Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Apple, Oracle and Adobe (ADBE) have big news ahead while Tesla (TSLA) stock, Roku and Shopify are big Cathie Wood holdings near buy points.
The stock market rally had a tough week, with all the major indexes falling below their 50-day lines and a Friday bounce fizzling. Market breadth has been noticeably weak.
The uptrend is under pressure, so investors should be wary of new buys. But that could change quickly.
Key Events Next Week
Oracle (ORCL) releases earnings Monday night, with Adobe late Thursday, offering insight into cloud computing and artificial intelligence. Both titans have been doing well, with the software sector faring much better than chips and hardware tech plays.
Lennar (LEN) also reports Thursday night. Housing stocks have had a huge 2023, but are facing trouble lately amid high mortgage rates.
The Labor Department releases the August CPI inflation report early Wednesday.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET, along with S&P 500 futures and Nasdaq 100 futures.
Stock Market Rally
The stock market rally weakened, with all the key indexes falling below their 50-day moving averages during the week.
The Dow Jones Industrial Average fell 0.75% in last week’s stock market trading. The S&P 500 index retreated 1.3%. The Nasdaq composite slumped 1.9%. The small-cap Russell 2000 tumbled 3.6%.
Apple stock fell nearly 6% for the week, tumbling below the 50-day line. China reportedly is expanding a government ban on iPhones at work, days after Huawei released a 5G phone with U.S.-banned chips. Apple will unveil the iPhone 15 on Tuesday, with a higher price expected.
The 10-year Treasury yield rose 8 basis points to 4.26%. The 10-year yield hit 4.31% during the week, not far from the 15-year high of 4.36% set on Aug. 22.
U.S. crude oil futures rose 2.3% to $87.51 a barrel last week.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.4% last week. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.6% after big gains in the prior two weeks. Adobe is the No. 1 holding in IGV, with ORCL stock No. 2. PATH stock also is in IGV.
The VanEck Vectors Semiconductor ETF (SMH) fell back 3.7%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) edged up 0.1% last week while ARK Genomics ETF (ARKG) skidded 4.5%. Tesla stock is the No. 1 holding across Ark Invest’s ETFs. Roku stock, UiPath, Shopify, DraftKings and Twilio also are top-10 holdings for Cathie Wood’s Ark.
SPDR S&P Metals & Mining ETF (XME) retreated 3.3% last week. The Global X U.S. Infrastructure Development ETF (PAVE) gave up 3.7%. U.S. Global Jets ETF (JETS) descended 4.6%. SPDR S&P Homebuilders ETF (XHB) stepped down 3.6%. The Energy Select SPDR ETF (XLE) climbed 1.4% and the Health Care Select Sector SPDR Fund (XLV) declined 1.1%. The Industrial Select Sector SPDR Fund (XLI) fell 2.9%.
Cathie Wood Stocks Near Buy Points
Tesla stock fell on Friday, but rose 1.4% to 248.50 for the week, bouncing between the 50-day and 21-day moving lines. The EV giant has a 299.29 buy point. A decisive move above the 50-day line would offer an early entry for TSLA stock, with investors using the Aug. 31 high of 261.18 as a specific trigger.
Roku stock has a new cup base with a 98.44 buy point, after finding support at the 50-day line in late August. Shares spiked as high as 95.84 on Wednesday after Roku guided up on Q3 revenue and said it would cut 10% of staff. Roku stock slashed gains but still rose 2.1% to 83.47 for the week. Roku could be starting to forge an odd-looking handle.
Shopify stock has a cup-with-handle base on a weekly chart with a 67.60 buy point, after tumbling 5.55% to 63.01. The handle needs one more day to show up on a daily chart. SHOP stock gapped above its 50-day line on Aug. 31 on news of an expanded partnership with Amazon.com (AMZN). On Friday, shares closed below the low of the gap up.
PATH stock surged 16.3% last week to 18.48, fueled by strong earnings and a buyback plan. UiPath stock is nearing a 19.03 double-bottom buy point, but is actionable from a downward-sloping trendline. After surging higher in the past three weeks, a pause or handle would be helpful for PATH stock.
DKNG stock jumped 7.5% to 31.85, rebounding from the 50-day. The online sports betting giant now has a V-shape base with a 34.49 buy point. DraftKings stock seems slightly extended now from the 50-day. A handle would come in handy here.
TWLO stock edged up 0.1% to 65.48 for the week. Twilio has a 71.24 buy point from a consolidation next to a failed base, according to MarketSmith analysis. The relative strength line for TWLO stock has improved slightly recently but has been choppy for months after a long slide.
Market Rally Analysis
The market rally weakened considerably this past week. The Dow Jones and Russell 2000 fell below their 50-day lines on Tuesday with the S&P 500 and finally the Nasdaq also breaking below that key level.
The market rally shifted to uptrend under pressure on Thursday.
The S&P 500 and Nasdaq have tested the intraday low of their Aug. 29 follow-through days, but didn’t close below that level. That would have been a highly bearish signal.
A Friday bounce quickly fizzled as the S&P 500 and Nasdaq hit resistance near their 50-day lines — and as the 10-year yield began to erase intraday losses.
The Russell 2000 is fighting to stay above its 200-day, as market breadth deteriorates.
The Nasdaq and NYSE advance-decline lines have struggled since the end of July. After a late-August bump, the A/D lines fell again this past week, with the Nasdaq’s right at long-term lows. That’s just not a healthy situation for a market rally.
Energy stocks are doing well with oil prices at 2023 highs. Software is showing strength, with giants Microsoft (MSFT) and Salesforce.com (CRM) flirting with buy signals. Adobe and Oracle earnings and commentary about AI will be key.
Most other sectors are struggling recently.
What To Do Now
With the market rally under pressure, investors should be cautious about new buys, with the possible exception of the energy sector. As a practical matter, few non-energy stocks have offered buying opportunities in the past week.
Investors may have needed to cut some holdings in recent days as they gave up gains or flashed sell signals.
Still, a large number of stocks are still setting up, or not far from doing so. So have your watchlists ready and stay engaged with the market.
With the S&P 500 and Nasdaq between support and resistance, it wouldn’t take a big move either way to significantly change the market picture.
The Apple iPhone event, Oracle and Adobe earnings and the August CPI inflation report are potential market-moving events in the coming week.
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