva (CAT) are stocks to watch. But the focus will be on the Federal Reserve meeting amid two major inflation reports.




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The stock market rally extended last week, although it slowed somewhat after Wednesday. The major indexes rose slightly for the week, with the Nasdaq and S&P 500 right on top for 2023. But small caps and midcaps had another solid gain, with market breadth trending higher, despite losers leading Friday.

With the Fed meeting on tap and the Nasdaq still close to being extended, investors have reason to be cautious right now with new purchases, especially in hot tech sectors. But some stocks continue to flash buy signals.

On holding (ON) made a bullish move on Friday. Nvidia (NVDA) has forged a new point of purchase. Can Tesla (TSLA) continue their winning streak? A pause or pullback would be normal for Tesla stock, and perhaps help the Nasdaq cool down.

ORCL stock is extended, but Oracle earnings late Monday could provide a measure of business software and AI. Glowing Adobe (ADBE) reports later in the week.

Biogen’s Alzheimer’s drug wins key vote

Late Friday, an FDA advisory panel unanimously recommended approval for Biogen’s Alzheimer’s drug Leqembi.

BIIB shares jumped 6.2% to 328 in late trade after being halted during Friday’s regular session. It signals a breakout from a brand new flat base, which is part of a base-on-base formation. The buy point is 319.74,

Shares rose 2.9% to 308.88 in the week through Thursday, rebounding from the 50-day line and breaking a downtrend on hopeful signs for the advisory panel’s vote. It offered an early entrance.

Eli Lilly shares rose 0.1% on Friday, largely untouched by the FDA advisory panel’s vote just before the close. FDA approval of Biogen’s Leqembi should be good news for Lilly’s experimental Alzheimer’s treatment donanemab. The LLY share has consolidated near highs in recent weeks.

Meanwhile, investors should keep their eyes on industrial stocks. Many are setting up or in buy ranges, including Dow giants Boeing and Caterpillar shares.

Tesla shares and Nvidia are on the IBD Leaderboard, with ONON shares added to the Leaderboard watch list on Friday. The BA share was added to SwingTrader. Tesla and ORCL shares are on the IBD Big Cap 20. On Holding was Friday’s IBD Stock Of The Day.

The video embedded in this article reviews market action over the past week and analyzed On Holding, Boeing and Nvidia stocks.

Cool meeting

Markets expect policymakers to leave interest rates unchanged at the end of their Fed meeting on 13-14. June, but it is not certain. The CPI inflation report for May is due Tuesday morning, with producer prices out early Wednesday. They may tip the scales right before the Fed meeting announcement.

Assuming the Fed stands firm, there could be a “hawkish” pause. The Fed meeting statement and Fed chief Jerome Powell are likely to emphasize the possibility of renewed rate hikes at a subsequent meeting. In fact, the markets are leaning towards a Fed rate hike in late July.

Dow Jones Futures today

Dow Jones futures open at 6 PM ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session.


Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live


Stock market rally

The share price rise showed broad progress for the week, although the indices and various sectors did not move in lockstep during the week.

The Dow Jones Industrial Average rose 0.3% in last week’s trading. The S&P 500 index rose 0.4 percent. The Nasdaq composite rose 0.1 percent. The small-cap Russell 2000 rose 1.65%.

The 10-year government yield rose 5 basis points to 3.74%.

US crude oil futures fell 2.2% to $70.17 a barrel last week. Copper futures rose 1.8%.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF ( FFTY ) rose 1.1% last week, while the Innovator IBD Breakout Opportunities ETF ( BOUT ) rose 1.9%. The iShares Expanded Tech-Software Sector ETF ( IGV ) closed a fraction higher, with Oracle stock a notable component. The VanEck Vectors Semiconductor ETF ( SMH ) rose 0.5%, with Nvidia stock a large holding.

The SPDR S&P Metals & Mining ETF (XME) rose 1.7% last week. The Global X US Infrastructure Development ETF (PAVE) rose 2.4%. The US Global Jets ETF (JETS) rose 3.6%. The SPDR S&P Homebuilders ETF (XHB) rose 2.8% to its highest point since January 2022. The Energy Select SPDR ETF (XLE) rose 1.8%. The Health Care Select Sector SPDR Fund ( XLV ) rose 0.1%. The Industrial Select Sector SPDR Fund ( XLI ) climbed 1.45%, hitting a three-month high. Boeing and CAT stocks are both large XLI holdings.

