Dow Jones futures will open Sunday night, along with S&P 500 and Nasdaq futures.
The stock market rally had another sideways week, with the Dow Jones, S&P 500 and Nasdaq composites all deflecting lower in continued tight action. Investors await an avalanche of profits with headlining Microsoft (MSFT), Amazon.co.uk(stock symbol=AMZN), Metaplatforms (META) and parent company of Google Alphabet (GOOGL).
Buying opportunities were not many and many failed or failed. Earnings season will peak in the week ahead, providing an opportunity for the market recovery to break out of its rut.
Microsoft, Amazon, Meta and Google are particularly important. Microsoft and, arguably, Amazon shares are now exploitable. Google stock is close to a buy point while Facebook’s parent company Meta pulls back after a massive run.
On their own, they have a big impact on the main indices. And their comments on the future growth of key markets such as cloud computing, artificial intelligence, e-commerce and PCs will have a major influence on the tech industry and beyond.
In the meantime, First Solar (FSLR), Dexcom (DXCM), mobileye (MBLY), Boeing (BA), ServiceNow (NOW), Cloudy (NET), Alignment technology (ALGN), Issac Fair (FICO), Visa (V) and Chipotle Mexican Grill (CMG) are just a few of the notable companies reporting this coming week with stocks in or near the buy zones.
MBLY stock, in particular, has an action-packed week, with its IPO expiring on Monday, followed by profits on Wednesday.
Bed bath and beyond (BBBY) filed for Chapter 11 bankruptcy on Sunday, with the long-struggling home goods retailer struggling with debt and declining sales. BBBY stock has been plunging for a long time, but the stock itself jumped 23% last week despite the prospect of bankruptcy.
In the meantime, keep an eye out for news on medical shock wave (SWAV). SWAV stock jumped on Friday on a report that Scientific Boston (BSX) is considering a Shockwave takeover bid. But the companies said nothing.
The video embedded in this article reviewed Arista Networks (A NET), TJX Cos. (TJX) and JPMorgan Chase (JMP).
Microsoft stock is on IBD Long-Term Leaders.
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET, along with S&P 500 and Nasdaq 100 futures.
Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join the experts at IBD as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally didn’t make much sense last week.
The Dow Jones Industrial Average plunged 0.2% in stock trading last week. The S&P 500 index edged down 0.1%. The Nasdaq composite fell 0.4%. The small cap Russell 2000 rose 0.6%.
The 10-year Treasury yield rose 5 basis points to 3.57%.
U.S. crude oil futures fell 5.5% to $77.87 a barrel last week.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) climbed 2.7% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 0.4%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.1%, with MSFT stock a major holding. ETF VanEck Vectors Semiconductor (SMH) slipped 1.5%.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) fell 3% last week and ARK Genomics ETF (ARKG) climbed 1%.
The SPDR S&P Metals & Mining ETF (XME) fell 4.2% last week. The Global X US Infrastructure Development ETF (PAVE) rose 0.55%. The US Global Jets ETF (JETS) climbed 1.8%. The SPDR S&P Homebuilders ETF (XHB) rebounded 3.4%. The Energy Select SPDR ETF (XLE) fell 2.6% and the Health Care Select Sector SPDR Fund (XLV) fell 0.2% after five weekly gains.
ETF Financial Select SPDR (XLF) climbed 1%, with JPM stock a major holding. The SPDR S&P Regional Banking ETF (KRE) advanced 1.5%, but still has a long way to go to recover.
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Market rally analysis
The stock market rally continues to trend sideways, with major indices retreating slightly. The S&P 500 and Nasdaq composite do indeed have tight four-week patterns. The Nasdaq tested support at the 21-day line and the 12,000 level over the weekend.
More broadly, major indices are stuck in a range between their early 2023 highs and their 50-day moving averages.
Market breadth remains lackluster, particularly on the Nasdaq. The advance-decline line has weakened over the past few days.
The Invesco S&P 500 Equal Weight ETF (RSP) ended slightly higher last week, holding firmly to its 50-day line.
Homebuilders look strong, with more reports this coming week. Medical products companies also led, including shares of Boston Scientific and SWAV.
Chip stocks have fallen all month, with the SMH ETF closing just below its 50-day line on Friday. It could be a healthy break, but it’s been tough for chip investors. Other tech hardware names struggled last week due to IT spending concerns.
Microsoft, Google, Amazon and Meta will outline broader IT spending plans. Their own spending plans and growth prospects will be important for major vendors, such as Arista Networks.
At some point, the market rally will break out of its recent range, for better or for worse. Earnings season over the next few weeks, along with key economic data and the Fed meeting in early May could serve as a catalyst for a rally or a sell-off. Or, they could offer a multitude of mixed signals that add more volatility to a limited market.
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What to do now
The market rally hasn’t done anything bad, but it’s not doing anything special yet.
Sideways action and short-lived rallies, as well as sector rotation, are not an ideal environment to buy stocks, especially during traditional breakouts. The moment a stock makes a strong move, sending buy signals, chances are it will come back down.
Truth be told, it’s probably positive that the market rally and major stocks didn’t take off just before earnings from Microsoft, Google and hundreds of others.
Now that the earnings season is about to move forward with full force, it is not only important to know which holdings have earnings at hand, but also which rivals, suppliers and customers are reporting.
If the market reacts well to earnings, a number of buying opportunities could arise. Even then, investors should gradually increase their exposure. The risks that specific stocks or the broader market will yield gains may remain high.
But be prepared to jump on the first entries. Have up-to-date watch lists. Keep track of a large list of stocks that are performing well or falling into place, focusing on stocks right around the buying points.
Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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