The stock market rally had another great week, with the Nasdaq edging higher amid a range of key news from the latest Fed outlook to the jobs report to huge earnings. Apple (AAPL), Meta . Platform (META) and more. Dow Jones futures open Sunday night, along with S&P 500 futures and Nasdaq futures.
X
Don’t be surprised to see the market fall after a strong rally in recent weeks, with Tesla (TSLA) and Apple stock rebounded sharply. Friday could be the start of a sale, with amazon.com (AMZN) plummeted because of weak earnings and prospects. But with the uptrend showing more signs than a bear market rally, investors can continue to gradually increase their exposure over time.
Dow Jones giant Microsoft (MSFT), lithium and giant fertilizer SQM (SQM), auto parts manufacturer Autolife (ALV), Pure storage (PSTG) and Freeport-McMoRan (FCX) is a stock close to buy points.
Microsoft, Autoliv, and FCX shares are close to earnings, while SQM and PSTG shares aren’t due for several weeks. MSFT stock is on Long-term leadership of IBD.
bust (ABOVE), formerly ON Semiconductor, reported early Monday. Shares of the electric vehicle-focused chipmaker have rallied 9.8% over the past week, breaking out of a cup bottom to a new high. But the ON stock has now been renewed.
The video embedded in this article looked at the strong market action and analysis Regeneron Pharmaceuticals (REGISTER), Microsoft shares and ALV.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Remember that action overnight in future index and other places that don’t necessarily translate into actual transactions the next time stock market meeting.
Join IBD experts as they analyze stocks that could act in the stock market rally on IBD Live
Stock market recovers
The stock market rally has shaken off a weak Monday for a generally strong week.
The Dow Jones Industrial Average fell 0.2% last week stock market trading. The S&P 500 index rose 1.6 percent. Nasdaq composite rose 3.3%. The Russell 2000 small-cap index rose 3.9%.
Shares of Apple, a component of the Dow Jones, S&P 500 and Nasdaq, rose 5.9% for the week, breaking above the 200-day moving average. Shares reversed higher on Friday despite weak Apple earnings and revenue.
AMZN stock fell 8.4% on Friday, back below its 200-day moving average, although it closed up 1.1% for the week. Late Thursday, Amazon reported a 98% drop in EPS for Q4. Despite slightly lower revenue, Amazon resulted in low Q1 revenue, with Amazon Web Services having high margins as the main reason.
Yields on 10-year Treasuries rose 1 basis point to 3.53% for the week, with yields up 13 basis points on Friday. hot job report. On Thursday, yields fell to 3.33%, the lowest since September 13.
U.S. crude futures fell 7.9% to $73.39 a barrel last week, with gasoline down 10.5% and natural gas down 12.9%.
ETFs
Among the growth ETFs, the Innovator IBD 50 ETF (FFTY) gained 1.25% last week, while Innovator’s IBD Breakthrough Opportunity ETF (HOUR) increased by 1.9%. iShares Expanded Tech-Soft Sector Sector ETF (IGV) rose 2.4%, with Microsoft stock making up the bulk of it. VanEck Vectors Semiconductor ETF (SMH) is up just over 4%, with ON stock being held modestly.
SPDR S&P Metals & Mining ETF (XME) rose 1.45% last week. US X Global Infrastructure Development ETF (PAY THE ROAD RED) spiked 4%, breaking a 13-month consolidation to hit a record high. US Global Jets ETF (jet plane) increased by 2.2%. SPDR S&P Homebuilders ETF (XHB) increased just over 6%. Energy Select SPDR ETF (XLE) fell 5.7%, wiping out meager gains over several weeks. Financial Options SPDR ETF (XLF) increased by 1%. SPDR Foundation for healthcare sector (XLV) fell 0.1%, the sixth modest weekly decline in a row.
Reflecting more speculative stocks, the ARK Innovation ETF (ARKK) rose 6.1% last week and the ARK Genomics ETF (ARKG) rose 3.7%, continuing strong performance since early 2023. Tesla stock is the primary holding on Ark Invest ETFs.