Financial Select SPDR ETF (XLF) rose 1.%. The SPDR S&P Regional Banking ETF (KRE) rose 3%.

Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) rose 2.1% last week and the ARK Genomics ETF (ARKG) gained 0.2%. Tesla stock is the top holding across Ark Invest’s ETFs.


Top five Chinese stocks to watch now


ONON stock

ONON shares climbed 5.4% to 30.24 on Friday. Shares touched as high as 31.45, above the 50-day moving average, but closed just below that key level. Intraday offered On Holding an early entry, but investors should now wait for a decisive move above the 50-day line, such as clearing Friday’s top. On Holding soared in late March with strong Q4 2022 earnings, and continued to climb into early May. Shares in the Swiss sports shoe maker sold off sharply in late May despite booming first-quarter earnings, amid concerns of slowing growth later this year.

Nvidia shares

NVDA shares fell 1.4% to 387.70 last week, continuing to consolidate after rallying higher on May 25 following strong earnings and blowout guidance on AI-powered chip demand. The graphics chip maker now has a three-week tight, giving it the opportunity to add a few more shares. The official buy point is 419.38, at the top of the tight pattern, but a move above Friday’s high of 397.11 could provide an entry. Even better, a break of another week or two would allow the 21-day line to catch up.

Tesla shares

Tesla shares rose 14% to 244.40 last week, an eight-month high, and extended their winning streak to 11 sessions. Even more impressive, TSLA stock is up 10 straight days on higher volume. A deal to give General Motors (GM) using Tesla charging stations and the entry of the Model 3 was once again eligible for the full $7,500 IRA tax credit in the US were key drivers. Yes, bears may point to rising US and European inventories despite various discounts, but the market isn’t listening to that now. TSLA stock is now sharply extended from a buy point at 207.79, according to MarketSmith analysis. After such a strong run, at least a short break seems likely, but it doesn’t have to happen right away.

Dow shares Boeing, Caterpillar

Boeing shares rose 1.9% to 217.31 last week, rebounding from the 50-day line on Wednesday and clearing a trend line on Thursday, making for an early entry. BA shares are just below a buy point at 221.33 from a flat base.

CAT shares fell 3.7% to 235.03 last week and are up 14% so far in June. The heavy equipment giant broke a trend line dating back to late January, making an early entry. Caterpillar stock has an official buy point of 227.04.

Terex (TEX), Parker-Hannifin (PH), Rockwell Automation (ROK) and WW Grainger (GWW) is among the many other industry names showing some strength.

Market rally analysis

The share rise gave reasons to be positive in the longer term, but also reasons to be cautious in the short term.

The market breadth has improved significantly over the past couple of weeks, although the losers led the winners on Friday. The small-cap Russell 2000 and S&P MidCap 400 posted solid gains to three-month highs, although they retreated late in the week. The Invesco S&P 500 Equal Weight ETF (RSP) rose 1%.

The major indices ended with small weekly gains. The S&P 500 is right at 2023 highs, pulling back from Friday from just 3 points below its August peak during the week. The Dow Jones found support at the 50-day line during the week and is moving toward 2023 highs.

The Nasdaq has now rallied for seven consecutive weeks, right at 52-week highs. The Nasdaq is 5.9% above its 10-week line with the Nasdaq 100 6.8% above that key level. These are not extreme levels, but suggest that technicians may have limited room to run before being stretched. So Friday’s pullback from morning highs wasn’t really a surprise. A pause would allow time for moving averages to catch up with the Nasdaq, and perhaps allow some managers to create new buying opportunities.

Ideally, the rest of the market would pick up the slack. It looks like it will happen, but not on Friday.

Chips and software are still the market leaders, and generally have the most recent gains. The manufacturing industry joins building materials, home builders, medical products, travel plays as well as some biotech companies and various restaurants as other leading groups.


Time the market with IBD’s ETF market strategy


What to do now

This may be a time to be cautious about new purchases, especially in technology, with the Nasdaq near stretched and the Fed meeting on tap. If you are making new purchases, make sure you have your exit strategies ready.

But the outlook seems positive for the stock market recovery. Improving market breadth helps a wider variety of stocks to line up. Some have flashed buy signals while others are moving into position.

Will this trend last? Don’t try to predict where this market will go. Pay attention to what the market is doing right now.

So definitely get your watch lists ready. Be sure to cast a wide net, so you catch industrial stocks and other emerging areas of strength.

Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock exchange updates and more.

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