Dow Jones futures were little changed Monday morning, along with S&P 500 futures and Nasdaq futures. Crude oil prices rose on a Saudi crude oil cut. Tesla, Apple and Palo Alto Networks are in focus.
The stock market rally showed growing momentum this past week, with the major averages all making big moves.
Market rally leadership remains narrow, concentrated in the artificial intelligence space, as well as chips and software. Many of those stocks are extended. But if market breadth continues to improve, a wider array of buying opportunities will develop.
Already, Tesla broke out Friday. DexCom, Lennar and JPMorgan Chase flashed early entries late in the week. Marriott International arguably is actionable as well.
All reflect possible leadership areas. Tesla stock joins EV rivals such as BYD in clearing buy points. DXCM stock is one of several medical products securities trying to push higher. LEN stock is among a number of homebuilders rebounding again. JPM stock stands out among financials, but the sector is rebounding. MAR stock is among a broadly reviving travel sector.
Investors should be looking to add exposure amid the promising bullish shift. But be ready to step back.
Meanwhile, Apple is expected to show off its mixed-reality headset on Monday, its first new hardware product since the Apple Watch in 2015. The headset will take on rivals such as the Meta Quest from Meta Platforms. Apple stock is on the cusp of clearing its January 2022 highs and is closing in on a $3 trillion market cap.
In other news, Palo Alto Networks will join the S&P 500, among many changes to the S&P indexes before the open on June 20. PANW stock jumped 5% early Monday.
Tesla stock joined IBD Leaderboard on Friday, joining Meta stock and Palo Alto Networks. PANW stock is on the IBD Big Cap 20. LEN stock joined SwingTrader on Friday. Lennar was Friday's IBD Stock Of The Day.
Dow Jones Futures Today
Dow Jones futures were slightly above fair value. S&P 500 futures edged lower and Nasdaq 100 futures fell 0.1%.
Crude oil prices rose more than 2%. Saudi Arabia will make a voluntary cut of one million barrels per day, at least for July. OPEC+, which includes OPEC and key allies such as Russia, officially agreed Sunday to extend current production through 2024. Weaker-than-expected China demand, along with excess production by Russia, have pushed crude oil prices toward 52-week lows.
The 10-year Treasury yield rose 6 basis points to 3.75%. T-bill rates advanced several basis points.
The Treasury Department is expected to auction off some $170 billion in T-bills Monday after President Biden signed the deal to raise the debt limit on Saturday. A flood of issuance will come over the next few weeks.
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 showed strong, broad gains, especially late in the week.
The Dow Jones Industrial Average popped 2% in last week's stock market trading. The S&P 500 index rallied 1.8%. The Nasdaq composite gained 2%. The small-cap Russell 2000 jumped 3.3%.
The 10-year Treasury yield fell 13 basis points to 3.69% for the week, but did rise 8 basis points on Friday.
U.S. crude oil futures fell 1.3% to $71.74 a barrel last week, even with Friday's 2.3% bounce.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF popped 3.6% last week, while the Innovator IBD Breakout Opportunities ETF gained 1.7%. The iShares Expanded Tech-Software Sector ETF climbed 2.1%. The VanEck Vectors Semiconductor ETF dipped 0.8%.
Reflecting more-speculative story stocks, ARK Innovation ETF leapt 6.45% last week and ARK Genomics ETF jumped 4.9%. Tesla stock is the No. 1 holding across Ark Invest's ETFs. Cathie Wood's Ark also owns some BYD stock.
SPDR S&P Metals & Mining ETF rebounded 4.2% last week. The Global X U.S. Infrastructure Development ETF popped just over 3%. U.S. Global Jets ETF ascended 3.1%. SPDR S&P Homebuilders ETF jumped 3.5%. The Energy Select SPDR ETF advanced 1.4%. The Health Care Select Sector SPDR Fund climbed 2.2%. DXCM stock is in XLV.
The Financial Select SPDR ETF rose 2.15% in an outside, upside week. JPM stock is a major XLF component.
The SPDR S&P Regional Banking ETF jumped 4.8%.
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Apple Mixed-Reality Headset
Apple will show off its latest hardware and software innovations in a keynote presentation Monday at 10 a.m. PT at its annual Worldwide Developers Conference. It'll detail the latest operating systems for the iPhone, iPad, Mac, Apple TV and Apple Watch. But the buzz is all about a mixed-reality headset, possibly called Reality Pro. It would be the first new hardware product since the Apple Watch debuted in 2015. The expected $3,000 price tag could deter buyers. Meta Platforms recently unveiled its latest Meta Quest headset.
Apple stock rallied 3.15% last week to 180.95. That's just below the January 2022 peak of 182.94.
Shares climbed 1% early Monday.
