Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures. The market rally continued to make gains last week, with a number of leading stocks flashing buy signals.
The stock market rally has shown resilience in the face of rising crude oil prices and surging Treasury yields. That is, so far. But don’t be complacent. A relentless rise in Treasury yields is hard for the stock market to shrug off indefinitely, especially growth names.
A modest pullback would be healthy for the major indexes and leading stocks. Apple (AAPL) and especially Tesla stock could use a rest. A handle would also be constructive for Nvidia (NVDA), which has raced higher in the past couple of weeks. Marriott Worldwide (MAR) has a handle, but could use a longer base.
Regeneron Pharmaceuticals (REGN) has forged a high handle as it trades in a buy zone, offering a second chance or add-on buying opportunity. JB Hunt Transport Services (JBHT) pulled back below a buy pointbut it did find support at a point.
Meanwhile, Xpeng (XPEV) reports fourth-quarter results early Monday. China EV rival Nio (NIO), which reported mixed results late Thursday, will begin deliveries of its luxury EV sedan, the ET7, on Monday as well. That’s part of a busy week for China EV makers, with March deliveries also on tap.
XPEV stock and Nio stock sold off hard Friday. That was partly due to Nio results and guidance, but also reflected revived delisting concerns for US-listed Chinese stocks in general.
The video embedded in this article covered another important market week and analyzed MAR stock, REGN stock and IBD Stock Of The Day Carlisle (CSL).
Dow Jones Futures Today
Dow Jones futures open at 6 pm ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Stock Market Rally
The stock market rally showed modest to solid gains last week, building on the prior week’s huge advance.
The Dow Jones Industrial Average gave out a 0.4% gain in last week’s stock market trading. The S&P 500 index climbed 1.8%. The Nasdaq composite popped 2%. The small-cap Russell 2000 sank 0.5%.
The 10-year Treasury yield leapt 34 basis points last week to 2.49%, the highest since May 2019. That’s up from the March 1 low of 1.68%. As fast as the 10-year yield has risen, the two-year Treasury yield has rallied even faster, narrowing the gap to just 20 basis points. The flattening Treasury yield curve, inverted in some places, reflects expectations the Federal Reserve will raise rates aggressively, and that economic growth will slow.
US crude oil futures shot up nearly 12% to $ 113.90 a barrel last week.
Among the best ETFsthe Innovator IBD 50 ETF (FFTY) rose 1.9% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) popped 3.5%. The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.6%. The VanEck Vectors Semiconductor ETF (SMH) gained 2.3%. Nvidia stock is a major SMH holding.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 1.9% last week and ARK Genomics ETF (ARKG) 2.8%. Tesla stock remains the No. 1 holding across Ark Invest’s ETFs. Ark also owns some XPEV stock.
SPDR S&P Metals & Mining ETF (XME) spiked 8.1% last week. The Global X US Infrastructure Development ETF (PAVE) gained 1.7%. US Global Jets ETF (JETS) ascended 1.1%, not bad given the soaring energy prices. SPDR S&P Homebuilders ETF (XHB) crashed 8.8% on soaring rates and weak housing reports. The Energy Select SPDR ETF (XLE) leapt 6.6% and the Financial Select SPDR ETF (XLF) advanced 1.3%. The Health Care Select Sector SPDR Fund (XLV) dipped 0.5%.
Apple stock rose 6.55% over the past week to 174.72, reclaiming the 50-day line and clearing a downward-sloping trendline early entry. Shares are closing in on a 176.75 double-bottom base buy point. But AAPL stock has risen for nine straight sessions. Ideally, shares would at least pause for a few days, or even form a handle, to minimize the risk of a post-breakout pullback.
The relative strength line is back at record highs, reflecting Apple stock’s strong performance vs. the S&P 500 index. The RS line is the blue line in the charts provided.
Tesla stock jumped 11.6% in the latest week to 1,010.64, after soaring 13.8% in the prior week. The official buy point is 1,208.10, according to MarketSmith analysiswith a shallow trendline offering a slightly lower entry around 1,150.
