Dow Jones futures fell while S&P 500 futures and Nasdaq futures, rose slightly after U.S. markets were closed for Memorial Day.
The stock market rally had a mixed week, despite Nvidia soaring on booming earnings and guidance. The Nasdaq hit a record high, shrugging off Thursday's ugly downside reversal. The S&P 500 was little changed after briefly marking all-time high levels. The Dow Jones and Russell 2000 had solid losses as consumer, housing, commodity and software names struggled.
Microsoft and fellow Dow giant Merck are near buy points. Netflix, Eli Lilly, TJX Cos., Arista Networks and Crocs are in buy zones.
Investors can take advantage of opportunities, but shouldn't feel compelled to add exposure either.
Key Earnings
This coming week, Salesforce.com, Cava, Dell Technologies, Abercrombie & Fitch, Costco Wholesale and Pure Storage are among the notable earnings reports.
Costco and Abercrombie & Fitch are in buy zones, while Cava, Dell and Pure Storage are all extended. Dow giant Salesforce is struggling, but its report will be key for the enterprise software sector after weak Workday guidance.
Early Friday, the Commerce Department will release the core PCE price index, the Fed's primary inflation gauge. Economists expect the core PCE price index to rise a modest 0.2% in April. There's also a chance of a slight downward revision to core inflation in the year's first three months.
Nvidia stock, Eli Lilly and Cava are on IBD Leaderboard. TJX and Crocs stock are on SwingTrader. Microsoft stock is on IBD Long-Term Leaders. Nvidia, Arista Networks and Netflix stock are on the IBD 50. Netflix and Arista stock are on the IBD Big Cap 20. Crocs was Friday's IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures climbed 0.1%. Nasdaq 100 futures rose 0.2%. Nvidia rose more than 2%, adding to its big 15% gain last week. Apple also climbed amid rebounding iPhone sales in China.
The 10-year Treasury yield dipped to 4.46%.
Crude oil futures rose more than 1%. Copper futures added 1%.
U.S. stock markets were closed Monday in observance of Memorial Day, but other exchanges around the world were 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 had a mixed week, with Nvidia and, to a lesser extent, Microsoft lifting the Nasdaq. But there was weakness in much of the market.
The Dow Jones Industrial Average tumbled 2.3% in last week's stock market trading. The S&P 500 index closed fractionally higher after briefly hitting a record high Thursday.
The Nasdaq composite rose 1.4%, its fifth straight weekly gain as it set all-time record levels. The tech-heavy index bounced back on Friday to a record close, but it was an inside day to Thursday's downside reversal.
Market breadth was weak, with many sectors slumping as well as a number of leading stocks. While Nvidia stock soared, other AI stocks were little changed or declined. That said, many stocks are working or setting up, just not as plentiful as a week earlier.
The small-cap Russell 2000 fell 1.2%, testing the 50-day line on Thursday.
The Invesco S&P 500 Equal Weight ETF slumped 1.25%, also testing the 50-day line on Thursday.
The First Trust Nasdaq 100 Equal Weighted Index ETF edged up 0.2%, lagging the Nasdaq 100's 1.4% gain.
The 10-year Treasury yield rose five basis points to 4.47% for the week.
U.S. crude oil futures fell 2.3% to $77.72 a barrel last week, but did rise 1.1% on Friday.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF fell 1.6%. Microsoft stock is a huge IGV holding. The VanEck Vectors Semiconductor ETF surged 6.1%, with NVDA stock the dominant member.
SPDR S&P Metals & Mining ETF fell 1% last week. The Global X U.S. Infrastructure Development ETF edged up 0.3%. U.S. Global Jets ETF sank 3.4%. SPDR S&P Homebuilders ETF declined 1.9%. The Energy Select SPDR ETF skidded 3.8%.
The Health Care Select Sector SPDR Fund fell 1.3%, even with Eli Lilly stock a major XLV holding. The Industrial Select Sector SPDR Fund dipped 0.7%
The Financial Select SPDR ETF declined 2.1%
Reflecting more-speculative story stocks, ARK Innovation ETF retreated 2.2%% last week and ARK Genomics ETF slumped 3.4%.
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Stocks Near Buy Points
Microsoft stock rose 2.4% to 430.16 last week, closing just below a 430.82 buy point from a flat base. Shares are already actionable after clearing a trendline entry around 427 on Tuesday.
Merck stock fell 1.3% to 129.48 last week, but is still close to a flat-base buy point of 133.10, according to MarketSurge analysis. Shares have been trading around the 21-day line and just above the 10-week average for the past several weeks.
Arista stock fell 4.2% to 306.48, sliding below the 307.74 cup-base entry but nearly ending the week back in the buy zone. Shares tumbled as low as 289.41 on Thursday on concerns that Nvidia will pose a big competitive threat. But ANET stock rebounded off the 10-week line and rose modestly Friday.
Stocks In Buy Zones
Crocs stock jumped 4.4% on Friday to 148.93, clearing a 146.79 cup-base buy point. Shares broke out after surprisingly strong earnings from peer Deckers Outdoor. Back on May 7, Crocs gapped above the 50-day line on its own strong quarterly report. The relative strength line for Crocs hit a 52-week high Friday, a bullish sign for a breakout. The RS line, the blue line in the charts provided, tracks a stock's performance vs. the S&P 500 index.
Netflix stock popped 4.1% last week to 646.75, above a 639 cup-base buy point. The RS line for NFLX stock is just below a 52-week high.
Eli Lilly stock leapt 4.8% to 806.77, breaking out Tuesday above a 795.50 buy point from a handle on a shallow double-bottom base. Lilly reported strong late-stage trial results for a Crohn's disease treatment.
TJX stock climbed 1.9% to 102.17, just above a 102.04 double-bottom buy point. Shares surged to a record 104.98 on Wednesday following earnings, but finished well off highs.
What To Do Now
The past week shows why it's a good idea to add exposure gradually. Thursday's downside reversal was painful for investors who got very aggressive right into that market top. But for those who had steadily made buys from early May, Thursday was simply a disappointing session in a bullish stretch.
The market rally has narrowed somewhat, with various sectors struggling recently. Some of those may be temporary, constructive pauses but others could be more significant.
Investors could choose to add new buys, depending on their exposure levels or risk tolerance. But if you're heavily invested, you could sit tight or offset new buys with some sells.
It's definitely a time to be prepared and stay engaged. Build up your watchlists over the long weekend but also have your exit strategies in place.
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