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Stocks near the buy point
Autoliv stock fell 2.7% over the past week to 90.27, consolidating after a 9% gain on Jan. 27 following high earnings. ALV stock is in a buy range from the 89.98 low. But investors can view the recent pause as a correction in the base price starting in November 2021. cup with handle buy point is 93.88. Many other auto parts stocks are showing strength in 2023.
Shares of Pure Storage rose 5.7% for the week to 29.91, a strong bounce off the key moving averages. PSTG stock has 31.33 double bottom buy point, but was able to act from clearing the downward sloping trendline in that base on Wednesday. Volumes have surged as Pure Storage has rebounded over the past two weeks. The relative strength line at best faint, reflecting sideways action over the past year. But while PSTG stock hasn’t recovered as quickly as some bulls, it’s not going to plunge into 2022 either.
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FCX stock fell 3.7% to 43.16 last week, closing just below the 21-day line as copper prices fell. FCX stock has a tight three-week pattern with a 46.83 buy point. Investors can also use it as a replacement handle or handle on a 10-month basis.
Microsoft shares rose 4.1% to 258.35 last week, even as prices fell 2.4% on Friday. The stock has broken out of the bottom formed below the 200-day line. But Thursday’s breakout cleared the 200-day line and the year-long trendline. Investors could see this move as a place to buy MSFT stock as a Long Term Leader.
SQM stock has regained its key moving averages and is operating on a double bottom with a 112.45 buy point, according to MarketSmith Analysis. Shares rose 2.6% to 97.09 last week. There is a chance that SQM stock could make a handle or some form of early entry. SQM stock probably won’t report until March, but lithium-ion peers Albemarle (ALB) and living (LTHM) releases earnings in less than two weeks. Albemarle reported positive preliminary Q4 results and offered an overall upbeat outlook.
SQM and Albemarle stocks are notable stocks in the Global X Lithium & Battery Tech ETF (LIT). Tesla shares and the Chinese electric car and battery giant BYD (BYDDF) are also significant holdings, along with China and other Asian battery makers. The LIT ETF is finding support at its 200-day line, just below the double bottom.
Tesla vs. BYD: Electric car giants vying for the crown, but which is better to buy?
Analysis of market recovery
The stock market’s rally had another impressive week. After sliding on Monday, the Nasdaq, S&P 500 and Russell 2000 posted strong weekly gains, clearly above the 200-day line and their late 2022 highs.
The Dow Jones is lagging, but has found support and is not far from its recent highs.
Some leading sectors or groups faltered, but overall the top stocks have boomed, flashing buy signals, establishing or simply extending their recent big gains.
All of this is happening in a context where economic data and earnings reports are often mixed.
The late-August high is the next test of the market’s recovery, with the Russell 2000 close to being reached and the S&P 500 not far away.
However, there is growing evidence that the market uptrend is real and not just another bear rally.
Perhaps the biggest complaint about the current market rally is that it’s been too strong. Nasdaq rose for 5 straight weeks. Perhaps Friday’s drop was the start of a much-needed pause or pullback for the major indexes. That will allow the stock to forge a handle or pull back to key support levels. Lots of interesting stocks are looking for significant expansion.
One question is whether Tesla, Roku (ROKU) and other ARK-style speculative growth names continue to rise or fall.
The US dollar hit a several-month low on Wednesday after the Fed meeting, but then bounced back on Thursday-Friday to post solid weekly gains. The strong dollar downtrend in recent months has been a major factor in the stock market’s recovery. After Friday’s jobs report, markets are now leaning toward two more rate hikes by two-quarters of a point by the Fed.
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What to do now
With the market rallied in a matter of weeks, most breakouts and buying opportunities have become active. So investors should have taken advantage.
But do so with caution. Increase visibility gradually so you don’t fall behind. It is possible that new purchases will dry up shortly if the market pauses, but that could pave the way for more entries.
Don’t get too focused on a particular stock or sector. Cut the hole short.
Spend some time working on your watchlist this weekend, making sure you’re looking at quality stocks from a variety of sectors. Identify your key goals and do some more analysis on these potential purchases.
After a brutal 2022, the new year is off to a great start. So get in and get ready for action.
Read Big picture every day to stay in sync with market trends and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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