Dow Jones futures were little changed Monday morning, along with S&P 500 futures and Nasdaq futures. Ousted OpenAI CEO Sam Altman will join Microsoft after a weekend of drama. Nvidia earnings loom large for the stock market rally and a slew of artificial intelligence plays.
Those include Microsoft, Google parent Alphabet, Meta Platforms, Palantir Technologies and Super Micro Computer.
The stock market rally had another strong week, buoyed by tame inflation and falling Treasury yields. The major indexes paused late in the week, but didn't want to go down. A pause or pullback could be constructive, letting some leaders forge handles or other entries.
The Nasdaq is about to enter a "power trend," perhaps as soon as Monday. Power trends are a time to be aggressive, but still disciplined.
Nvidia, Microsoft, Meta and Google stock are all in buy areas, with PLTR stock and Super Micro around entries. Obviously, Nvidia earnings could be a big positive or negative catalyst.
Microsoft stock, Nvidia and Meta Platforms are on IBD Leaderboard. META stock is on SwingTrader. MSFT stock is on the IBD Long-Term Leaders list. Nvidia stock, Microsoft and Super Micro are on the IBD 50. Microsoft, Meta Platforms and SMCI stock are on the IBD Big Cap 20.
The video embedded in this article discusses the weekly market action and analyzes NVDA stock, Novo Nordisk and MongoDB.
Dow Jones Futures Today
Dow Jones futures fell slightly vs. fair value. S&P 500 futures edged lower and Nasdaq 100 futures tilted higher. Microsoft stock was a slim boost to Dow, S&P and Nasdaq futures.
The 10-year Treasury yield rose a few basis points to 4.47%.
Crude oil futures climbed nearly 2%.
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 surged on Tuesday's tame inflation report, then slightly added to gains the rest of the week.
The Dow Jones Industrial Average gained 1.9% in last week's stock market trading. The S&P 500 index popped 2.2%. The Nasdaq composite leapt 2.4%.
The small-cap Russell 2000 surged 5.4%, despite being rejected from the 200-day line. The Invesco S&P 500 Equal Weight ETF rallied 3.4% to retake its 200-day.
The First Trust Nasdaq 100 Equal Weighted Index ETF, which has been a good proxy for growth stock leadership, jumped 2.9%, getting above its October highs.
The Nasdaq 100 has run up to just below July's 52-week high.
The Nasdaq composite and S&P 500 are trading right around their Sept. 1 short-term peaks, with July's 52-week highs the next hurdle.
The market is pausing, sort of, but it's definitely not a pullback. The S&P 500 and Nasdaq are on four-day win streaks. Since bottoming in late October, those indexes have only had two down sessions.
Leading stocks are acting well and broadening out. Chip, software, as well as some e-commerce, retail, financial, travel and industrial/aerospace plays, are among the leaders.
The 10-year Treasury yield tumbled nearly 19 basis points to 4.44%, hitting the lowest levels in two months.
U.S. crude oil futures fell 1.7% to $75.89 a barrel last week. During the week, crude hit the lowest since July, but roared back 4.1% on reports that OPEC+ may cut production further.
Power Trend
Not all market rallies are alike. Some are choppy and short-lived, while others show real power. A power trend marks the latter.
The power trend includes several criteria, some of which have already been met.
The Nasdaq has traded above the low of the 21-day exponential moving average for at least 10 straight sessions. The 50-day moving average is trending higher.
What's left?
The 21-day line EMA must close above the 50-day line for five straight sessions. Monday will mark day five.
If Monday is a positive session for the Nasdaq, the power trend will begin. If not, the power trend will start with the next up day.
Power trends are a time to be more aggressive, including being more open to aggressive growth names and being willing to hold stocks for longer.
Market rallies in power trends often go on to big gains, but sometimes power trends quickly fizzle out. So keep following the market's actions.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF popped 2.65% to a 52-week high. MSFT stock is a major component and PLTR stock also a significant holding. The VanEck Vectors Semiconductor ETF leapt 3.4% to a record high. Nvidia stock is the biggest holding in SMH.