Shares lost a fraction Friday, but after surging for eight straight sessions. Ideally, TSLA stock would take a breather, forming a decent handle on the deep cup base and let the moving averages catch up. The 50-day line is still in a downtrend.
Tesla stock has held up much better than most other stocks with triple-digit price-to-earnings ratio. But that still bears watching as Treasury yields surge.
Tesla will likely report another quarter of record deliveries for Q1, perhaps as early as Friday, April 1.
Nvidia stock advanced 4.7% to 276.92 in the latest week, leading a semiconductor revival after spiking nearly 20% in the prior week. On Thursday, shares cleared short-term resistance levels, offering an aggressive add-on entry. Only about midway up the right side of a deep consolidation with a potential 346.57 buy point, NVDA stock could use a handle. Nvidia stock might need to rise a little further to forge a proper handle, with the midpoint above the midpoint of the base.
Marriott stock edged up 0.2% this past week to 171.52. Shares flirted Friday with a 173.54 early entry. After breaking out with many other travel stocks in early February, MAR stock sold off hard on the Russia-Ukraine war. It’s rebounded in a V-shaped consolidation. The 173.54 buy point is just above the top of a “handle” that isn’t proper because the consolidation needs another week to forge a proper base. The entry is also close to prior buy point that is no longer valid but still worth noting.
After strong gains in the prior two weeks, REGN stock dipped 0.8% to 680.03 this past week, building a high handle right in the buy zone of a flat base. Regeneron stock is still above the 673.96 buy point, which now seems to safer after the recent pause. REGN stock already cleared early entries near 636 and 645.
JB Hunt stock fell 2.7% to 209.19, drifting lower for several sessions after a powerful March 6 breakout. The pullback was relatively tame, and not surprising given the surging energy prices over the past several days. But JBHT stock dipped below the 208.97 flat-base buy point late last week, but rebounded Friday from its 21-day line to move back into the buy zone. Investors could buy the trucking firm here, or wait for JBHT stock to break the short downtrend by topping Thursday’s intraday high of 213.29.
Market Rally Analysis
The stock market rally had a decent week, with the Nasdaq rising solidly and the S&P 500 reclaiming its 200-day line. The Dow Jones is closing in on its 200-day line. The Russell 2000 fell modestly.
It’s impressive that the Nasdaq in particular has been able to rally so strongly in the past couple of weeks despite Treasury yields soaring over that time. It’s hard to believe that growth stocks, could continue to advance if bond yields continuing rising at such a brisk pace. But that could have been said a week ago.
Still, the major indexes sometimes shrug off rising interest rates for a time until they don’t.
A lot of the Nasdaq’s strength this past week reflected solid to sharp gains in megacaps such as Apple, Tesla, Nvidia and Google parent Alphabet (GOOGL). Last week’s ARKK retreat, though relatively modest, suggests that rising Treasury yields might be starting to take a toll on highly valued growth stocks.
One concern is that if these megacaps lose ground that growth stocks would sell off sharply, especially ARKK-type stocks.
Still, a modest market pullback would help Tesla stock, Nvidia, Apple and more form handles and let their moving averages catch up. It would also reduce the risk of a much-sharper market slide.
On the other hand, JBHT stock could use some market strength, or perhaps lower energy prices.
Energy and commodity stocks continue to look strong. A few are in or near buy zones, such as Marathon Petroleum (MPC), Civitas (CIVI), Shell (SHEL) and BHP (BHP), but many others are extended or had lagged their sectors in recent months.
What To Do Now
Investors should have added to their exposure over the past week, taking advantage of new buying opportunities. But investors might wait and see if the market pulls back and creates a new crop of set ups.
Work on those watchlists, focusing on stocks that may forging handles and other buy points.
If the market rally then marches higher, you’ll be in a position to jump on breakouts and early entries. If the major indexes fall further, breaking their 50-day lines, your exposure won’t be too high.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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