Dow Jones futures and S&P 500 futures fell slightly Monday morning, while Nasdaq futures rose modestly.
The Nasdaq boomed last week, with the S&P 500 also hitting record highs, thanks to big-tech winners. But, despite tame inflation, the Dow Jones and Russell 2000 fell below their 50-day line.
Apple, Nvidia and Microsoft are in a virtual dead heat for the most valuable company, with all three Magnificent Seven stocks comfortably above the $3 trillion mark.
Microsoft stock also is in a buy zone. Meta Platforms, Pinterest, Spotify, Netflix, Chipotle Mexican Grill and Universal Health are actionable as well.
Tesla has a new base, with shareholders reaffirming a massive pay deal for CEO Elon Musk. But the Tesla stock chart has some key flaws. Meanwhile, Cybertruck deliveries reportedly are on hold.
More broadly, the increasingly split market and some weakness in leading stocks means investors should be cautious about new buys.
Nvidia stock, Universal Health and Pinterest are on IBD Leaderboard. Spotify, Netflix and Chipotle stock are on SwingTrader. Microsoft stock is on IBD Long-Term Leaders. Nvidia and Netflix stock are on the IBD 50. Nvidia, Netflix and Pinterest stock are on the IBD Big Cap 20.
The video embedded in this article analyzed the market action and reviews Spotify stock, Netflix and Deckers.
Dow Jones Futures Today
Dow Jones fell 0.2% vs. fair value. S&P 500 futures lost 0.1%. Nasdaq 100 futures rose 0.15%.
The 10-year Treasury yield rose to 4.27%.
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 is looking increasingly divided, despite tame inflation reports.
The Nasdaq jumped 3.2% in last week's stock market trading while the S&P 500 gained 1.6%, both hitting fresh highs. Credit Apple, Oracle, Broadcom and long-lagging Adobe, which all jumped on news, along with megacaps Nvidia and Microsoft.
But the Dow Jones Industrial Average fell 0.5% for the week, even with Apple and Microsoft, dropping below the 50-day line. The Dow did close near session highs multiple times.
The small-cap Russell 2000 and the S&P MidCap 400 slumped 1% and 0.9%, respectively, hitting their lowest levels in over a month and clearly below their 50-day lines.
The relative strength line for the Russell 2000 is at a 23-year low, reflecting small caps' long-term underperformance vs. the S&P 500.
The Invesco S&P 500 Equal Weight ETF sank 0.5%, a fourth straight modestly weak loss and undercutting the 50-day line on Friday.
The First Trust Nasdaq 100 Equal Weighted Index ETF rose 0.9%, but significantly lagged the Nasdaq.
The Nasdaq ended the week 7.5% above its 50-day line, somewhat extended from that key level. That raises the risks of a pullback. Nvidia stock is 35.3% above its 50-day line.
Meanwhile, the Nasdaq Advance/Decline line is at a multiyear low.
Hospitals like Universal Health, as well as a variety of other medicals, are still looking good. So are some discount retailers.
Aerospace stocks retreated last week, with some like GE Aerospace breaking key levels. Homebuilders fell back from Wednesday morning's peak despite tumbling interest rates. Financials, metals and mining plays, and industrials broadly are having trouble.
The 10-year Treasury yield plunged 22 basis points to 4.21%, the lowest point since late March.
U.S. crude oil futures jumped 3.9% to $78.45 a barrel last week.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF rose 2.2% last week. The iShares Expanded Tech-Software Sector ETF rebounded 3.3%, with Microsoft, Oracle and Adobe key members. The VanEck Vectors Semiconductor ETF soared 6.2%, with Nvidia and Broadcom major holdings.
Reflecting more-speculative names, ARK Innovation ETF edged up 0.2% last week and ARK Genomics ETF fell 0.9%. Tesla stock is the No. 1 holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF slumped 3.7% last week. U.S. Global Jets ETF descended 2.5%. SPDR S&P Homebuilders ETF climbed 2.2%. The Energy Select SPDR ETF retreated 2.2%. The Health Care Select Sector SPDR Fund edged up 0.2%, with UHS stock a member.
