Last week, the Nasdaq led the sell-off after US Treasury yields climbed to 2023, putting pressure on the stock market rally. Stocks reversed their decline on Friday as yields fell and major indices tried to rebound.
X
Dow Jones futures will open Sunday night along with S&P 500 futures and Nasdaq futures.
The market rally may be at an inflection point, for better or worse. Investors should be wary of new purchases as the uptrend is “under pressure”. But it’s a great time to look for promising stocks.
Nvidia (NVDA) is rebounding from near the 10-week line test. Tesla (TSLA) holds a 50-day line and a 10-week line, with the possibility of multiple entries. broadcom (AVGO) are trading strongly. Toll Brothers (Thor) is rebounding from the 10-week line, delta airlines (Dar) trying to do so.
Hundreds of companies will be reporting this week after the busiest two weeks of earnings season.
Warren Buffett’s Berkshire Hathaway (BRKB) is scheduled to report second-quarter earnings on Saturday morning. Analysts expect Berkshire’s earnings to fall 8% to $3.87 a share and revenue to rise nearly 6% to $80.58 billion. Investors will also want to know whether the Buffett conglomerate added or sold an entire stake in the quarter, the size of the BRKB share buyback and its June 30 cash position. BRKB shares have risen slightly from the buy point.
apple (AAPL) makes up nearly half of Berkshire’s stock portfolio. Apple shares, which are set to rise 40% in 2023, plummeted last week on weak earnings and guidance, breaking below key levels on Friday.
Palantir Technologies (PLTR) reported on Monday night eli lilly (Lily) and Celsius Holdings (cell) on tuesday.
Nvidia shares, Tesla and Celsius on the rise IBD Leaderboard. TSLA shares are IBD50. A video embedded in this article details the market dynamics while also analyzing AVGO stock, Delta Air Lines and Toll Brothers.
dow jones futures today
Dow Jones futures open Sunday at 6:00 pm ET along with S&P 500 and Nasdaq 100 futures.
Note that overnight trading such as Dow Futures does not necessarily translate into actual trading in the next regular stock market.
IBD experts analyze hot stocks during the stock market rally on IBD Live.
stock market rise
Last week’s rally in the stock market saw a sharp decline. Friday’s rebound reversed, even though US Treasury yields were well below their highs. It’s not clear what triggered the afternoon selling. There have been reports of large-scale cyberattacks.
The Dow Jones Industrial Average fell 1.1% in last week’s stock market trading. The S&P 500 index fell 2.3%. The Nasdaq Composite fell 2.85%. The small-cap Russell 2000 is down 1.15% on him.
The S&P 500 and Nasdaq rebounded to their 21-day moving averages on Friday, but closed below that level. The Russell 2000 is slightly above its key short-term levels, but the Dow Jones is close.
Apple stock made a big contribution to the market’s tough week. The Dow Jones fell 7.1%, its worst weekly decline in nine months. AAPL stock fell below the 50-day line after Friday’s results, pushing its market capitalization below $3 trillion.
The 10-year U.S. Treasury yield climbed 9 basis points to 4.06%. But this is below the all-time high for 2023. The intraday yield climbed to 4.21% on Friday, a nine-month high and well short of October 2022’s 15-year high of 4.31%. However, yields fell 13 basis points (bp) on the day.
The July jobs report showed a slowdown in hiring, with two Fed policymakers suggesting a turnaround from further interest rate hikes. Two-year US Treasury yields, which are more closely tied to Fed policy, fell 10 basis points on Friday and the week to 4.79%.
US crude futures rose 2.8% to $82.82 a barrel, the sixth straight week of gains.
ETFs
Among Growth ETFs, Innovator IBD 50 ETF (FFTY) fell 4.3% last week. iShares Augmented Technology Software Sector ETF (IGV) fell 3.5%. VanEck Vectors Semiconductor ETF (SMH) gave up 3.9%. Nvidia is his #1 holding in SMH, and AVGO stock is an equally notable holding.
A stock that reflects a more speculative story, the ARK Innovation ETF (Arkuk) plummeted 8.2% last week, the ARK Genomics ETF (Argu) was sold 8.85%. Tesla shares are the number one holding of all Ark Invest ETFs. Kathy Wood’s Ark also owns a portion of PLTR shares.
