Dow Jones futures were little changed Sunday evening, along with S&P 500 futures and Nasdaq futures. The Federal Reserve meeting looms as investors look for a shift toward rate cuts.
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The stock market rally enjoyed modest weekly gains, with the major indexes reversing higher after Wednesday. The S&P 500 hit a 2023 high Friday while the Nasdaq is right on the cusp. A number of stocks are trying to move out, including several chip plays. The market rally looks ready to run, but bullish sentiment is already elevated.
Advanced Micro Devices (AMD) surged past buy points last week on new AI chips, challenging Nvidia (NVDA) in the huge, fast-growing artificial intelligence accelerator market. Nvidia stock, for its part, rebounded back toward a buy point and tripped some early entries. Arm Holdings (ARM) broke out of its IPO base Friday. Broadcom (AVGO) nudged back a buy point Friday following earnings. Taiwan Semiconductor (TSM), which makes chips for Nvidia, AMD, Broadcom Apple (AAPL) and many others, often from Arm chip designs, flashed an early entry Friday.
Meanwhile, Tesla (TSLA) continues to trade tightly while slowly advancing toward its own aggressive entries.
Finally, the FDA approved a first-ever gene-editing treatment from Crispr Therapeutics (CRSP) and Vertex Pharmaceuticals (VRTX). But CRSP stock, which had surged Friday morning and over the past several weeks, reversed sharply lower on the announcement in a classic “sell the news” event.
The last Fed meeting of 2023 takes place Tuesday-Wednesday. No action is expected, but Fed chief Jerome Powell could signal that he and his policymakers are now leaning toward cutting rates in 2024.
Cigna (CI) reportedly has given up efforts to merge with rival Humana (HUM). Instead, the health insurer on Sunday hiked its buyback program by $10 billion, after CI stock had tumbled on takeover buzz.
Macy’sM reportedly has received a $5.8 billion buyout offer.
The video embedded in the article highlighted the weekly market action and analyzed Arm Holdings, Microsoft (MSFT) and CRSP stock.
ARM stock was added to IBD Leaderboard on Friday, joining Nvidia. Nvidia stock is on SwingTrader and the IBD 50. AMD was Thursday’s IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures rose 0.1%, while S&P 500 futures climbed 0.1%. Nasdaq 100 futures were just below break-even.
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 started the week lower, but rebounded Thursday and finished with modest gains on the major indexes.
The Dow Jones Industrial Average rose 2 points in last week’s stock market trading. The S&P 500 index rose 0.2%. The Nasdaq composite rose 0.7%, staging an upside reversal after undercutting some short-term lows on Monday.
On Friday, the S&P 500 cleared its 2023 high set in July, while the Nasdaq set a closing high for the year. A decisive clearing of the recent range would suggest the market rally is starting another leg higher.
The small-cap Russell 2000 climbed 1%, working its way back as market breadth improves.
Some leading stocks broke out this past week, while many others forged handles or pulled back to key levels. While chips and software continued to do well, industrials, financials and travel plays also showed some strength.
The 10-year Treasury yield rose 2 basis points to 4.24%. The 10-year yield jumped more than 11 basis points Friday following the November jobs report. The two-year Treasury yield leapt 16 basis points to 4.725%, nearly all of that on Friday.
Recently the inverse relationship between Treasury yields and stock prices has weakened. Investors are no longer concerned about inflation or Fed rate hikes, and don’t want the economy to slow too much. The November jobs report
U.S. crude oil futures fell 3.8% to $71.23 a barrel last week, even with Friday’s 2.7% bounce from multimonth lows.
One caveat: The CBOE Volatility Index, or VIX, fell Friday to the lowest since January 2020. When the market fear gauge gets unusually low, it’s a sign of excessive bullishness or complacency. That raises the risk of a market pullback. But it doesn’t have to happen right away and it doesn’t have to be deep or long lasting.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.9%, but after a huge five-week run. The VanEck Vectors Semiconductor ETF (SMH) rose 0.8%, but with big upside reversal late in the week. Nvidia, AMD, Broadcom and TSM stock are all top-five SMH holdings.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) gained 1.55%% last week and ARK Genomics ETF (ARKG) fell 1.4%. Tesla stock is a major holding across Ark Invest’s ETFs. CRSP stock also is a top Cathie Wood holding.
