Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures.
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The stock market rally got off to a rough start in 2024, with the major indexes snapping nine-week losing streaks. But the S&P 500 and many leading stocks found support late in the week. Some stocks flashed buy signals.
Those could work but that’ll largely depend on whether the stock market rebounds. And equities will continue to take their cue from the bond market, with Treasury yields back above 4%.
Magnificent Seven stock Nvidia (NVDA) rebounded Friday, nearing a buy point as predictions that the AI chip giant could generate $100 billion in free cash flow in the next two years.
PulteGroup (PHM), Super Micro Computer (SMCI), Eli Lilly (LLY) and MercadoLibre (MELI), Snowflake (SNOW) also are showing constructive action.
The FAA temporarily grounded some Boeing 737 Max-9 jets on Saturday. That came after a Boeing (BA) 737 Max-9 jet operated by Alaska AirlinesALK lost some of its fuselage midair Friday. Alaska Air grounded its 65 Boeing 737 Max-9 jets Friday night.
Get ready for big AI and other tech news from Nvidia and others at the CES show. The JPMorgan Healthcare Conference also is this week. Earnings season also will get underway, with JPMorgan Chase (JPM), Citigroup (C) and UnitedHealth (UNH) among the big names.
Nvidia stock is on IBD Leaderboard. Eli Lilly stock and MercadoLibre is on SwingTrader. Nvidia, Snowflake, Super Micro and MELI are on the IBD 50.
The video embedded in the article discussed the rough market start to 2024 and analyzed Nvidia, Spotify (SPOT) and PHM stock.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET, along with S&P 500 futures and Nasdaq 100 futures.
On Sunday, congressional leaders reached a deal on top-line spending for the fiscal year ended Sept. 30, easing the risk of a partial government shutdown on Jan. 20.
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 retreated, with the major indexes all suffering their first weekly losses since the end of October.
The Dow Jones Industrial Average dipped 0.6% in last week’s stock market trading. The S&P 500 index fell 1.5%. The Nasdaq composite skidded 3.25%. The small-cap Russell 2000 tumbled 3.75%.
The S&P 500 found support at the 21-day line. But the Russell 2000 hit resistance there and fell back, ending back within a long range. The Nasdaq is trading below its now-sliding 21-day. The next obvious support area is the top of the Nasdaq’s July-early December range.
Leading stocks suffered solid-to-sharp losses to start the new year, especially those that had been rallying late in 2023. Many found support at some key levels. Some bounced bullishly from those levels, fading somewhat again into Friday’s close.
With the major indexes and leading stocks around key levels, even modest moves could make the market look significantly more bullish or bearish, even if the action isn’t truly decisive.
The 10-year Treasury yield surged 18 basis points to 4.04%. On Friday, the 10-year yield soared as high as 4.1%, reversed to 3.95% before closing above 4%.
U.S. crude oil futures rebounded 3% to $73.81 a barrel last week.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) slumped 4.7%, while the VanEck Vectors Semiconductor ETF (SMH) gave up 5%, both to their 10-week lines. Nvidia stock is the No. 1 holding in SMH.
SPDR S&P Metals & Mining ETF (XME) fell 2.8% last week. SPDR S&P Homebuilders ETF (XHB) slid 3.4%, with PHG stock a notable holding. The Energy Select SPDR ETF (XLE) gained 1% and the Health Care Select Sector SPDR Fund (XLV) climbed 2%, with LLY stock a key component. The Industrial Select Sector SPDR Fund (XLI) retreated 2.25%, while the Financial Select SPDR ETF (XLF) edged up 0.4%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) sold off 6.6% last week and ARK Genomics ETF (ARKG) gave up 3.7%.
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Spot Bitcoin ETFs
The SEC is expected to approve the first spot bitcoin ETFs next week, potentially fueling much-wider institutional involvement. SEC staff have no more issues for spot bitcoin ETF applicants, Bloomberg reported Friday.
Bitcoin and notable crypto stocks such as CoinDesk (COIN) and miner Marathon Digital (MARA) have surged over the past few months in anticipation of a spot ETF. Bitcoin and COIN stock fell last week, while MARA stock whipsawed higher.
CoinDesk plans to acquire an unnamed company with a MiFID II license, letting it offer Bitcoin derivatives in the European Union, the crypto exchange told CNBC Friday night.
Nvidia
Nvidia stock dipped 0.9% to 490.97, rebounding late in the week from the 50-day/10-week line and closed back above the 21-day. Shares have a 505.48 flat-base buy point forged around the top of a double-bottom base. A move above 500 — a key resistance area for months — could offer an early entry into NVDA stock.
On Friday, Bank of America analyst Vivek Arya said that Nvidia could generate $100 billion in free cash flow over 2024-2025. That could go for shareholder returns — perhaps $30 billion to $35 billion — as well as acquisitions. Arya has a buy rating and $700 price target on NVDA stock.
Nvidia is expected to unveil its latest GeForce RTX gaming chips at a CES address on Monday at 11 a.m. ET.
Other Stocks Setting Up
Eli Lilly stock rose 6.1% to 618.55 last week, clearing early entries on Tuesday and Wednesday. On Thursday, LLY stock briefly topped a 629.97 flat-base buy point.
On Sunday, Eli Lilly forged a drug discovery deal with Isomorphic Labs, a unit of Google-parent Alphabet (GOOGL).
MELI stock fell 2.1% last week to 1,519.38, but bounced from its 50-day line late in the week, hitting resistance at the 21-day line. Clearing the 21-day decisively would offer an early entry. MercadoLibre stock now has a flat base with a 1,660 official buy point. That’s part of a base-on-base pattern.
SNOW stock tumbled 5% to 189.12 during the week, but did rebound well off lows from their 10-week line. Like MELI, the data analytics software firm hit resistance at the 21-day line. Snowflake stock has a still-valid 192.66 cup-with-handle buy point, according to MarketSmith analysis. It’s possible that SNOW is starting to forge a new base near the top of that cup.
PHM stock sank 1.7% to 101.48, but held up support despite rebounding Treasury yields. PulteGroup has a three-weeks-tight entry with a 105.13 buy point. That formed with the 20%-25% profit-taking zone from a cup-with-handle buy point cleared on Nov. 14.
SMCI rose 2.8% to 292.13 last week, rebounding from the 50-day and retaking the 21-day line. At this point, investors could use the 300 level as an early entry, slightly above Friday’s high. Super Micro had a massive, multiyear run that ended with an ugly post-earnings gap down in early August. The subsequent consolidation has been volatile, but has started to tighten. Investors could view 327.55 as a handle entry.
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What To Do Now
The market rally got off to a rough start in 2024, but that wasn’t really surprising after nine straight weekly gains. The S&P 500 and Nasdaq are near key levels.
So are many leading stocks. A few flashed buy signals, but whether those work will depend on the broader market.
The best that can be said is that bulls are trying to make a stand, but aren’t making much forward progress.
Don’t let your emotions go on a roller coaster with intraday swings, which can seem more significant when the market is around key levels.
Still, the market pullback is creating potential buying opportunities. So build up your watchlists, focusing on stocks finding support and showing relative strength. Stay engaged with the market, keeping an open mind so you’re prepared to add exposure or step back.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971, X/Twitter at @IBD_ECarson and Bluesky at @edcarson.bsky.social for stock market updates and more.
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