Dow Jones futures open Sunday night, along with S&P 500 futures and Nasdaq futures. The rise in equities became a confirmed upward trend as the large indices took long weekly losses.
Thursday’s follow-up day on Nasdaq was followed by further strong gains on Friday. Investors should take part in this new market rally, but not jump in.
DLTR stock, Atkore (ATKR), Delta Air Lines (VALLEY), Onsemi (ON) and Microsoft (MSFT) is worth seeing. Dollar tree (DLTR), Atkore, Onsemi and DAL stocks are undoubtedly flashing early listings, although they are definitely on the aggressive side. Investors may want to wait for the right buy points.
Microsoft stock is not capable of action. It is a long way from being able to act. But it’s a megacap growth stock that does not look terrible. Unlike, Tesla (TSLA) and Nvidia (NVDA) had a bigger bounce than Microsoft last week. But both had fallen more than 50% from record highs.
The ATKR stock is on the IBD Leaderboard watch list and on the IBD 50. The MSFT stock is on the IBD Long-Term Leaders. The ON stock was Friday’s IBD Stock Of The Day.
The video embedded in this article highlighted a key market week and analyzed DAL stocks, Onsemi and Regeneron Pharmaceuticals (RAIN).
Dow Jones Futures today
Dow Jones futures open at 6pm ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Dow futures are usually traded on Sunday night and on Monday. But US stock exchanges will be closed on Monday in connection with Memorial Day. Other exchanges around the world will be open.
Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze powerful stocks in the stock market rally on IBD Live
Stock market rally
The rise in equities started unstable with the Nasdaq setting a 52-week low on Tuesday. But the large indices rose sharply for the rest of the week, giving strong weekly gains.
The Dow Jones Industrial Average jumped 6.2% in last week’s trading. The S&P 500 index rose 6.6 percent. The Nasdaq composite rose 6.8 percent. Small-cap Russell 2000 rose 6.55%.
The 10-year government interest rate fell four basis points to 2.74%, just above the 50-day limit.
US crude oil futures rose to $ 115.07 a barrel last week.
Growth and sector funds reflected the broad-based market progress.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 9% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 4.9%. iShares Expanded Tech-Software Sector ETF (IGV) rose 6.1%, with MSFT stock as a major stake. VanEck Vectors Semiconductor ETF (SMH) xx%. The Nvidia share is an important SMH component with ON Holding also in the ETF.
SPDR S&P Metals & Mining ETF (XME) rose almost 10% last week. Global X US Infrastructure Development ETF (PAVE) rose 7.2%. The US Global Jets ETF (JETS) rose 7%, with the Delta stock a large holding. SPDR S&P Homebuilders ETF (XHB) rose 6.9%. Energy Select SPDR ETF (XLE) rose 8.6% to new highs, while Financial Select SPDR ETF (XLF) rose 8.3%. Health Care Select Sector SPDR Fund (XLV) rose 3.3%
ARK Innovation ETF (ARKK) reflects more speculative history stocks, jumping 7.1% last week and ARK Genomics ETF (ARKG) relatively modest 3%. The Tesla share is number 1 across Ark Invest’s ETFs. Ark’s Cathie Wood has also started buying NVDA shares again.
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Shares close to buy points
The Dollar Tree stock raked 29% last week to 165, more than canceling last week’s 20% dive. DLTR stock was sold after Walmart (WMT) and Goal (TGT) missed EPS views and guided lower. But the dollar store chain easily beat the outlook and provided solid outlook. If you put a giant thumb in the middle of the DLTR stock chart, it almost looks like action, trading above the 50-day line and a trend line. But investors should probably wait for the shares to settle. Maybe Friday’s high intraday of 166.35 can serve as a new area of resistance. The relative strength line is already at heights, MarketSmith analysis shows.
The ATKR share crossed a buy point of 112.34 from a double-bottom base after earnings in early May, but then fell back with the sale of the market. The stock fell below the 50-day and 200-day lines on Tuesday, but they picked up again the rest of the week, ending up 5.4% at 107.72 for the week. Undoubtedly, the Atkore share breaks a short downtrend, offering an early entry. But the three-day rally has come at light volume while the downtrend is steep. Investors may want to wait for a new base within a larger consolidation, with 115.88 as a possible buying point.
The DAL share gained momentum in the last week, rising 9.3% to 42.23, with all these gains and more coming in the last three days. On Thursday’s follow-up day, the Delta share returned above the 50-day and 200-day lines, at the same time as it broke a downward trend line from 21 April short-term high of 46.27. Even with Friday’s gain, investors can take an early position here. But 46.37 could serve as a better buying point, with the 45-46 range having served as resistance several times over the past year. United Airlines (UAL), Marriott International (MAR) and some other travel stocks made similar moves last week.
