The S&P 500 index hit a 14-month high as the stock market rally picked up steam last week. The Dow Jones and Nasdaq Composite Indexes are back near their 2023 highs Apple (AAPL) closed for the first time on Friday with a market cap of $3 trillion.
Dow Jones futures open Sunday night, as do S&P 500 futures and Nasdaq futures. Tesla (TSLA) and China EV rivals will be the focus over the weekend.
Nvidia (NVDA), HubSpot (HUBS) Marriott International (TO DAMAGE), General Electric (GE) and JPMorgan Chase (JPM) are all blinking buy signals.
The only concern is that the Nasdaq is already widening, increasing the risk of another market decline in the near term.
Tesla shares, Nvidia and HubsSpot are on the IBD leaderboard. HubSpot is on the IBD 50. HubSpot and Tesla stocks are on the IBD Big Cap 20.
The video embedded in this article discussed the major market moves and analyzed Nvidia, HubSpot, and JPM stocks.
Chinese electric car startups Li car (LI), noo (NIO) and XPeng (XPEV) will report June and second quarter shipments on Saturday. Tesla and BYD (BYDDF) is expected to release June and Q2 sales over the weekend. Li Xiang, CEO of Li Auto, said Friday that June sales surpassed 32,000, a new record, and comfortably surpassed the target of 30,000.
Dow Jones futures today
Dow Jones futures open at 6:00 p.m. ET on Sunday, as do S&P 500 futures and Nasdaq 100 futures.
Keep in mind that nightly action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks from the stock market rally on IBD Live
stock market rally
The stock market rally continued a brief decline on Monday before bouncing back strongly.
The Dow Jones Industrial Average gained 2% in trading last week. The S&P 500 index rose 2.35%. The Nasdaq Composite rose 2.2%. The Russell 2000 small-cap index rose 3.7%
In the first half of 2023, the S&P 500 is up 15.9%, its best half-year start since 2019. The Nasdaq is up 31.7%, its best since 1983.
The Dow is up a modest 3.8% and the Russell 2000 is up 7.4%.
AAPL stock is up 3.9% last week and 49% so far this year, giving it a market cap of $3.05 trillion. It's the first time Apple or any other company has closed at a $3 trillion valuation.
The 10-year government bond yield rose 8 basis points to 3.82%, hitting a three-month high on Friday morning.
US crude futures rose 2.1% to $70.64 a barrel last week but fell 6.65% for the quarter. Copper futures fell 1.6% this week but ended a six-day losing streak on Friday.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) is up 5.3% to a seven-month high last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) is up 5.25%. The iShares Expanded Tech-Software Sector ETF (IGV) is up 2.7% with HUBS stock an IGV stock. The VanEck Vectors Semiconductor ETF (SMH) is up 3.2%. Nvidia stock is #1 on SMH.
The ARK Innovation ETF (ARKK) is up 4.75% and the ARK Genomics ETF (ARKG) is up 4% last week, reflecting more speculative story stocks. Tesla stock is Ark Invest's #1 ETF. Cathie Wood's Ark also owns a small amount of BYD stock.
The SPDR S&P Metals & Mining ETF (XME) climbed 4.4% last week, hitting its 200-day moving average for the first time in two months. The Global X US Infrastructure Development ETF (PAVE) rose 4.6% to a new high. The US Global Jets ETF (JETS) rose 6% to its best in 52 weeks. SPDR S&P Homebuilders ETF (XHB) is up 4.5% for its fifth straight weekly gain. The Energy Select SPDR ETF (XLE) rallied 4.9% and the Health Care Select Sector SPDR Fund (XLV) edged up 0.55%. The Industrial Select Sector SPDR Fund (XLI) was up 3.9%, just below the record high. GE shares are an important XLI component.
The Financial Select SPDR ETF (XLF) rose 3% to close above its 200-day moving average for the first time since early March. JPM stock is an important holding. The SPDR S&P Regional Banking ETF (KRE) gained 3.2% after falling 8.1% the previous week.
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Stocks in buy zones
Nvidia shares edged up 0.2% last week to 423.02 but rallied 3.6% on Friday, moving from near the 21-day moving average and breaking a brief downtrend. This provided an opportunity to open a position or perhaps add a few shares to an existing position. Throughout the week, Nvidia ignored reports that the Biden government would expand its chip export restrictions to China and add more Nvidia products.
HUBS shares rose 3.9% to 532.09 last week, rebounding off the 21-day moving average and breaking through most of a four-week tight pattern. For intraday trading, HubSpot briefly surpassed the 535.12 buy point on Friday.