Tesla Stock
Tesla stock jumped 10.8% to 213.97 for the week, including a 3.1% jump on Friday. Shares cleared their 200-day moving average on Tuesday. On Friday, TSLA stock ran past a 207.89 buy point from what's either a cup or double-bottom base. The EV giant has advanced on above-average volume for five straight sessions, after few such days in the prior three months.
Shares rose more than 1% in premarket trading, near the edge of Tesla's buy zone.
Meanwhile, BYD stock ran up 5.6% to 31.50 last week. Friday's 2.3% gain pushed the China EV and battery giant back above a 31.17 cup-with-handle buy point initially cleared on May 10. On Thursday, BYD reported record deliveries in May, exceeding its late 2022 peak.
Tesla now says its base Model 3 gets the full $7,500 tax credit in the U.S., along with all other Model 3 and Model Y vehicles, according to reports late Friday. It's not clear how that happened. Meanwhile, Tesla has boosted its referral program again, on top of U.S. inventory discounts, especially on the Model 3.
Tesla sold 77,695 China-made vehicles in May, including exports, according to data released Monday by the China Passenger Car Association. That's up 2.4% from April. A breakdown of local sales vs. exports will come in a few days.
Other Stocks Near Buy Points
DXCM jumped 6.5% to 122.57 last week. On Thursday, DexCom reclaimed its 50-day line, then added to gains Friday in above-average volume. That's offered an early entry. The continuous glucose monitor maker has a buy point above 126.44 in a new flat base, right next to two other consolidations, according to MarketSmith analysis. Several other medical product and systems makers are worth watching, including Shockwave Medical and Intuitive Surgical.
LEN stock rallied 3.6% to 112 on Friday, rebounding back above the 50-day line, offering an aggressive entry in an emerging consolidation. On Wednesday, Lennar stock fell to test a prior buy point. Several other homebuilders made bullish price gains Friday, but LEN stock moved in heavy volume.
JPM stock popped 3% to 140.47, closing right on a downtrend in a new flat base next to a prior consolidation. It's not extended from its 50-day line either. JPMorgan looks a lot healthier than other banks, but bank stocks did make bullish moves Friday.
MAR stock gained 3.55% to 177.22 on Friday after reclaiming its 50-day line on Thursday. Arguably, Marriott is offering an early entry from an emerging flat base. Royal Caribbean is cruising higher, but most other travel stocks are like Marriott, trying to take off after fits and starts.
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Market Rally Analysis
The stock market rally showed further strength this week, with some hopeful signs that breadth and leadership are improving.
The Nasdaq continued to power ahead, hitting a 13-month high on Friday. But the past week was about more than AI plays.
The S&P 500 decisively cleared its 2023 range and is closing in on its August 2022 peaks.
The Dow Jones, which was testing its 200-day line for much of the week, vaulted above its 50-day line on Friday. The Russell 2000, which broke below its 50-day line Wednesday, rose to the best levels since early March, clearing the 200-day line for the first time since then as well.
The First Trust Nasdaq 100 Equal Weighted Index ETF advanced 1.4% for the week to a 52-week high.
The Invesco S&P 500 Equal Weight ETF popped 1.9% for the week. Friday's 2.2% gain pushed the RSP clearly above its 50-day and 200-day lines, breaking a downtrend going back to early February.
Advancers trounced losers on Thursday and Friday. On Friday, winners led by more than 5-to-1 on the NYSE and nearly 3-to-1 on the Nasdaq. Still, the long-term trend has been weak. And a downward trending A/D line is critical.
The Nasdaq and Nasdaq 100 have been getting extended, with the latter now 9.5% above the 50-day line. Ideally, big-cap techs, especially AI plays, would slow down or pause while other sectors step up. That was generally the pattern on Friday, with the Dow Jones, Russell 2000 and RSP easily outpacing the Nasdaq 100's 0.7% gain.
That's creating some buying opportunities, such as Tesla, Lennar, DexCom and JPMorgan.
Of course, a strong couple of days doesn't guarantee that a broad market advance is underway. From a macro perspective, the debt ceiling is no longer a concern. The Fed, which seemed headed for a June 14 rate hike just a few days ago, now appears to poised to pause. With earnings season (finally) winding down, the news cycle may be in for a relatively quiet stretch.
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What To Do Now
With the market rally picking up steaming and starting to broaden, investors have to take notice. Yes, this might be another head fake. The narrow advance could resume or, worse, the overall market rally could buckle or break down.
But right now, the market is sending bullish signals. If you wait until a powerful bull market has undeniably taken hold, the leading stocks will all be well extended.
Investors should be looking to add exposure, especially if they've mostly been in cash. But do so gradually, to minimize the impact of sudden market reversals.
It's important to be flexible. And, just as you don't want to get locked into a bearish mindset, don't be a blind bull if the broader market or your positions falter.
This is an important time to be building your watchlists. Have a select group of stocks that you focus on, but make sure to cast a wide net to keep tabs on a wide array of potential leaders.
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