Travel shares rose as JetBlue (JBLU) and Southwest Airlines (LUV) provided bullish forecasts for second-quarter earnings, following positive guidance from United earlier this month. However, Delta said it would cut flights this summer due to staffing issues.
The Onsi stock took back its 200-day and 50-day lines late last week, also removing some short-term resistance. Investors who wanted to invest in a growth name could have bought ON shares here. The official point of purchase is 71.35. The RS line is already at a new high. In terms of fundamentals, Onsem boasts five consecutive quarters of triple-digit earnings growth.
Microsoft shares rose 8.2% to 273.24 last week after hitting an 11-month low last week. The MSFT share is still below the 50-day and especially the 50-day line. A strong pull over the 200-day line can offer an entry as a long-term leader. But Microsoft stock is a long way from the November 22 high of 349.67. Its RS line is good of heights.
But, with the possible exception of apple (AAPL), Microsoft stock looks better than other megacap growth names. Microsoft’s earnings estimates are stronger than Apple’s. The business is also less prone to supply chain problems and a weakened consumer than Apple can be.
If large companies are to have a lasting run, Microsoft is likely to participate.
Tesla shares reached a 10-month low of 620.37 on Tuesday, just over 50% below the November high of 1,243.49. But shares rose sharply, ending the week with a rise of 14.4% to 759.63. These advances came at a higher volume, after a large number of large losses in large-scale trade in recent weeks. Still, the Tesla stock chart needs a lot of repair, with a lot of overhead resistance. The 50-day line crosses just below the 200-day line again.
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Nvidia beat views, but guided low Tuesday night, just after setting a 52-week closed lowest level. But stocks continued to rise over the next three days, ending with 12.7% weekly growth to 188.11. But after crashing 55% from the end of November, Nvidia shares have significant work to do.
Market Rally Analysis
The rise in shares is in a confirmed upward trend, and Friday’s follow-up purchase provides some encouragement.
Nasdaq arranged a follow-up day on Thursday with the Nasdaq volume up from Wednesday despite the fact that it was below average. Nasdaq had another large price gain in higher volume on Friday.
The S&P 500 and Dow Jones delivered solid price gains on Thursday and Friday, but NYSE volume fell in both sessions. The S&P 500 follow-up days require a higher NYSE volume than in the previous session. But given the abundance of Nasdaq major companies in the S&P 500, including Apple stock, Microsoft, Facebook parent Metaplatforms (FB), Google parent Alphabet (GOOGL), Amazon.com (AMZN), the Tesla share and Nvidia, without a doubt, the S&P 500 has staged an FTD based on total volume.
But in the end, the market does not need a Dow or S&P 500 follow-up day at this time. An index that confirms a rally attempt is all that is required.
The Dow Jones took an eight-week losing streak, while the S&P 500 and Nasdaq ended in a seven-week decline – all crucial. It’s nice to see a rally appear on a weekly chart.
All the major indices have moved above their 21-day moving average. Everyone is above their heights on May 17, when they staged follow-ups before plunging the next day. The indices are still below the 50-day and 200-day lines, but with other resistance points along the way.
So even if the market rally has not fallen apart immediately, it is not clear if this will be a negotiable rally or something that lasts longer.
One problem is that there are not many stocks in a good position. This is not surprising, given the market’s sharp decline from the end of March.
Energy reserves continue to lead, although many are expanding again. The lithium spills are hot again, but already appear to have expanded. Some drug and biotechnology names still look strong. Maybe some dealers, like DLTR warehouse and Ulta beauty (ULTA), will settle down. Travel games such as the DAL share are on the rise again, but they have arranged a number of short round trips in recent months. The ON stock can be set up, but most growth names are still in the off position.
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What to do now
Investors should take advantage of the current market upturn, perhaps wading a little more into the pool after dipping a toe on Thursday’s follow-up.
If you do not see individual stocks you are confident in, an ETF with a broad market may offer some exposure.
Keep your portfolio mostly in cash. And consider taking partial profits on relatively small gains, especially if the large indices approach important resistance levels such as the 50-day moving average.
The more aggressive you are in adding exposure, the faster you will have to scale out if the market worsens.
If the market rally continues to strengthen, you will have the opportunity to reap big gains. But if the trend stops, it will pay to stay light and nimble.
Build your watchlists over the long weekend. Look for stocks that are actionable, but keep a broader list of quality names that hold up relatively well but need some time to set up.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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