Dow Jones futures were little changed early Monday, along with S&P 500 futures and Nasdaq futures. Crude oil futures fell while Treasury yields rose to a 2024 high.
The stock market pulled back last week, highlighted by Thursday's downside reversal that pushed the uptrend to "under pressure." But the major indexes rebounded Friday. A few leaders flashed buy signals, but with head fakes continuing as well. Many are near early entries or working on new consolidations.
Investors should be watching closely and could consider some incremental buys. However, it's still a rangebound market.
Nvidia fell last week but is close to forging a new base. Broadcom, Taiwan Semiconductor and recent IPO Astera Labs also are working on potential bases, while ARM Holdings already has one. Super Micro Computer, closely tied to AI chips, also is forging a base.
Super Micro and Nvidia are the top S&P 500 performers in 2024.
Tesla retreated amid weak first-quarter deliveries and other negative headlines. Shares rose early Monday as Elon Musk said Tesla would unveil a robotaxi on Aug. 8.
Nvidia and ARM stock are on IBD Leaderboard. Nvidia stock and Arm Holdings are on the IBD 50. Nvidia, Broadcom and Super Micro stock are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures were slightly above fair value. S&P 500 futures were little changed and Nasdaq 100 futures rose a fraction.
The 10-year Treasury yield jumped to 4.46%, which would be a 2024 high. Crude oil futures fell slightly. Both could reflect easing Mideast tensions as Israel pulled some troops from Gaza.
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 modest-to-solid weekly losses, but ended on a high note Friday.
The Dow Jones Industrial Average slumped 2.3% in last week's stock market trading, but reclaimed the 50-day line on Friday. The S&P 500 index fell 0.95% and the Nasdaq composite declined 0.8%, but both ended back above their 21-day lines. The small-cap Russell 2000 tumbled 2.9%, unable to close above its 21-day on Friday.
On Thursday, stocks suffered a sharp downside reversal on Mideast tensions. But they rebounded Friday, even in the face of a strong jobs report, perhaps as Mideast fears ebbed.
The Dow, which undercut its 50-day line Thursday, rebounded Friday. The S&P 500, Nasdaq and Russell 2000 regained their 21-day moving averages. The Nasdaq and Russell 2000 bounced from their 10-week averages.
Still, Friday was an inside day for the major indexes, while volume fell vs. Thursday.
Despite some daily swings, the Nasdaq has been trading relatively tightly since early March, finding 10-week line support. The Russell 2000 is around the top of a consolidation from the tail end of 2023. That has let many leading stocks work on bases or pull back to key support. Several leaders tried to clear entries during the week, but many quickly pulled back.
The 10-year Treasury yield jumped 18.5 basis points to 4.38%, the highest close of 2024. The 10-year yield hit a 2024 intraday high of 4.43% on Wednesday morning. The odds of a June Fed rate cut fell to just 53.2% on Friday, and were essentially flat early Monday.
U.S. crude oil futures jumped 4.5% to $86.91 a barrel for the week, hitting their best levels since October.
Fed Rate-Cut Odds On Cusp Of Big Shift
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF fell 1.3% for the week. The VanEck Vectors Semiconductor ETF declined 1%. Nvidia is a massive SMH holding, with Broadcom and Taiwan Semiconductor also key holdings.
SPDR S&P Metals & Mining ETF jumped 2.9% last week. The Global X U.S. Infrastructure Development ETF dipped 0.2%. U.S. Global Jets ETF descended 4.2%. SPDR S&P Homebuilders ETF retreated 2.7%.
The Energy Select SPDR ETF leapt 3.9% and the Health Care Select Sector SPDR Fund fell just over 3%. The Industrial Select Sector SPDR Fund slipped 0.2%. The Financial Select SPDR ETF declined 1.3%.
Reflecting more-speculative story stocks, ARK Innovation ETF sold off 5.9% last week and ARK Genomics ETF plunged 7.1%. Tesla stock is a major holding across Ark Invest's ETFs.
Time The Market With IBD's ETF Market Strategy
Nvidia Stock
Nvidia stock fell 2.6% to 880.08, a second straight weekly decline after a huge 11-week run. Shares did rebound Friday to close pennies above their 21-day line. The AI chip leader is now four weeks into a possible flat base. The buy point would be 974, marking the high of NVDA stock's big reversal day on March 8. Another week could let the fast-rising 10-week line close the gap significantly.
Thursday's high of 906.34 would offer an early entry from a very short trendline.
