Dow Jones futures rose slightly Tuesday morning, along with S&P 500 futures and Nasdaq futures, after the long holiday weekend.
The stock market rally suffered an abrupt sell-off Wednesday, but it was more of a jump scare than a horror show. The major indexes rebounded, closing near weekly highs, with slim to solid gains. The Russell 2000 hit a 20-month high on Friday.
But while the market rally doesn't want to back down, a pause or pullback would be constructive. The Nasdaq is looking extended, along with many leading stocks.
Nvidia has forged a new buy point. So has Tesla, amid a flurry of headlines. A third Magnificent Seven stock, Microsoft, is holding in a buy zone, with possible additional entries.
Samsara is trading tightly while specialty steel play Tenaris is flirting with a buy area. Warren Buffett-backed Nu Holdings is right around several key levels.
NVDA stock and Microsoft are on IBD Leaderboard. Microsoft stock is on IBD Long-Term Leaders. Nvidia and IOT stock are on the IBD 50. Tenaris was Friday's IBD Stock Of The Day.
The video embedded in the article analyzed the weekly market action as well as Nvidia, Samsara and TS stock.
On Tuesday, investors got weekly China EV registration data for Li Auto, XPeng, Nio and China EV and battery giant BYD as well as Tesla. On Saturday, Nio unveiled a new flagship ET9 at Nio Day 2023, but deliveries of the super-premium sedan won't start until early 2025.
China approved 105 online video games on Monday amid efforts to ease concerns after regulators proposed tougher new rules on gaming. Video game plays such as NetEase signaled modest gains Tuesday after tumbling Friday.
Dow Jones Futures Today
Dow Jones futures climbed 0.1% vs. fair value. S&P 500 futures rose 0.1% and Nasdaq 100 futures climbed 0.15%.
Crude oil futures rose more than 1%.
The U.S. stock market was closed Monday in observance of the Christmas holiday, along with most exchanges around the world.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock Market Rally
The stock market rally shrugged off Wednesday's sell-off, with the major indexes rising for an eighth straight week.
The Dow Jones Industrial Average rose 0.2% in last week's stock market trading. The S&P 500 index climbed 0.75%. The Nasdaq composite gained 1.2%. The small-cap Russell 2000 jumped 2.5%.
It's certainly positive that the market rally held its ground after Wednesday's abrupt tumble. But the Nasdaq is 7.8% above its 50-day line. The Nasdaq certainly can become more extended, but the wider the spread, the greater the risk that a pullback will occur, and that it will be more serious. Various sentiment indicators also signal elevated bullishness, bolstering the case for a pullback.
A pause or modest market pullback, like for a couple weeks after Thanksgiving, would be healthy. That would let moving averages close the gap while leaders could forge new handles or bullish pullbacks.
The 10-year Treasury yield fell two basis points to 3.91% for the week. The two-year Treasury yield, more closely tied to the Fed policy outlook, fell 12 basis points to 4.34%.
U.S. crude oil futures climbed 2.5% to $73.56 a barrel last week.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF rose 1.5% for the week. MSFT stock is a major IGV holding. The VanEck Vectors Semiconductor ETF fell 0.5%. Nvidia stock is the top SMH component.
Reflecting more-speculative story stocks, ARK Innovation ETF popped 3.7% last week and ARK Genomics ETF soared 6%. TSLA stock is a major holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF spiked 6.1% last week. The Global X U.S. Infrastructure Development ETF climbed 1.5%. U.S. Global Jets ETF ascended 0.8%. SPDR S&P Homebuilders ETF advanced 0.9%. The Energy Select SPDR ETF gained 0.8% and the Health Care Select Sector SPDR Fund climbed 0.6%.
The Industrial Select Sector SPDR Fund edged up 0.1%, rebounding from midweek lows.
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Stocks Near Buy Points
Nvidia stock dipped 0.1% to 488.30 last week. The AI chip leader now has a new flat base with a 505.48 buy point, right next to a double-bottom base.
IOT edged up 0.1% to 34.01. Samsara stock is sitting in a buy range from a 32.41 entry from a cup base. Shares now have a three-weeks-tight pattern on a weekly chart, with an official 36.91 entry. Investors could use Friday's high of 35.04 as an early entry.
Samara spiked 26% on Dec. 1 following strong earnings and guidance. Since then IOT stock has largely held that powerful move, while the 21-day line has almost caught up.
Microsoft stock rose 1% to 374.58, continuing to hug the 21-day line as the 50-day line closes the gap. Shares are still in range from a 366.78 cup-base buy point, first cleared on Nov. 10. Investors might want to wait for MSFT stock to clear a short trendline, using Wednesday's high of 376.03 as a specific entry. Microsoft also has a five-weeks-tight pattern with a 384.30 buy point. That's on track to be a flat base, base-on-base pattern after next week.
Tenaris stock rose 3.3% to 35.25 last week. Shares are closing in on a 35.98 flat-base buy point, according to MarketSmith. On Friday, TS stock flirted with a 35.31 early entry. The specialty steel pipe maker has a large exposure to the energy market.
NU stock fell 1% to 8.22. Shares have been hugging the 21-day line since mid-November, while the 50-day line has caught up. NU stock now has a flat base around the top of a prior consolidation. The new official buy point is 8.87. But a strong move off the 50-day line, which would also break a very short trendline, could offer an early entry.
Warren Buffett's Berkshire Hathaway is an investor in the Brazilian digital banking platform.
China EV Registrations Show Race To Finish For Li Auto, Nio, XPeng, BYD
Tesla Stock
Tesla stock edged down 0.4% for the week to 252.42, dipping 0.8% on Friday. Shares are working on a 278.98 double-bottom buy point. Technically, TSLA stock now has a wafer-thin handle on a weekly chart, giving it a 259.84 buy point. But ideally the handle would have some depth, perhaps undercutting the Dec. 20 low and at least testing the 21-day moving average.
Norway revealed Thursday it's been looking into Model S and X suspension failures for more than a year, with a possible decision, including a potential recall, coming soon. Sweden announced Friday that it's looking into similar issues. That comes as Reuters said a review of documents showed that Tesla knew of faulty suspension and steering parts across its model lineup going back at least seven years, but often blamed drivers when those parts failed.
Tesla is pushing hard to reach its full-year delivery target of 1.8 million EVs. China EV registrations have been strong, with Europe and the U.S. less so, even with various expiring subsidies.
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What To Do Now
The market rally looks strong, and there are good reasons to be bullish going in 2024. But right now, the major indexes look stretched, along with a lot of leaders.
So standing pat remains a sound strategy.
Some proto-handles, tight areas and pullbacks are developing, so investors should be working on their watchlists and checking them twice.
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