MAR stock rose 7.1% to 18.69, enjoying a week of strong uptrend, retaking the 50-day moving average and clearing buy points just above 183 to hit a 52-week high. Marriott's volume was below average all week.
According to a weekly MarketSmith chart, GE stock rose 5.85% to 109.85, rebounding off the 10-week moving average and surmounting a three-week tight buy point of 108.90.
JPM shares are up 4.75% to 145.44 last week, with all gains from Thursday through Friday. This cleared a flat base buy point of 143.37 and set a 16-month high. JPMorgan and other major banks passed the Fed's stress tests late Wednesday, as expected. Banking giants, and particularly JPMorgan, may have a long-term competitive advantage over regional banks after the recent crisis.
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Electric vehicle sales in China
Li Auto basically pre-announced sales for June, which would indicate second-quarter deliveries of about 84,000. The hybrid SUV maker, which will launch its first all-electric model later this year, is enjoying tremendous momentum right now.
Nio is trying to get back on its feet as deliveries of the completely revamped ES6 SUV pick up speed. Nio has also made some price cuts over the past few weeks. XPeng sales are likely to be weak, but the electric vehicle maker has high hopes for its G6 crossover, with deliveries set to begin in July.
EV giant BYD is expected to report record monthly and quarterly sales, perhaps around 250,000 EVs in June.
Li Auto shares rose 5.7% to 35.10 last week, hitting their best in almost 10 months. Nio stock is up nearly 15% to 9.69, nearing its 200-day moving average. Xpeng shares rose 36% to 13.42, overcoming a seven-month consolidation.
BYD shares fell 1.7% to 32 last week but rebounded off its 50-day moving average on Friday. Shares range from a buy point of 31.07.
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According to FactSet, Tesla deliveries are expected to increase to around 445,000 in the second quarter. That would be up from 422,875 in the first quarter and 405,278 in the fourth quarter.
After huge price cuts around the world in the first quarter, Tesla made some official price cuts and some modest price increases in the second quarter. But it offered significant inventory discounts and other incentives that could put further pressure on gross margins. But that won't be clear until its second-quarter earnings report in late July.
Production is likely to have exceeded deliveries again, even as Tesla throttled production well below capacity.
Tesla shares rose 2% to 261.77 last week, even after falling 6.1% on Monday. Shares have more than doubled in 2023 and are a long way off recent buy points.
Analysis of the market rally
The stock market rally has resulted in an almost textbook uptrend over the past week. The Dow Jones, S&P 500 and Nasdaq Composite were all uptrends outside of the weeks after testing or undercutting their 21-day moving averages. The S&P 500 hit a 14-month high while the Nasdaq hit a 14-month close. The Dow is just below its 2023 highs.
The Russell 2000 hasn't had an entirely bad week, but it has raced towards recent highs.
The Invesco S&P 500 Equal Weight ETF (RSP) rose 3.4%, hitting its best in nearly four months and outperforming the S&P 500.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) gained 2.8%, outperforming the Nasdaq 100's 1.9% gain.
Advance/Decline lines have improved over the past few days after weakening during the recent decline, particularly on the NYSE.
A large number of leading stocks from various groups — chips, software, travel, real estate, industrials, retail/restaurants, and even some financials — broke out or gave various buy signals.
The only yellow flag is that the strong market rally is too strong.
When the Nasdaq rises 6-7% above its 50-day moving average, the risk of a pullback increases. In recent years, the Nasdaq has sometimes risen by 10% or more, such as when it peaked in mid-June. Because the market decline was so shallow and short, the Nasdaq is already 7.6% above its 50-day moving average. The Nasdaq 100, which includes Apple stock, Nvidia, Tesla and other big companies, is 8.3% above the 50-day moving average.
The S&P 500 is also on the verge of an extension at 5.3% above the 50-day moving average.
Plan the market with IBD's ETF market strategy
The short-lived decline in the equity markets created numerous buying opportunities across various sectors.
Investors could have built up some exposure over the past few days. You can still do this, but do it gradually and be ready to cut losses quickly. There is already an increased risk of another market decline.
Returning to IBD Live on Friday, Mike Webster discussed the importance of ranking your stocks or potential purchases based on a variety of fundamental and technical factors. Review your portfolio to see which stocks you might want to get rid of and which ones you'd like to add.
Run your screens and grow your watch lists. Pay particular attention to stocks near or in buy zones that deserve an A rating.
Read The Big Picture daily to stay up to date on market direction and the leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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