The Industrial Select Sector SPDR Fund declined nearly 1%. The Financial Select SPDR ETF gave up 2%.
Time The Market With IBD's ETF Market Strategy
Apple, Microsoft, Nvidia Vie For Market Cap Crown
Apple soared 7.9% last week to 212.49 on its long-awaited AI strategy, breaking out of a consolidation going back to July. Apple stock ended the week with a $3.258 trillion market cap, briefly retaking the crown as the most valuable company as of Thursday.
Nvidia stock leapt 9.1% to 131.88, its eighth straight weekly gain. The AI chip leader has a market cap of $3.249 trillion.
Microsoft stock climbed a solid 4.4% to a new high. That gave it a $3.288 trillion valuation, just enough to close the week in first place.
Combined, the three megacaps are worth $9.796 trillion, accounting for over 20% of the entire S&P 500 market capitalization.
Early Monday, Nvidia rose slightly and Apple climbed a fraction. Microsoft nudged higher. Wedbush's Dan Ives raised his MSFT stock price target to 550 from 500.
Stocks In Buy Areas
Chipotle stock popped 3.25% to 3,272.13, clearing a consolidation that was just shy of being a flat base. CMG stock also bounced off the 50-day line and is still in range of that level.
Meta stock climbed 2.3% to 504.16. Shares are working on a 531.49 cup-base buy point. The Facebook and Instagram parent offered an early entry as it broke above the 50-day line on June 5. Meta is still in range of the 50-day, though investors could wait to see if it forges a handle and a lower official buy point.
Spotify stock gained 1.6% to 313.05 for the week. Shares are slightly below a 319.30 flat-base buy point, according to MarketSurge. SPOT stock briefly broke out in early June but then fell back, testing the 50-day line on Thursday. Friday's bounce could be a place to start a position.
Pinterest stock edged down 1.3% to 43.52, in range of a 41.60 cup-base buy point and an alternate entry of 43.12. Shares fell Friday morning to test their 21-day line on a report indicating weaker growth trends. But PINS stock quickly rebounded to finish the day 0.7% higher.
Universal Health stock nudged 0.2% higher for the week. UHS stock tested its 182.92 cup-with-handle buy point and the 21-day line on Thursday and Friday before closing strong both sessions. The hospital operator now has a three weeks tight with a 90.50 buy point that could serve as an add-on entry.
Netflix stock ran up 4.35% to 669.38 last week. Friday's 2.5% gain pushed NFLX stock to the edge of the 5% buy zone of a 639 cup-base entry. However, it's just above 664.25, an entry from a three-weeks tight or a high handle
Microsoft stock rose 18.72 points last week to 442.57, reclaiming a 430.82 flat-base buy point.
Tesla Vs. BYD: EV Giants Vie For Crown, But Which Is The Better Buy?
Tesla Stock
Tesla stock edged up 0.3% to 178.01 last week, continuing a string of tight weekly closes. Shares popped to 191.08 Thursday morning as Elon Musk said a shareholder vote on his huge pay deal was set to pass easily, which Tesla confirmed that evening. But TSLA stock largely erased those gains.
Tesla stock now has a new base with a 198.87 buy point, forged just above the 50-day line.
But shares are still 14.9% below the 200-day line and in a downtrend. Also, Tesla's fundamentals are poor, despite ongoing enthusiasm among die-hard bulls for moonshot bets.
Cybertruck deliveries have been halted, Electrek reported, apparently due to a problem with its windshield wiper.
What To Do Now
This is a tricky market. The Nasdaq is looking stretched while much of the market is struggling somewhat.
Many stocks continue to work well, though fewer than before.
If you have heavy exposure, you don't need to be taking much action. If you add positions, do so incrementally or offset that by cutting losers.
In the past couple of weeks, a lot of recent buying opportunities have quickly fallen back, though they sometimes bounce back.
If the broad market rebounds, stocks that have been setting up could offer new entries, so have them in your sights now. Meanwhile, keep your exit strategies prepped.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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