The stock market rally had a mixed and mixed week. Indicators were down strongly in the middle of the week. But then the technology boomed nvidia (NVDA) jumped exponentially, driving up chip counts and AI plays. Meanwhile, optimism over a debt ceiling deal returned late in the week, overshadowing the growing possibility of another rate hike by the Fed. Still, the overall movement for the week was mixed, with at times dizzyingly wide, and a number of blue-chip stocks struggled.
Dow futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Debt ceiling talks remain in focus over the weekend, amid signs that an agreement is starting to take shape.
Tesla (TSLA), Netflix (NFLX), Arista Networks (network), on semiconductors (on me), netease (NTES), Mobileye (MBLY), smart paper (Samar), Aehr Test Systems (AEHR) f Makison (MCK) It is traded near the buy points.
Shares of ANET, Netflix, On Semiconductor, NetEase and Mobileye flashed on Friday. Tesla, Aehr Test, Smartsheet and MCK systems come close to being doable.
Investors can add exposure gradually, if the market rally makes more headway on a broader scale.
NVDA stock is on IBD Leaderboard. MBLY stock, Smartsheet is at IBD 50. Arista Networks was Friday’s IBD stock of the day. SMAR stock was picked up on Thursday.
The video embedded in this article discusses weekly market action and analyzes Arista Networks, Smartsheet, and Tesla stocks.
Debt ceiling deal talks
Late Friday, the Treasury Department said it would not run out of money until at least June 5th, giving negotiators more time to hammer out the debt ceiling agreement. Earlier, the Treasury said the default could come as early as June 1.
House Republicans and President Joe Biden appear to be closing in on a debt-reduction deal that would impose some caps on discretionary spending. But there is no agreement yet, and any tentative agreement must clear Congress.
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.
US stock markets will be closed on Monday in observance of the Memorial Day holiday. But other exchanges around the world will be open.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Stock market rise
The stock market rally was struggling in the middle of the week on debt ceiling concerns, but it has bounced back as Nvidia unleashed an artificial intelligence revolution and default fears eased. However, the indicators closed mixed.
The Dow Jones Industrial Average fell 1% in trading last week. The S&P 500 rose 0.3%. The Nasdaq Composite jumped 2.5%. Close the Russell 2000 small cap flat.
The 10-year Treasury yield rose 13 basis points for the week to 3.82%, the highest point since early March. The odds of a Fed rate hike next month have jumped to 70%.
US crude oil futures rose 1.4% to $72.67 a barrel last week. Copper prices fell 1.3%, but rebounded from their lowest levels in 2023, and jumped 2.6% on Friday.
Exchange Traded Funds
Among the ETFs that saw growth, the iShares Expanded Tech-Software ETF (IGV) was up 3.4%, with small ownership of SMAR stock. VanEck Vectors Semiconductor ETF (SMH) exploded to gain 10.55% with Nvidia a major holding company and ON stock also in the ETF.
Reflecting the speculative stock stories, ARK Innovation ETF (ARKK) rose 1% last week and ARK Genomics ETF (ARKG) gained 3%. Tesla stock is the number one stock ETF held by Ark Invest.
The SPDR S&P Metals & Mining ETF (XME) fell 2.9% in the past week to its lowest level in nine months. The US Infrastructure Development Fund (PAVE) Global X Index fell 0.8%. The US Global Gates Index (JETS) was down 1.25%. The SPDR S&P Homebuilders ETF (XHB) is down 2% after hitting a 52-week high the previous week. The Energy Select SPDR ETF (XLE) fell 1.1%. The Healthcare Sector SPDR (XLV) Fund fell 2.9%. MCK stock is part of XLV.
The Financial Select SPDR ETF (XLF) declined 1.5%, below the 50-day line. The SPDR S&P Regional Banking ETF (KRE) rose 2.75%, but hit resistance at the 50-day line.
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Tesla shares jumped 7.2 percent to 193.17 during the week, including 4.7 percent of heavy trading volume on Friday. The electric car giant has decisively cleared the 50-day line and is now approaching the 207.89 buy point, according to MarketSmith analysis. This buying point is for an eight-week cup bottom or a three-month double bottom consolidation. Either way, TSLA stock has been consolidating below its 200-day line all along. However, the 200 day line is now at the 200 level, below the buy point. So the breakout would be valid, with a decisive drop below the 200 day line as the place to exit.
Other stocks near buy points
NFLX stock jumped 5.5% to 378.88 Friday, clearing an alternate buy point of 375.97 from a double-bottomed base and reaching a 52-week high.