Reflecting more-speculative story stocks, ARK Innovation ETF spiked 10% last week and ARK Genomics ETF soared 14.4%.
SPDR S&P Metals & Mining ETF ran up 6.5% last week. The Global X U.S. Infrastructure Development ETF advanced 3.6%. SPDR S&P Homebuilders ETF stepped up 6.3%. The Energy Select SPDR ETF advanced 1.5% and the Health Care Select Sector SPDR Fund 1.6%. The Industrial Select Sector SPDR Fund gained 3%, breaking a downtrend.
The Financial Select SPDR ETF jumped 3.2% and the SPDR S&P Regional Banking ETF spiked 9.3%.
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Nvidia Earnings
Nvidia earnings are due Tuesday night. Wall Street expects fiscal Q3 earnings to skyrocket 481% with revenue up 173% to $16.19 billion. But after two massive beat-and-raise reports, investors might be looking for a lot more than that.
Analysts also will be looking for commentary about the impact of tighter China export controls.
Nvidia stock rose 2% last week to 492.98, moving higher in a buy zone from a double-bottom base. The official buy point is 476.09. Like the broader market and many leaders, NVDA stock largely paused after Tuesday.
OpenAI Shake-up
Shortly before Friday's close, Microsoft-backed OpenAI said CEO Sam Altman was out because the "board no longer has confidence" in his leadership. Friday evening, Greg Brockman, OpenAI's president and co-founder, said he was quitting due. Some other top OpenAI staff also left.
But with OpenAI's staff and key investors such as Microsoft objecting, OpenAI tried to reinstate Altman over the weekend.
Ultimately, Altman and Brockman "will be joining Microsoft to lead a new advanced AI research team," Microsoft CEO Satya Nadella wrote on X, early Monday morning.
Nadella said Microsoft is still "committed to our partnership with OpenAI." Microsoft has a 49% stake in OpenAI.
Wedbush's Dan Ives said hiring OpenAI co-founders Altman and Brockman puts Microsoft in an even "stronger" AI position than before.
AI Stocks
Microsoft stock settled for a 17-cent gain last week to 369.84, pulling back 1.7% Friday from Thursday's record high. Shares are holding in range of a 366.78 cup-base buy point. A longer pause would let the moving averages catch up.
On Tuesday, Microsoft announced an-house AI chip to ease its reliance on Nvidia and others.
Most of Friday's losses came on the OpenAI news.
MSFT stock fell 1% late Friday. But with Altman joining Microsoft, shares rose about 1% early Monday.
Google stock rose just over 2% to 135.31 last week, moving back above the 50-day line, despite Friday's 1.2% retreat. Investors could use Thursday's high of 137.22 as an early entry in a flat base. The official buy point is 141.22.
The Information reported Thursday night that Google is delaying to early 2024 the launch of Gemini, a potential rival to OpenAI's ChatGPT 4.
Meta stock climbed 1.9% to 335.04, moving within the buy zone of a consolidation going back to late July.
PLTR stock rose 4.2% to 20.49, clearing a 20.24 cup-base buy point, according to MarketSmith analysis. At 23% above its 50-day line, a pause around these levels would be healthy. But Palantir stock has shown little inclination to do so.
SMCI stock leapt 8.5% for the week to 288.59, largely on Tuesday's 14.9% surge. It has a 317.50 buy point from a less-than-ideal double-bottom buy point. Super Micro stock is pausing around some key levels and a downward-sloping trendline. A move above Wednesday's high of 297.48 could offer an early entry.
These are just some of the many AI-related plays, many of which could swing on Nvidia earnings and guidance.
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Market Rally Analysis
The stock market rally continues to act very well, reflected by the upcoming power trend. Investors can keep adding exposure, though they might decide to wait for new setups as well as Nvidia earnings.
There are plenty of important earnings reports this coming week. On Tuesday, the same day as Nvidia reports, Abercrombie & Fitch, American Eagle Outfitters, Urban Outfitters and China's Miniso are on tap.
Keep working on watchlists. You want to be ready if the market rally revs higher again. On the flip side, have a game plan if the market or specific holdings have a significant pullback.
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