Saturday, September 23, 2023

Dow Jones Futures: Bulls Want To Run, But Market Rally Hits Resistance; 10 Stocks Near Buy Points

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Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally showed resilience during the past week, paring modest weekly losses even as Treasury yields soared. But Friday’s bounce largely fizzled, as the Nasdaq faces resistance.

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Nvidia stock, Visa (V), Chipotle Mexican Grill (CMG), Salesforce.com (CRM), Tempur Sealy (TPX), Livent (LTHM), Arista Networks (ANET), SLB (SLB), Flowserve (FLS) and Marriott International (MAR).

Visa stock and Marriott are in traditional buy zones, while Chipotle and FLS stock are near them. SLB stock is actionable from an early entry while Nvidia (NVDA), CRM stock, Tempur Sealy, Arista Networks and Livent are close.

Nvidia and software makers Salesforce and Dynatrace are riding the AI wave, along with many other tech stocks.

Nvidia is on IBD Leaderboard, while CMG stock is on the Leaderboard watchlist. DT stock is on SwingTrader. LTHM stock and Salesforce.com are on the IBD 50 list. Salesforce was Friday’s IBD Stock Of The Day.

The video embedded in the article discussed the market rally’s weekly action and analyzed Salesforce, Tempur Sealy and SLB stock.

Dow Jones Futures Today

Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

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 actionable stocks in the stock market rally on IBD Live


Stock Market Rally

The stock market rally pulled back in a holiday-shortened week.

The Dow Jones Industrial Average fell 2% in last week’s stock market trading, skidding below its 21-day line and nearing its 50-day line. The S&P 500 index fell 1.2% to just below its 10-day line. The Nasdaq composite slipped 0.9%, holding the 10-day. The small-cap Russell 2000 fell 1.4%, but Friday’s 1.1% bounce brought it back above the 21-day.

The Invesco S&P 500 Equal Weight ETF (RSP) lost just 0.75% for the week. The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) gave up 1.3%.

The 10-year Treasury yield jumped 23 basis points to 4.05%, matching the 2023 high of 4.09% intraday. The two-year Treasury yield, more closely tied to Fed policy, rose 5 basis points to 4.93%, but fell back from Thursday’s 16-year high of 5.12%.

U.S. crude oil futures jumped 4.6% to $73.86 a barrel during the week. Copper futures climbed 0.7%, thanks to a 1.3% gain Friday.

The U.S. dollar initially rallied with Treasury yields, putting pressure on stocks and especially commodities. But the greenback reversed lower for the week.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) fell 2.7% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 1.75%. The iShares Expanded Tech-Software Sector ETF (IGV) declined 1.8%, with CRM stock a major component. The VanEck Vectors Semiconductor ETF (SMH) gave up 2.1%, with NVDA stock the top holding.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slipped 0.9% last week and ARK Genomics ETF (ARKG) retreated 2.8%.

SPDR S&P Metals & Mining ETF (XME) sank 0.6%% last week, but came off lows. The Global X U.S. Infrastructure Development ETF (PAVE) declined 1.6%. U.S. Global Jets ETF (JETS) rose 1.2% and soaring 6% in the prior week. SPDR S&P Homebuilders ETF (XHB) gave up 2.9%. The Energy Select SPDR ETF (XLE) dipped 0.5%, with SLB stock a significant holding. The Health Care Select Sector SPDR Fund (XLV) slumped 2.8%. The Industrial Select Sector SPDR Fund (XLI) stepped back 1%.

The Financial Select SPDR ETF (XLF) fell 0.4%, hitting resistance at the 200-day line. The SPDR S&P Regional Banking ETF (KRE) rose 1.6%.


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Stocks To Watch

Nvidia stock edged up 0.5% to 425.03 during the week. The AI leader has a four-weeks-tight pattern with a 439.90 buy point, but investors could use 431.77 as an early entry. A longer pullback or sideways action would be ideal, but NVDA stock may not offer that.

Visa stock is holding just above a 235.57 flat-base buy point, and is only 3.2% above its 50-day line. Can Visa and fellow payments giant Mastercard (MA) finally make another real move? A robust U.S. consumer and overseas travel are tailwinds.

CMG stock tried to move above a 2,139.88 flat-base buy point, but never closed above it, MarketSmith analysis shows. Shares fell 2.9% to 2,077.46 for the week, pulling back to the 21-day and 10-week line. A bullish move from those levels or a traditional breakout are possible entries.

CRM stock is trading tightly at its 21-day and 10-week lines, within a flat base with a 225 buy point. A move above Wednesday’s high of 214.62 would offer an early entry.

TPX stock rose 0.9% to 40.43, including Friday’s near-3% gain in above-average volume. The mattress giant is working up the right side of a five-month consolidation with a 44.28 buy point. It’s right at resistance around 41.50-41.62. Clearing that would offer an early entry into Tempur Sealy stock.

LTHM stock rose 1.7% to 27.40 on Friday, just below a 27.75 entry. Investors could view 27.75 as a high handle to a bottoming base. Other lithium plays are rebound after Tesla (TSLA) and several other EV makers reported strong Q2 deliveries in recent days.

ANET stock is starting to tighten up again, finding support at the 21-day line. It’s close to a trendline break, with 164.20 as another possible entry. The networking giant has a new base with a 178.36 buy point. Note that Arista stock has a few weeks of high-volume selling in its new consolidation.

SLB stock vaulted 8.6% to 53.35 on Friday in the heaviest volume of the year, blasting above its 200-day line and breaking a trendline going back to January. Investors could still buy the oil-field services giant, formerly known as Schlumberger, though it is getting somewhat extended from the 200-day. SLB earnings are due on July 21.

Flowserve stock rose 1.9% to 36.96 on Friday, bouncing from the 21-day line. FLS stock has a 37.56 cup-with-handle buy point. Flowserve has struggled since 2014. But earnings are rebounding, with strong growth seen through 2024. Industrials are market leaders right now, with Flowserve’s end markets doing well.

Marriott stock rose 1.1% to 185.66 for the week. Friday’s 2% gain in slightly above-average volume pushed MAR stock back above a 183.27 buy point and not far from the April 2022 record high.

Market Rally Analysis

The market rally has moved sideways for the past three weeks, which has been constructive, letting stocks pull back to key support or forge handles and bases.

Not many stocks flashed buy signals and made those moves stick in the past week. But a large number of leading stocks from a variety of groups are setting up, including Nvidia, Salesforce, Flowserve and more Chips, software and megacaps look strong, but do housing, industrials, travel and even some energy plays. So do EVs and automakers generally, though few are in position.

The bulls want to run, which is a good thing, but are hitting resistance The Nasdaq is 5.4% above its 50-day line with the Nasdaq 100 up 6%. Those aren’t extended, but aren’t far from being so. Ideally, the Nasdaq would move sideways or slight sideways


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What To Do Now

Investors should be paying close attention, building up their watchlists. You can look to slightly add exposure, but do so carefully. A number of stocks have flashed early entries over the past week or so only to pull back amid the rangebound market. Many may work out fine, but you can’t assume that.

You still may want to take quick partial profits, especially if the Nasdaq gets up to extreme levels again.

Keep in mind that earnings season begins this coming week, with Delta Air Lines (DAL), Aehr Test Systems (AEHR) and JPMorgan Chase (JPM) leading several banks.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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