Dow Jones Futures: Market Rally Shows Strength, Resilience; Why These 2 Chip Stocks Matter

Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures.




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Last week the stock market showed strength and resistance. Major indexes rose on Wednesday in a big reaction to Fed Chairman Jerome Powell’s speech, with the S&P 500 retaking its 200-day moving average. On Friday, the S&P 500 tested and held that key level for the second straight session despite a hot jobs report.

Investors could increase exposure significantly, but the 200-day line is still in play. Don’t be too aggressive until there is definitive clarity on that long-term level.

Dow Jones giant Boeing (BA), lithium giant SQM (SQM), Dexcom (DXCM), Cheniere Energy ( LNG ) and Invesco Solar ETF ( TAN ) are all near buy points. Boeing, Dexcom, SQM stock and TAN ETF – which is included First Solar (FSLR), Enphase Energy (ENPH) and many other major names – now active. The LNG company has a new flat base.

Chip giants Taiwan Semiconductor (TSM) and Nvidia ( NVDA ) has rallied sharply over the past few weeks, closing in on its 200-day moving averages. The responses of Taiwan Semi and Nvidia back to the 200-day lines will not provide buying opportunities, but will be a positive sign for technologies and the overall market. Chips are almost always involved in the latest market developments, because of their market weight and key role in many industries.

Stock Enphase and DXCM are on the IBD Leaderboard. BA stock is on SwingTrader. ENPH stock is on the IBD 50. The TAN ETF was IBD’s Stock of the Day on Friday.

The video included in the article discussed the market action of the past week and analyzed Dexcom, LNG stock and TAN ETF.

The earnings season is finally easing, while the economic calendar is lower next week. But on Sunday, OPEC+ will meet, with the oil cartel and key allies to decide on crude production quotas to start the new year.

Dow Jones Futures Today

Dow Jones futures open at 6:00 PM ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Remember that overnight activity in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular market session.

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Join IBD experts as they analyze active stocks in the market rally on IBD Live


Stock Market Rally

The stock market rally had a strong week. The index’s gains were modest but found support and broke above key resistance.

The Dow Jones Industrial Average rose 0.2% in stock trading last week. The S&P 500 index rose 1.1%. The Nasdaq stock rose 2.1 percent. The small-cap Russell 2000 1.3%.

The 10-year Treasury yield fell 18 basis points to 3.51%, the lowest since late September. Manufacturing rose 10 percent on Friday with a strong jobs report but ended the day slightly lower

US crude oil prices rose 4.9% last week to $79.98 per barrel, but fell back below $80 on Friday. Natural gas has decreased by 14%.

ETFs

Among the best ETFs, the iShares Technology Sector-Expanded Software ETF ( IGV ) rose 2%.

The VanEck Vectors Semiconductor ETF ( SMH ) climbed 1.1% last week, but fell back below its 200-day line on Friday. Stock TSM and Nvidia are the two main components. Taiwan Semi rose 0.1% for the week. Nvidia stock rose 3.7%.

The SPDR S&P Metals & Mining ETF (XME) rose 4.4% last week to its best level in nearly six months. The U.S. Global X Infrastructure Development ETF ( PAVE ) climbed 1%. The United States Global Jets ETF (JETS) climbed. 0.7%. The SPDR S&P Homebuilders ETF ( XHB ) advanced 0.9%. The Energy Select SPDR ETF (XLE) fell 1.7% and the Financial Select SPDR ETF (XLF) fell 1.7%. The SPDR Health Care Select Sector Fund ( XLV ) advanced 1.9%, near a record high. DXCM stock is an XLV component.

The ARK Innovation ETF ( ARKK ) rose 6% last week and the ARK Genomics ETF ( ARKG ) rose 4% as the stocks told more speculative stories.


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Stocks Close to Buy Points

Boeing stock increased by 2.5 percent and reached 182.87 weeks. Boeing rose 4% on Friday, according to a Wall Street Journal report that United Airlines (UAL) is close to buying “dozens” of 787 Dreamliners. BA stock is just a 5% retracement area of ​​the stock’s 173.95-basis buy point, but investors may consider clearing recent levels as an alternative entry.

Last week SQM stock rallied 7.8% to 99.85, retreating from near its 200-day line and retracing its 50-day. While the lithium giant has an official buy point of 112.45 cup-to-hand, an early entry around current levels may be safer.

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DXCM stock rebounded from its 21-day line last week, breaking a short-term consolidation downtrend to offer an early entry. Shares closed up 5.5% at 118.11, still fairly close to its 21-day line, with its 10-week line struggling to hold. According to MarketSmith analysis, Dexcom stock currently has a favorable base on a weekly chart with a buy point of 123.46. That flat base can be seen as a support from a deep cup that goes back to early April.

The LNG stock rose about 1% to 174.72, finding support at its 50-day line. Shares have risen for three straight weeks, but on anemic volume, which is not great. On a weekly chart, Cheniere Energy currently has a bullish base with a buy point of 182.45, followed by a broken box-to-hand base. LNG stock could have an early move above Thursday’s 178.12, which is consistent with some recent trading levels.

The Invesco Solar ETF is in line for a buy point at 83.20, up 1.5 percent to a weekly high of 83.76. The company FSLR and Enphase are the clear leaders, but the whole group returns once again. TAN is a little less volatile than individual solar stocks but can still make big moves.

Market Rally Analysis

The stock market rally had an interesting week, although the lagging Nasdaq was the only major index with a strong gain.

On Wednesday, Fed chief Powell largely reiterated expectations for slower rate hikes, but no immediate end to tightening. But the major indexes climbed on the day, with the S&P 500 retracing its 200-day line for the first time since early April.

Given the hot jobs report and Wednesday’s big move, a market selloff wouldn’t have been a shock on Friday. But the index is hardly complicated. The S&P 500 pared losses and held support at its 200-day line. The Russell 2000, which also bounced back above its 200-day line on Wednesday, quickly bounced back from a test of Friday’s 200-day to close higher.

The Nasdaq retreated from its 50-day moving average midweek and hit a two-month high. The Dow Jones, which led the market rally, rose to a seven-month high.

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Still, the S&P 500 index has yet to decisively clear its 200-day line and is right on an uptrend.

In late March, the S&P 500 appeared decidedly above its 200-day high. But the Nasdaq hit resistance at its 200-day line, retreated and led other indexes lower.

Today, the Nasdaq has some distance to go before reaching its 200-day moving average, but that will also serve as a big test. That’s yet another reason investors will want to see Taiwan Semiconductor and NVDA stocks clear their 200-day lines, even though TSM’s stock is listed on the NYSE.

Still, while some chip names have become pioneers and others are settling in, overall semiconductors and future technologies are the current market rally.

Industrials, infrastructure, solar, financials and medical groups are among those doing well.


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What to do now

Stocks continue to perform well, coming off a big week of Fed-related news.

But progress is unclear, with the S&P 500 still very much in play.

Investors can gradually increase exposure here, although holding onto existing holdings remains a solid strategy. If this market rally ends with real legs, you will have plenty of time to be fully invested.

In any case, if conditions change, be prepared to measure. Taking partial profits relatively early still makes a lot of sense.

When searching for potential purchases, look for initial listings. With individual stocks, sectors, and the overall market still prone to large swings, buying on high strength often means buying near a short-term top.

Work on your watch lists. Look no further than traditional tech growth names, which are completely lagging behind.

Read The Big Picture every day to stay in sync with market direction and leading companies and sectors.

Please follow Ed Carson on Twitter @IBD_ECarson for stock updates and more.

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