Dow Jones futures rose modestly on Sunday night, along with S&P 500 futures and Nasdaq futures. Tesla (D.S.L.A), Service now (Now) and Netflix (NFLX) headlined a big earnings week.
X
The S&P 500 and Dow Jones hit all-time highs on Friday, along with the Nasdaq, its best in two years. Tech majors led the market rally last week. Small caps struggled, but they bounced back from support on Friday.
Except for silver, the market breadth in 2024 was limited. But market leadership remains strong, with a significant number of stocks flashing buy signals over the past few days.
Apple (APL) issued an initial entry on Friday, albeit cautiously. Cloudflare (Net) flashed a buy signal with Draft Kings (D.K.N.G) at the node.
Investors can gradually add exposure, but the earnings season is huge.
Besides Tesla, ServiceNow and Netflix, Intel (INTC), ASML (ASML), Lam Research (LRCX), KLA (Clutch), TR Horton (DHI), Packer (PCAR) and United Rentals (URI) to name a few, tap.
Tesla stock, despite its decline, is still closely watched by investors. ServiceNow is kicking up software revenue, while Intel, ASML, LRCX and KLAC provide more insight into the growing chip industry. DR Horton, Paccar and URI stocks show strength beyond technicals.
Now the stock is available IBD Leaderboardwith Reservation holdings (B.K.N.G) share on the leaderboard watchlist. KLA stock is among IBD's long-term leaders. DraftKings, ServiceNow, United Rentals and NET stocks IBD 50. ServiceNow, United Rentals and ASML have stock IBD Big Cap 20.
Cloudflare stock was Friday's IBD Stock of the Day. TKNG share Thursday exam.
Video embeddedIn this article weekly market action and analysis of Cloudflare stock, DraftKings and Super Micro Computer (SMCI)
Dow Jones Futures Today
Dow Jones futures advanced 0.2% and fair value. S&P 500 futures rose 0.3% and Nasdaq 100 futures rose 0.6%.
The 10-year Treasury yield fell to 4.12%.
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 rally
Stock market gains retreated to start the week, but rallied on Thursday and Friday.
The Dow Jones Industrial Average rose 0.7% in last week's stock market trade. The S&P 500 index rose 1.2%. The Nasdaq composite rose 2.3%.
The S&P 500 surpassed its January 2022 all-time high on Friday. The Dow Jones hit an all-time high. The Nasdaq set a two-year best, though it's still some way from its record high. The Nasdaq 100 rose 2.9% to a record high last week.
The Russell 2000 fell 0.3%. The small-cap index rebounded significantly from its 50-day line.
Invesco S&P 500 Equal Weight ETF (RSP) fell 0.15% on the week, but rebounded significantly from its 10-week line and retook a 21-day line on Friday.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) lagged the Nasdaq 100, but rose 1.8% to a two-year high. This reflects strong market leadership, particularly in the technology development space.
The 10-year Treasury yield rose 20 basis points to 4.15%. The two-year Treasury yield, which is more closely linked to central bank policy, rose 27 basis points to 4.41%.
Economic data was generally strong last week, while Fed policymakers and European Central Bank officials showed a dovish approach on rate cuts. Markets now see a less than 50-50 chance that the Fed will begin rate cuts in March.
The jump in Treasury yields and rate cut hopes have yet to have much of an impact on the market rally, but they are watching.
US crude oil futures rose 1% last week to settle at $73.41 a barrel.
The central bank sends a fresh message on rate cuts
ETFs
Among growth ETFs, the iShares Expanded Technology-Software Sector ETF (VAT) rose 2.4%, and the stock is now a significant component. VanEck Vectors Semiconductor ETF (SMH) shares of ASML rose 8.2% with KLA, LRCX and Intel all the big names.
Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) fell 2.3% last week and the ARK Genomics ETF (A.R.K.G) fell 5.8%. Tesla stock is a major player across Arc Invest's ETFs.