ANET stock rose more than 18% to 170.35 this week amid the artificial intelligence frenzy. Stocks jumped above the 50-day line and touched a trend line on Thursday, then jumped 9.1% on Friday, with huge volume in both sessions. Arista stock has now extended slightly from the 50-day early entry/trend line, but it is also close to the official buy point of 171.54. Ideally, the stocks would pause and form a ticker. ANET stock has recovered since its plunge on May 2 after management didn’t raise guidance enough to satisfy investors.
ON stock rebounded from its 50-day line on Thursday, then rose 5.6% on Friday to 86.62. The stock has broken the downtrend of a sharp handle, providing an early entry. The official overbought point is 87.17, which Onsemi briefly topped on Friday. Note that On Semiconductor stock has a history of breaking out but later returned to the old base. On Semiconductor is Tesla’s chip supplier.
AEHR fell 0.6% to 32.76 for the week, but found support at the 50-day line and rose strongly late in the week. It’s a fake handle that’s too low to be suitable, but investors can use 33.40 as an early entry. This is probably safer than waiting for a traditional breakout above 40.79. On semiconductors is Aehr Test Systems’ largest customer.
MBLY stock broke out with a weekly gain of 10.6% to 45.14, jumping back above the 50-day line. That provided a strong entry on Thursday and Friday morning, but Mobileye stock is now extending from that. It is close to entering the trend line near 46, with 47.04 another key level. The official buy point is 48.21. Ideally, the MBLY stock would pause and form a handle. Like ANET stock, Mobileye fell after earnings several weeks ago.
SMAR stock paused just below the 49.09 buy point from the bottom of the cup, next to another short consolidation. Smartsheet stock rose 2.2% to 47.86 for the week, with all the gains and more coming Friday. The work planning software maker has rebounded after strong results earlier this month from Monday.com (MNDY). Smartsheet’s dividend is due on June 7.
MCK stock fell 2.4% to 387.95 last week, near the top of the six-month consolidation. The drug distributor forged a handle with 401.53 POIs. McKesson stock is a defensive growth game. So if the risk-driven growth rally takes hold, McKesson could fall behind.
NTES stock rose 2.4% for the week, to 89.51. On Thursday, shares rebounded from the 200-day line after earnings. On Friday, NetEase stock retraced the 50-day streak, offering an early entry. The Chinese mobile game giant has a solid 95.09 PPO.
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Market rally analysis
After a stunningly mixed Thursday session, Tech led again on Friday, but the advance was broader in scope. Optimism about the debt ceiling deal, after some jitters in the middle of the week, helped boost investor sentiment.
Still, this is the rise of a divided stock market. The Nasdaq is rising toward its August highs, with the Nasdaq 100 already in high gear. After the S&P 500 fell back to its sideways range in the middle of the week, it is right at the 2023 highs again.
But the Dow fell below the 50-day and 200-day lines last week, although it regained the 200-day line on Friday. The Russell 2000 pulled back from the 200-day line, although it erased losses and closed above the 50-day mark.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) rose 1.6% for the week. On Friday, QQEW jumped 2.5%, reaching a 2023 high and surpassing its August peak. This was a sign of broader participation, at least among growth stocks.
The Invesco S&P 500 Equivalent ETF (RSP) is down 1.2% for the week, falling below all of its moving averages again even as it posted solid gains on Friday.
Within the AI and chip spaces, a slew of stocks posted huge weekly gains, and many ex-buy points are racing.
But market leadership elsewhere is narrow. A number of stocks and groups suffered significant losses in the middle of the week. Some bounce back, but others may need to be set up again.
A debt ceiling deal looks close, but it’s not here yet. Given that the market is holding or ahead of the default deadline of early June, the actual agreement to raise the debt limit may not spur significant additional gains.
Fed rate hike fears may once again take center stage. On the plus side, this coincided with relatively strong economic data, which eased recession fears.
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What are you doing now
This past week offered some buying opportunities, though investors need to take advantage of them quickly. Also, the mixed market signals may have instilled some understandable caution.
This was a week when “fortune favors the bold,” but for the past few months, “predestination is the better part of courage” has been a wise course.
Ideally, a market rally will provide clear signals to be more or less aggressive. This has not been the case since early February.
Meanwhile, several AI and chip names raced into buy territory and haven’t looked back, but a number of other stocks executed clear sell signals or jerks.
Assuming the market rally makes more headway and more stock buying signals, you can add more exposure. But do it gradually. If this bullish trend continues, it won’t take long for it to become fully exposed. If this separate market takes Mr. Hyde’s turn, your losses will be kept to a minimum.
Turn your screens on this weekend. Big fluctuations over the past week could mean big changes to your watchlists. Come back on Tuesday alert, flexible and ready for action.
Read the big picture every day to stay in sync with market trend, leading stocks and sectors.
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