Dow Jones futures fell solidly Monday morning, along with S&P 500 futures and Nasdaq futures, while crude oil futures jumped. That followed massive Hamas attacks on Israel and the start of a huge Israeli response.
After some struggles for much of last week, the new stock market rally made a bullish move Friday. The major indexes staged an upside reversal and a number of stocks flashed buy signals.
Nvidia stock, Meta Platforms, Arista Networks, Qualys, Eli Lilly, CME Group, Vertiv Holdings, CrowdStrike Holdings, Cadence Design Systems and Palo Alto Networks were among those clearing buy points or early entries. All have relative strength lines at or near highs, reflecting strong performance vs. the S&P 500.
Along with those 10 stocks, Tesla rebounded from key support Friday and rose for the week despite a flurry of bad news.
Investors should be getting their watchlists ready this weekend, looking to add exposure gradually if the market continues to act well.
However, many growth stocks, including those cited here, were down modestly early Monday as futures retreated.
Nvidia, LLY stock, Arista Networks, Vertiv and Meta Platforms are on IBD Leaderboard, with Tesla stock on the Leaderboard watchlist. PANW stock and Meta Platforms are on SwingTrader. CDNS stock is on IBD Long-Term Leaders. Meta stock, Nvidia, Qualys, Arista Networks, Cadence Design, Palo Alto Networks, Tesla and Eli Lilly are on the IBD 50. Nvidia, Tesla, Palo Alto and ANET stock are on the IBD Big Cap 20.
Eli Lilly was Friday's IBD Stock Of The Day, with CrowdStrike, Arista Networks and PANW stock also selections during the week.
Hamas Attacks Israel
The Palestinian group Hamas on Saturday launched massive brutal attacks on Israel, with thousands of missiles and forces infiltrating throughout much of the country's south, deliberately killing more than 1,000 civilians and taking dozens, perhaps hundreds hostage. Israeli Prime Minister Benjamin Netanyahu declared war on Hamas. Israel is striking Gaza hard and has ordered a "complete siege." Sweeping retaliation is expected in the coming days and weeks.
That could disrupt possible normalization of relations between Israel and Saudi Arabia. Also, Saudi Arabia reportedly had told U.S. officials that it could boost oil production next year, as a possible goodwill gesture to get Congress to OK a U.S.-Saudi defense pact as part of Saudi recognition of Israel.
Dow Jones Futures Today
Dow Jones futures fell 0.4% vs. fair value. S&P 500 futures declined 0.5%. Nasdaq 100 futures sank 0.7%.
Defense stocks rose solidly amid the Israel-Hamas fighting, including Lockheed Martin, Northrop Grumman, RTX, and General Dynamics.
Crude oil futures spiked 4% to just above $86 a barrel, after surging more than 5% at one point Sunday night. Energy stocks rebounded.
Bond markets are closed Monday for Columbus Day.
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 struggled for much of the week, with the Dow Jones and S&P 500 undercutting recent lows, ending their rally attempts. But the Nasdaq rally attempt continued. On Friday, the major indexes staged a bullish upside reversal in higher volume, with leading stocks powering higher.
The Dow Jones Industrial Average edged down 0.3% in last week's stock market trading. The Dow undercut lows again Friday morning, but then rallied for a 0.9% gain. The S&P 500 index rose 0.5%, rebounding Friday from the 40-week line. The Nasdaq composite jumped 1.6% on Friday and for the week, pushing above the 21-day line. The small-cap Russell 2000 slumped 2.1% after hitting five-month lows Tuesday.
Market breadth was positive Friday, but the general trend has been very weak for weeks or months.
The 10-year Treasury yield surged 21 basis points to 4.78%, but closed well off early Friday's peak of 4.89%. The 10-year bond yield did rise several basis points Friday, but the dollar retreated for a third straight session.
U.S. crude oil futures plunged 8.8% to $82.79 a barrel last week. Gasoline futures tumbled 8.6% last week and just over 19% for the past three weeks. They hit a 2023 low during the week.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF advanced 0.5% last week. The iShares Expanded Tech-Software Sector ETF popped 2.2%, reclaiming the 50-day line. Cybersecurity plays CRWD stock, Qualys and Palo Alto are all IGV members. The VanEck Vectors Semiconductor ETF gained 2.3%, with Nvidia stock the No. 1 holding. CDNS stock is in SMH and IGV.
Reflecting more-speculative story stocks, ARK Innovation ETF fell 1.2% last week and ARK Genomics ETF tumbled 5.7%. Tesla stock remains the No. 1 holding across Ark Invest's ETFs.