SPDR S&P Metals & Mining ETF (XME) fell 0.9% last week. Global X US Infrastructure Development ETF (sidewalk) added 0.5%, the URI share being a large component. US Global Jets ETF (JETS) decreased by 0.3%. SPDR S&P Homebuilders ETF (XHB) rose 1.3%, DHI stock is a large holding. Energy Select SPDR ETF (XLE) fell 3% to a six-month low. Health Care Select Sector SPDR Fund (XLV) fell 0.75% as health insurers fell, snapping a nine-week winning streak. Industrial Select Sector SPDR Fund (XLI) rose 0.3%, with the fund holding both United Rentals and PCAR.
Fund Selection SPDR ETF (45rose 0.9%.
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Stocks to watch
Apple shares rose 3% to 191.56, rebounding from the 200-day line and retracing the 50-day clear, providing an aggressive entry. However, the relative strength line has lagged behind, recently hitting a 10-month low.
Apple's earnings are so high that China's demand for the iPhone is a concern. First quarter earnings for fiscal 2024 are due on February 1.
Cloudflare shares rose 2.5% last week to 81.36, after finding support at the 50-day line and the previous 76.07 cup-base buy point. On Friday, NET shares retook a 21-day streak and broke a short fall, giving an early entry. Cloudflare now has a flat base, base-on-base pattern with a buy point of 86.91.
DKNG shares rose 14.2% to 37.62, breaking above the 50-day line. DraftKings shares are hitting resistance on a downside. A move above Friday's high of 38.15 would provide an early entry. The official consolidation buy point is 39.35.
Tesla, Netflix, GE Earnings: Investment Action Plan
Tesla earnings
Tesla earnings are due Wednesday night. Analysts had expected EPS to fall 39% from a year earlier to 73 cents a share, with revenue up more than 5% to $25.62 billion.
The focus will be on the 2024 outlook for gross margins and deliveries, with price reductions and incentives continuing in early 2024 in particular.
Tesla began rolling out FSD beta version 12 to paying customers on Sunday night after weeks of internal testing.
Tesla shares retreated 3.1% last week to 212.19, its fifth weekly decline. The RS line fell to an eight-month low, mirroring TSLA stock's slide against the S&P 500.
Tesla and TSLA's stock woes are mirrored by many other EV makers and stocks.
Other major revenues
Netflix earnings take a hit Tuesday night, subscriber growth is back in focus. NFLX stock is below a traditional buy point, finding support in a 10-week line.
The ServiceNow role is stretched, but works well. Wednesday night's results and guidance will be key for many software plays.
ASML reports Wednesday morning, Lam Research Wednesday night, followed by KLA and Intel Thursday night. Shares of Intel have hit a 10-week range over the past week, though the earnings significantly raise the risk of new buys. ASML, KLA and LRCX stocks extend after big bounces from 10-week streaks.
Heavy truck maker Paccar will be on Tuesday and heavy equipment player United Rentals on Wednesday. Both are arguably flashing buy signals, early registrations on emerging platforms.
TR Harden returns on Tuesday. DHI stock has been consolidating over the past month, with moving averages catching up.
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What to do now
The stock market rally from late 2023 is not a broad-based improvement. Instead, technologists and some other leaders are moving away from small caps and certain sectors. However, market leadership remains strong, with new buying opportunities and recent purchases generally extending gains.
Investors can add to their portfolio or stand pat, depending on their investment style and current holdings and exposure levels.
Buy as close to points of purchase or early registration as possible. Being a successful investor requires the discipline to not buy into the long ones – and to do the prep work for watch lists and take advantage of buying opportunities.
Especially for technology leaders, income will increase in the next two weeks. As the market gathers into the earnings season, there is a risk that expectations may be too high.
Know when your stocks are tapping – as well as when competitors, customers and suppliers are reporting.
Read the big picture every day to stay in tune with market direction and leading stocks and sectors.
Follow Ed Carson on Threads @edcarson1971X/Twitter at @IBD_ECarson And at Bluesky @edcarson.bsky.social For stock market updates and more.
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