A new base would let investors join or add to the clear leader of the AI stock market rally. An Nvidia breakout would have a big impact on the broader market, especially other AI chip stocks.
Mike Webster On Staying In SMCI Stock
AI Chip Stocks
Broadcom stock rose 1.1% to 1,339.43 last week, holding the 21-day and rebounding from the 10-week line again. On Thursday, AVGO stock briefly cleared a downward-sloping trendline before reversing lower. Shares are five weeks into a possible base with a potential 1,438.17 entry. Investors could use Thursday's intraday high of 1,403.98 as an early entry.
ARM stock dipped 0.1% to 124.82 for the week, finding support at the 10-week but hitting resistance at the 21-day. Shares have forged a base with a 164 buy point. But a downward-sloping trendline or the March 26 high of 145 could be places to least start a position.
Taiwan Semiconductor stock rose 1.2% last week to 141.37, finding support at the 21-day. The foundry giant which makes chips for Nvidia, Apple and many others, is a few weeks into a possible base. Investors could use Thursday's high of 146.75 as an early entry.
Early Monday, the U.S. tentatively agreed to give Taiwan Semi up to $11.6 billion in grants and loans via the Chips Act for building plants in Arizona. TSM now says it plans a third fab in Arizona, making its most-advanced chips.
Shares rose slightly Monday.
Taiwan Semi reports March sales on April 10, with Q1 earnings due on April 18. That could have a big impact on AI chipmakers as well as chip-equipment makers.
Astera Labs stock fell 3.8% to 71.34 last week, but rose on Friday. The AI networking chipmaker started trading on March 20 and hit a record 95.21 on March 26. ALAB stock is eight days into a possible IPO base, which can be as short as two weeks or 10 days. The potential buy point would be 95.21, though investors might look for early entries, with the 75 area being a resistance area.
Super Micro stock is an honorary AI chip play, with its servers a favorite destination for chips from Nvidia and others. SMCI stock tumbled 6.1% to 948.02 last week, below the 21-day line. Super Micro stock is working on a new base, but a 10-week line test may come sooner. Investors might use Thursday's high of 1,057.18 as an early entry.
SMCI stock is up 237% in 2024, making it top performer in the S&P 500 by far. Nvidia is No. 2 at 73.5%.
Astera Labs Is Star In AI Networking Chips
Tesla Stock
Tesla stock fell 6.2% to 164.90 for the week, once again retreating from near the 10-week moving average. Shares briefly matched an 11-month low on Friday.
The EV giant on Tuesday reported first-quarter deliveries that were far below the most bearish estimates. Meanwhile, Reuters reported Friday that Tesla is scrapping plans for a $25,000 EV, shifting focus once again to a robotaxi with no steering wheel.
If true, that would suggest that Elon Musk is pinning Tesla's future growth almost entirely on autonomous driving.
Musk, responding on his social site X, wrote that "Reuters is lying (again)." But he didn't specify what was inaccurate.
Late Friday, Musk said Tesla would unveil a robotaxi on Aug. 8. He gave no other details, such as whether fans would see a prototype, a design or merely an image.
But Tesla's Full Self-Driving is still a Level 2 system, which means human drivers must be ready to take the wheel. So it's unclear when a robotaxi might enter production.
If a robotaxi is being prioritized, that could push back a small EV for years.
Analysts had many questions and a lot of caution regarding Musk's robotaxi announcement.
Meanwhile, new Cybertruck orders won't be delivered until 2025, according to Tesla's website. That could reflect strong demand, still-limited production or even a halt to output.
TSLA stock rose more than 2% early Monday.
Tesla Deliveries Dive, Musk Teases Robotaxi As BYD Rebounds
What To Do Now
The stock market rally is taking a well-deserved break, with moving averages closing the gap. That could set the stage for another leg higher, but there's no guarantee that this would happen soon or even at all.
In the meanwhile, the sideways action has been tricky, with many leading stocks flirting with buy points before quickly falling back. Investors could have tried a few buys, but may have had to cut many loose.
With Treasury yields at 2024 highs and the market ready to push back Fed rate cuts yet again, the market rally faces key potential headwinds.
Investors may want to wait for more convincing strength, such as the Nasdaq and S&P 500 clearing Thursday's intraday highs and testing all-time levels, before significantly adding exposure.
Such a broad market move might be just what Nvidia, ARM and the other AI chip leaders need to get going as well.
Definitely work on your watchlists, looking for those emerging setups. While this article focused on AI chip plays, a large number of software stocks are teasing entries, along leading stocks from a variety of sectors.
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