SPDR S&P Metals & Mining ETF (XME) fell 1.9% last week. Global X US Infrastructure Development ETF (pave) fell 0.2%. US Global Jets ETF (Jets) fell 4.4%, with DAL shares being a big component. SPDR S&P Homebuilders ETF (XHB) fell 0.7%, with its holdings of TOL shares prominent. Energy Select SPDR ETF (XLE) rose 1.25%. Healthcare Select Sector SPDR Fund (XLV) fell 2.1%, with LLY shares becoming a notable component. Industrial Select Sector SPDR Fund (XLI) fell 1.7%.
Financial Select SPDR ETF (XLF) decreased by 0.8%. BRKB is XLF’s number one holding, and Warren Buffett’s Berkshire owns stakes in many other big financial companies. bank of america (BACs). SPDR S&P Regional Banking ETF (KRE) fell 0.3%.
Higher long-term yields and lower short-term rates are good news for banks.
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Nvidia shares fell 4.4% to 446.80, but gained slightly after testing the 10-week line on Wednesday. Investors may try to add stocks that show strong rebounds. But perhaps a longer hiatus, like actually touching the 10-week line, would be preferable. Nvidia is clearly the leader in AI chips and a symbol of the rising Ailed market, so investors should pay close attention to its actions.
AVGO shares fell 2% last week to 881.65. The chipmaker earned 921.78 buy points from the 16% consolidation, according to Marketsmith analysis. The base is strange, starting with a reversal to the downside after a big surge on May 30th. But Broadcom is also getting a big boost in AI, tightening while the 10-week line catches up. Last week’s move may be part of a healthy selection.
Tesla shares fell 4.7% to 253.86, ending just above the 50-day line but below the 10-week line. Stocks are hitting resistance at the 21-day line. A strong move above the 21st line could lead to early entrants to EV giants. Meanwhile, Tesla stock has an official cup-with-handle buy point of 299.29 after a deep consolidation dating back to September last year.
Tesla continues to increase discounts, putting more pressure on its profit margins. A local social media post said the latest Model 3, aimed at reducing production costs, could start production at the Shanghai factory later this month. Tesla China sales, including exports, hit their lowest level for 2023 last month, likely because the Shanghai government has cut production of the current Model 3.
Delta Air Lines shares fell 2.5% to 44.59, testing the 10-week line on Friday before rising slightly. DAL shares look better than other airline stocks, even though the stock has fallen from a two-year high of 49.81 on last month’s results. A strong rally above the 21st line will probably allow early entry. Investors may see 49.81 as a buy-in point to the huge base starting in March 2021.
TOL shares fell 1% last week to 79.39, with below-average trading volumes but a 2.2% gain on Friday, rebounding from the 10-week line. Toll Brothers may take action from a move above the short trendline, using the Aug. 1 high of 81 as an entry point. This luxury home builder will have weeks to complete its new base.
market rise analysis
Last week’s stock market rally suffered a heavy loss on the rise in US Treasury yields, demoralizing Friday’s downside reversal.
The market will grow sideways. The Nasdaq is just above the 50-day line, its narrowest gap in four months. Longer pauses or withdrawals are also healthy.
Market breadth remains strong, with leadership across many sectors.
Many major stocks are finding significant support or working on their base. Some stocks with 50-day/10-week support, such as Tesla, Toll Brothers, and DAL, may be poised for a bullish move. However, it is possible that these key levels could be breached, especially if the overall market recedes.
Treasury yields are clearly a big factor in the current rally in the stock market. If 10-year yields return below 4%, the index could bounce back to its recent highs. The uptrend is likely to come under further pressure once yields resume their surge and approach their long-term peak.
Timing the Market with IBD’s ETF Market Strategy
what to do now
Investors don’t want to be too aggressive as the market is under pressure to rise. As a practical matter, there aren’t that many stocks that are giving buy signals at the moment. But many stocks are becoming so. So run your screens this weekend and build your watchlist.
Investors should remain flexible as the market may be at an inflection point.
Over the past week, investors may have been tempted to take a more defensive stance, taking profits and slightly reducing exposure. If the market shows further weakness, investors may need to strengthen it, so review their portfolios carefully.
If the stock gives a buy signal and you take action, take action gradually. The ups and downs of the past few weeks, including Friday, have quickly put many of the recent buys on the back burner.
The earnings season isn’t over yet. Last week we had some big winners, but also a lot of big losers.
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