SPDR S&P Metals & Mining ETF slid 3.2% last week. The Global X U.S. Infrastructure Development ETF edged down 0.4%. U.S. Global Jets ETF descended 1.5%. SPDR S&P Homebuilders ETF stepped down 2.1%. The Energy Select SPDR ETF sold off 5.2% and the Health Care Select Sector SPDR Fund rebounded 1% higher, with LLY stock a notable member. The Industrial Select Sector SPDR Fund slipped 0.6%.
The Financial Select SPDR ETF dipped 0.4%, with CME stock a member.
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Stocks In Buy Zones
Nvidia stock rose 2.4% to 457.62 on Friday and 5.2% for the week, clearing the 50-day line, offering an early entry. As of Friday's close, NVDA stock has a new base with a 502.66 buy point. Nvidia stock fell 2% early Monday with futures lower. Shares had edged lower Friday night as The Information reported Microsoft will debut an AI chip next month to lessen its dependence on Nvidia GPUs.
Meta stock jumped 3.5% to 315.43 on Friday, clearing a 310.64 cup-with-handle buy point as well as a 312.87 entry.
Arista stock popped 3.2% on Friday and 45.5% for the week to 194.02. Shares cleared a 189.90 early entry. ANET stock now has a flat base with a 198.70 buy point.
Eli Lilly stock bounced from its 50-day line Friday, jumping 4.4% to 565.22 and moving above the 21-day moving average. That offered a new buying opportunity. LLY stock fell below its 50-day line on Tuesday but reclaimed that on Thursday. Eli Lilly staged a bullish outside week.
Qualys stock jumped 4% on Friday to 160.97, clearing short-term resistance around 155 as well as a recent 52-week high of 157.88. That recent area could be viewed as a de facto flat base or a handle to a base going back to September 2022.
CrowdStrike stock jumped 6.9% Friday to 176.69 in heavy volume, vaulting from the 21-day line to clear a few months of messy consolidation. CRWD stock did close 11.4% above its 50-day line, however.
Palo Alto stock leapt 4.2% to 246.69 on Friday, jumping from near the 50-day line and clearing some very short-term levels. PANW stock has a 258.88 consolidation buy point. However, investors could use 254.23, or a trendline that's around 250, as further early entries.
CME stock leapt 4.85% to 211.93 in a big week that engulfed the past two months of trade. On Thursday, shares bounced from the 50-day line. On Friday, shares cleared the 209.31 flat-base buy point, according to MarketSmith analysis.
Vertiv stock bounced 6.9% to 39.77 for the week, including Friday's 4.2% gain. Shares rallied from the 21-day and 10-week lines while also clearing short-term levels, offering an early entry. VRT stock, one of 2023's big winners, now has a new flat base with a 40.41 buy point.
Cadence Design stock jumped 3.9% on Friday to 243.95, rebounding from the 50-day line and breaking the downtrend of a handle, offering an early entry. CDNS stock is working on a 247.50 cup-with-handle buy point.
Tesla Stock
Tesla stock popped 4.1% to 260.53 for the week. On Wednesday, shares jumped 5.9%, surging above the 50-day line and offering an early entry. Shares fell back Friday morning to the 50-day line, but rebounded for a slight gain. A move above Thursday's intraday high of 263.20 could offer a new early entry from breaking a downtrend in the handle. Tesla stock has a 278.98 cup-with-handle base.
Tesla showed surprising strength given a flurry of seemingly bad news. Early Monday, Tesla reported third-quarter deliveries that fell much more than expected. Monday night, Tesla launched a new, lower-priced Model Y that's $3,750 cheaper than the prior base variant. Late Thursday, Tesla cut Model 3 and Model Y prices in the U.S., along with Model Y cuts in Norway.
Bulls are looking ahead to an updated Model 3, which will begin deliveries in China and Europe soon, as well as the upcoming Cybertruck and more speculative long-term bets on self-driving, AI and robotics.
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What To Do Now
The stock market rally attempt showed bullish action to close out the week, with the major indexes staging an upside reversal Friday and a large number of leading stocks flashing buy signals.
Investors could have and perhaps should have added some exposure on Friday. If the market continues to act well, keep shifting out of cash, but do so gradually.
Remember, stocks rebounded Friday as Treasury yields came off their high, but the surge in market rates continues. It's easy to envision the major indexes buckling again if the 10-year Treasury bond yield closes in on 5%.
So be ready to step back if the market or your positions start to falter.
But this weekend is a time to get ready. Make sure your watchlists are up to date. Pay special attention to stocks that are actionable or nearly so.
In the coming week, investors will get the CPI and PPI inflation reports. Earnings season will kick off, with JPMorgan Chase, UnitedHealth and Delta Air Lines among the headliners.
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