SPDR S&P Metals & Mining ETF (XME) slumped 4% last week, with weakness in coal, steel, copper and gold plays. The Global X U.S. Infrastructure Development ETF (PAVE) edged up 0.2%. U.S. Global Jets ETF (JETS) soared 6.5%. SPDR S&P Homebuilders ETF (XHB) leapt 3.5% to a record high. The Energy Select SPDR ETF (XLE) slumped 3.3% and the Health Care Select Sector SPDR Fund (XLV) edged up 0.2%, with VRTX stock a component. The Industrial Select Sector SPDR Fund (XLI) nudged up 0.2%.
The Financial Select SPDR ETF (XLF) dipped 0.1% and the SPDR S&P Regional Banking ETF (KRE) jumped 3.2%.
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Chip Stocks Near Buy Points
AMD stock vaulted 6.2% to 128.92 this past week. Shares cleared two cup-with-handle buy points Thursday, 122.11 on a daily chart and 125.37 on a weekly chart. While AMD stock is slightly extended from the 122.11 entry, it’s still in the buy zone from 125.37. On Wednesday, AMD unveiled its new AI chip lineup to take on Nvidia. Microsoft, Meta Platforms (META) and Oracle (ORCL) are early buyers, as they seek to lessen their dependence on Nvidia GPUs.
Nvidia stock started the week falling to its 50-day line, but rebounded on Thursday and Friday. Shares finished up 1.6% to 475.01, back above the 21-day moving average. NVDA stock is just shy of reclaiming a still-valid 476.09 double-bottom buy point, though investors could have taken action Friday afternoon.
Arm stock jumped 7.7% to 67.23 on Friday, clearing a 64.92 cup-with-handle IPO base in heavy volume. The relative strength line hit a record high on the breakout. The U.K. wireless chip design giant came public at 51 a share and hit 69 intraday on Sept. 15, its second day of trading. Arm designs are used by a slew of chipmakers.
AVGO stock rose 1.5% for the week to 944.30, rebounding from the 50-day/10-week line on Thursday. On Friday, Broadcom stock moved back above a still-valid 923.67 flat-base buy point in very heavy trade. Shares also decisively cleared the 21-day line and broke a short downtrend.
Late Thursday, Broadcom earnings slightly beat fiscal Q4 estimates. The chip-and-software giant gave upbeat fiscal 2024 guidance and hiked its dividend by 14%.
TSM stock gained 1.8% to 100.35 this past week in a solid upside reversal. The chip foundry giant has a 100.70 cup-with-handle buy point. Shares just broke a downtrend in the handle on Friday, offering an early entry. On Friday, Taiwan Semiconductor reported November sales fell vs. a year earlier.
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Tesla Stock
Tesla stock rose 2.1% to 243.84, a fourth straight weekly gain. The EV giant has been trading tightly the past few weeks, and has found support at the 50-day line. TSLA stock has a 278.98 double-bottom buy point, according to MarketSmith analysis. Investors could use a trendline break just below 250 or the Nov. 29 high of 252.75 as an early entry.
Seemingly every active investor is focusing on those Tesla stock levels. Is it too obvious?
What To Do Now
The stock market rally continues to trade in a sideways pattern, but is getting very close to 2023 highs. Some leading stocks are already pushing out, while others are getting close.
Hopefully, most investors are already heavily invested. You might incrementally add to exposure, perhaps taking profits or cutting laggards to partially offset new buys.
If the S&P 500 and Nasdaq break out to 2023 highs, that could signal a new leg in the market rally, bolstering the case for getting more aggressive. Many recent setups would likely trigger in that scenario.
So be prepared. Work on your watchlists. While this article highlighted Tesla and five big chip stocks, leaders have emerged from a variety of sectors. So cast a wide net.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on X/Twitter at @IBD_ECarson, Threads at @edcarson1971 and Bluesky at @edcarson.bsky.social for stock market updates and more.
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