Dow Jones Futures: Market Rally Stellar As Nvidia, Microsoft Lead; Tesla Tumbles

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Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures.

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The stock market rally had a strong rebound last week after the major indexes and many leading stocks retreated to start 2024 but soon found support at key levels. A large number of stocks flashed buy signals, including a powerful breakout from Nvidia (NVDA).

It’s been a good time to add exposure.

Nvidia stock is now extended, but fellow AI leader Microsoft (MSFT) is just above a buy point after solid weekly gains, on the cusp of surpassing the market cap of fellow Dow giant Apple (AAPL). Novo Nordisk (NVO) remains in a buy zone.

MercadoLibre (MELI) and Tradeweb Markets (TW) flashed entries intraday.

On the downside, Tesla (TSLA) had an ugly week, extending a recent sell-off and breaking key support levels amid a flurry of headlines.

Nvidia and NVO stock are on IBD Leaderboard. MELI stock, Nvidia and Microsoft are on SwingTrader. MSFT stock is on IBD Long-Term Leaders. Nvidia stock, MercadoLibre, Novo Nordisk and Microsoft are on the IBD 50. Microsoft, Nvidia and MercadoLibre stock are on the IBD Big Cap 20.

The video embedded in the article discussed the market rally’s weekly action and analyzed Microsoft, MercadoLibre and NVO stock.

Dow Jones Futures Today

Dow Jones futures open at 6 p.m. ET, along with S&P 500 futures and Nasdaq 100 futures.

U.S. stock markets will be closed Monday for the MLK holiday, but other exchanges around the world will be open.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.


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Stock Market Rally

The stock market rally got off to a strong start Monday and extended gains, though the major indexes are hitting resistance at key levels.

The Dow Jones Industrial Average edged up 0.3% in last week’s stock market trading, after briefly topping a record high on Friday. Boeing (BA), which tumbled nearly 13% on 737 Max woes, curbed the Dow’s gains.

The S&P 500 index popped 1.8%, hitting 52-week highs and coming within a few points of its all-time peak. The Nasdaq composite jumped 3.1%, rebounding from the 10-week line but hitting resistance at the 15,000 level.

While the S&P 500 and Nasdaq are right around highs, they are not extended from the 50-day line, suggesting they have room to run.

The small-cap Russell 2000 jumped on Monday but closed flat for the week, hitting resistance at the 21-day line. The Invesco S&P 500 Equal Weight ETF (RSP) looks better, holding above the 21-day line near 52-week highs, but only rose 0.2% for the week.

That reflects weak market breadth in 2024 after expanding significantly in late 2023. That’s the most notable blemish on the market rally right now. But market leadership has been broad.

On that point, the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) gained 2.1% for the week. While that lagged the Nasdaq 100’s 3.2% jump, buoyed by Nvidia stock, Microsoft and other megacaps, it was a solid performance for QQEW.

The 10-year Treasury yield fell 9 basis points to 3.95%, back below the 4% level. The two-year Treasury yield, more closely tied to Fed policy, plunged 25 basis points to 4.14%. Fed rate-cut odds increased after the week’s big inflation reports.

U.S. crude oil futures fell 1.5% to $72.68 a barrel last week.

ETFs

Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) rebounded 5.7%, with MSFT stock a major holding. The VanEck Vectors Semiconductor ETF (SMH) rose 4.1%, with NVDA stock the largest holding. Both ETFs rebounded from their 10-week lines.

SPDR S&P Metals & Mining ETF (XME) fell 1.1% last week. The Global X U.S. Infrastructure Development ETF (PAVE) advanced 0.9%. U.S. Global Jets ETF (JETS) slumped 3.25%, plunging Friday on Delta Air Lines (DAL) guidance. SPDR S&P Homebuilders ETF (XHB) stepped up 2.2%. The Energy Select SPDR ETF (XLE) fell 2.4% and the Health Care Select Sector SPDR Fund (XLV) rose 1%, its ninth straight weekly gain.

The Industrial Select Sector SPDR Fund (XLI) edged up 0.6%. The Financial Select SPDR ETF (XLF) dipped 0.4%, continuing to trade tightly.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 3.1% last week and ARK Genomics ETF (ARKG) slumped 2.9%. Tesla stock is a major holding across Ark Invest’s ETFs. Cathie Wood bought more TSLA shares on Thursday.


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Stocks In Buy Zones

MSFT stock rallied 5.6% to 388.47 for the week, moving above a 384.30 buy point from a flat base, base-on-base pattern. During the week, Microsoft rebounded from the 10-week line and cleared some resistance to offer early entries.

Microsoft’s valuation briefly topped Apple’s on Thursday, but didn’t close ahead. Microsoft stock has a $2.887 trillion market cap. Apple is at $2.892 trillion. AAPL stock rose 2.6% last week, rebounding from the 200-day line but below its 50-day.

NVO stock climbed 1.1% in the week to 107.16, rising slightly within a buy zone. Unlike most of the market, Novo Nordisk stock had a strong first week of 2024. Shares cleared the 105.69 flat-base buy point on Jan. 4. Fellow weight-loss drug giant Eli Lilly (LLY) also is in a buy zone.

MELI stock jumped 4.2% to 1,658.58, briefly clearing a 1,660 flat base, base-on-base buy point, according to MarketSmith analysis. For the week, MercadoLibre stock leapt 7.8%, rebounding from the 10-week line and offering some early entries.

TW stock rose 3.1% this past week to 95.91, rebounding from the 10-week line. On Friday, shares hit 97 intraday, just shy of the 97.18 flat-base buy point. It’s actionable above 96.10.


EV King To Unveil Driver-Assist Systems, Enter Major Market


Tesla Stock

Tesla is a bad stock, at least right now. The EV giant has had mammoth runs and could do so again in the future. But right now TSLA stock is struggling.

Shares tumbled 7.8% to 218.89 for the week, knifing through the 50-day and 200-day lines. The relative strength line, which tracks a stock’s performance vs. the S&P 500, is at its lowest levels since May.

In the past week, Tesla has cut prices in its strongest market and announced plans to suspend production at its Berlin plant for two weeks. Meanwhile Hertz (HTZ) is dumping many of its EVs at cut-rate prices, largely Tesla vehicles. The rental-car giant cited weak demand and high repair costs.

What To Do Now

The market rally has been acting great. Stocks sold off to start 2024, but the pullback was modest with the S&P 500, Nasdaq composite and leading stocks finding support where you’d expect. The pullback was enough to quickly forge some bullish pullbacks and handles, but not so deep as to cause serious damage.

Investors could have held through the early selling or taken some profits. Either way, there were a number of opportunities to add exposure this past week.

Meanwhile, there are a number of stocks that are setting up new consolidations, often just above or at the top of deep bases. So keep working on your watchlists.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Threads at @edcarson1971, X/Twitter at @IBD_ECarson and Bluesky at @edcarson.bsky.social for stock market updates and more.

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