The stock market rally fell towards key support but rebounded on Friday, led by Apple (AAPL), Tesla (TSLA) and bank stocks. Nasdaq is again nearing its 2023 high. But we’ve been here before. Dow Jones futures open Sunday night, along with S&P 500 futures and Nasdaq futures.
by Warren Buffet Berkshire Hathaway (BRKB) reports earnings on Saturday.
Buying opportunities are still limited. Dow Jones giant Passport (DRAW), Advanced micro-devices (AMD) And Company TJX (TJX) are hovering around the entries. Visa stock is in a buy zone, but there could be other entry points as well. AMD stock, driven by Microsoft (MSFT) AI buzz is about to start logging in soon. So does TJX stock.
Tesla stock is still a long way from a buy point, but it’s worth a look.
Investors should continue to be cautious about adding more risk until the market recovers – still “under pressure” – showing greater strength and breadth. But that could come soon.
Microsoft stock is over Long-term leadership of IBD.
Video embedded in the article discussed another complicated market week and analysis Draft Kings (DK), Visa and TJX shares.
Earnings of Berkshire Hathaway
Berkshire Hathaway will report first quarter earnings on Saturday.
Buffett’s corporation will also disclose its net equity purchases and sales, as well as its share buybacks.
Apple stock is by far the largest individual stock Buffett holds. Berkshire has also significantly increased its stake in Random oil and gas (OXY) in the last year.
Apple stock hit an eight-month high on Friday after topping the earnings view. OXY stock has struggled for the past six months amid weak oil prices. Random earnings are due on Tuesdays.
Dow Jones Futures
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Stock market recovers
The stock market rallied for most of the week, but rallied on Friday to close the opposite.
The Dow Jones Industrial Average fell 1.2% last week stock market trading. The S&P 500 Index fell 0.8%. The Nasdaq Composite Index rose 0.1%. The Russell 2000 small-cap index fell 0.4 percent.
The yield on the 10-year Treasury note fell partially to 3.445% for the week, amid some major daily swings.
U.S. crude futures fell 7.1% to $71.34 a barrel over the past week, even as Friday’s gain was just over 4%.
Among the growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.3% last week, while Innovator’s IBD Breakthrough Opportunity ETF (HOUR) decreased by 1.2%. iShares Expanded Tech-Soft Sector Sector ETF (IGV) retreat 1.1%. MSFT securities are a core component of the IGV. VanEck Vectors Semiconductor ETF (SMH) increased by 0.6%. AMD stock is a large holding SMH stock.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) rose 4.1% last week and the ARK Genomics ETF (ARKG) increased by 2.6%. Tesla stock is the #1 holding on Ark Invest ETFs. TSLA stock was up 5.5% on Friday, just below its 21-day moving average. It still needs to retake the 50-day line to start approaching possible buy points. Meanwhile, Tesla’s arch-rival and arch-enemy BYD (BYDDF) is establishing near a suitable buy point. Cathie Wood’s Ark owns a small stake in BYD stock.
SPDR S&P Metals & Mining ETF (XME) fell 1.9% last week. US X Global Infrastructure Development ETF (PAY THE ROAD RED) increased by 1.4%. US Global Jets ETF (jet plane) decreased by 0.7%. SPDR S&P Homebuilders ETF (XHB) decreased by 0.2%. Energy Select SPDR ETF (XLE) decreased by 5.8%. Health care SPDR Foundation (XLV) just above breakeven.
Financial Options SPDR ETF (XLF) fell 2.5% for the week, but was up 2.4% on Friday. XLF is largely made up of banking giants, but Berkshire Hathaway is its top stock, and Visa stock is a major component.
SPDR S&P Regional Bank ETF (KRE) rose 6.3% on Friday but was still down 10.1% for the week. KRE hit a 31-month low on Thursday. PacWest shares spiked 82% on Friday, but are still down 43% for the week. WAL stock was up 49% on Friday, down 27% for the week.
Stocks near the buy point
Visa shares bounced back on Friday from the 50-day moving average to reclaim the 227.51 double bottom buy points. Shares fell just 0.4% for the week to 231.78, prolonging the tight action. V shares have a four-week tight pattern with an entry 235.67. Visa and competitors MasterCard (GHOST) is expected to deliver solid earnings growth over the next two years, benefiting from strong cross-border payments. MA stock is also in the buy zone.
AMD shares rose 0.5% to 89.84 for the week amid big swings. Shares plunged on Wednesday on weak AMD guidance, then rebounded sharply on Thursday when it was reported that it was working with Microsoft on AI chips. Microsoft later denied that it was developing AI chips in-house but did not say whether it was funding AMD’s efforts. On Friday, the stock extended its gains, closing back above the 50-day line. A move above Thursday’s high of 91.64 would mark a decisive move above the 50-day line and the downward sloping trendline.
For Microsoft stock, the Dow tech titan rose 1.1% for the week to a new 52-week high.
TJX stock fell 0.4% to 78.50 last week, continuing to find support at the 50-day line. The official buy point is 83.23, but investors can use 79.81 as a legitimate early entry point. It’s right on a handle that’s too low to fit. That “processing” also lasted three weeks with the same entry 79.81.
Analysis of market recovery
The stock market rally saw some notable changes during the week, but ended up closing with a narrow divergence.
The major indexes fell for the week to test their 50-day or 10-week lines, but rebounded strongly on Friday for banks, Apple, Tesla and the April jobs report. Even so, Friday’s gains came on lower volume.
The Nasdaq briefly hit a three-month high on Friday, just below its 2023 peak. But the major indexes have threatened to do so for weeks.
The winners crushed the losers on Friday, but Nasdaq’s up/down line hit a low with the NYSE’s A/D line also deteriorating.
First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) rallied above the 50-day line and the 21-day line on Friday, cutting weekly losses to just 0.35%. Invesco S&P 500 Equal Weight ETF (RSP) fell 1.45% for the week, though it rebounded on Friday in between the 200-day and 50-day lines.
The market leadership has shrunk, with few buying opportunities. Many of Friday’s big movers were those below the 200-day moving average.
The bank is still a big wild card. If the regional banking crisis comes to an end and bank stocks recover significantly over time, it will be a big hit for the market as a whole, as shown on Friday. But the risk of a new waterfall-style sell-off is likely to persist for a considerable time.
The market also recovered on Friday on a Strong employment report that may have depressed the stock price just a few days earlier. With the Fed seemingly taking a pause, investors’ concerns are shifting to recession risks. Will that continue indefinitely, or is it just a blip?
But if the major indexes can decisively break higher – with breadth – the market rally could have a chance to continue.
What to do now
The market recovery remains under pressure, with indicators moving sideways and overall market conditions weak.
There are not many stocks with stable performance. Buying opportunities have been sparse lately, with many buying from large earnings spreads particularly risky in an uneven market. Many stocks that have rallied have ended up making solid gains.
If Nasdaq can take the indexes to all-time highs in 2023, many stocks will make bullish moves closer to the buy point, then continue to rise. Investors can gradually come into contact with them.
So investors need to be ready. Watchlists need to be updated after earnings reports cause some stocks to expand significantly and others to plummet. It is not clear which sector will take the lead.
But also be ready for the downside. While the market ended on a high Friday, the market ultimately failed to make any progress. A decisive break lower for the market or individual stocks would be a strong signal to exit.
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