Dow Jones futures open Sunday evening, as do S&P 500 futures and Nasdaq futures. Massive Hamas attacks on Israel and expectations of a massive Israeli response could weigh on futures and financial markets on Monday.
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After some difficulties for most of last week, the new stock market rally showed an upward trend on Friday. Major indices saw an upward move and a number of stocks signaled buy signals.
Nvidia stock, Metaplatforms (META), Arista Networks (A NET), Qualys (QLYS), Eli Lilly (LLY), CME Group (CME), Vertiv Holdings (VRT), CrowdStrike Holdings (CRWD), Cadence design systems (CDNS) and Palo Alto Networks (PANW) were among those clearing buy points or early entries. All have relative strength lines at or near highs, reflecting strong performance relative to the S&P 500.
Along with these 10 stocks, Tesla (TSLA) rebounded from key support on Friday and rose over the week despite a barrage of bad news.
Investors should prepare their watchlists this weekend and look to gradually increase their exposure if the market continues to perform well.
Nvidia (NVDA), LLY stock, Arista Networks, Vertiv and Meta Platforms are on the IBD leaderboard, while Tesla stock is on the Leaderboard watchlist. PANW stocks and meta platforms are on SwingTrader. CDNS stock is one of the IBD Long-Term Leaders. Meta stocks, Nvidia, Qualys, Arista Networks, Cadence Design, Palo Alto Networks, Tesla and Eli Lilly are in the IBD 50. Nvidia, Tesla, Palo Alto and ANET stocks are in the IBD Big Cap 20.
Eli Lilly was the IBD Stock of the Day on Friday, with stocks from CrowdStrike, Arista Networks and PANW also picked throughout the week.
Hamas attacks Israel
The Palestinian group Hamas launched massive brutal attacks on Israel on Saturday. Thousands of rockets and military forces penetrated large parts of the south of the country, deliberately killing hundreds of civilians and taking several dozen hostages. Israeli Prime Minister Benjamin Netanyahu declared war on Hamas, with widespread retaliation likely in the coming days and weeks.
This could disrupt any possible normalization of relations between Israel and Saudi Arabia. Saudi Arabia has told U.S. officials it may increase oil production next year as a possible goodwill gesture to get Congress to approve a U.S.-Saudi defense pact as part of Saudi recognition of Israel.
All of this could send financial markets into turmoil on Monday, particularly the crude oil market.
Dow Jones futures today
Dow Jones futures open at 6:00 p.m. ET, as do S&P 500 futures and Nasdaq 100 futures.
Bond markets will be closed Monday for Columbus Day.
Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
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Stock market rally
The stock market struggled for most of the week as the Dow Jones and S&P 500 undercut recent lows and ended their rally attempts. But the Nasdaq rally attempt continued. Friday saw a bullish upward reversal on higher volume across major indices, with leading stocks rising sharply.
The Dow Jones Industrial Average fell slightly 0.3% in trading last week. The Dow undercut its lows again on Friday morning but then recovered 0.9%. The S&P 500 index rose 0.5%, rebounding from the 40-week line on Friday. The Nasdaq Composite rose 1.6% on Friday and this week, crossing the 21-day line. The Russell 2000 small-cap index fell 2.1% after hitting a five-month low on Tuesday.
Market breadth was positive on Friday, but the overall trend has been very weak for weeks or months.
The 10-year Treasury yield rose 21 basis points to 4.78%, but closed well below early Friday’s high of 4.89%. The 10-year bond yield rose several basis points on Friday, but the dollar fell for the third straight session.
U.S. crude oil futures fell 8.8% last week to $82.79 a barrel. Gasoline futures fell 8.6% last week and just over 19% over the past three weeks. They hit a low of 2023 during the week.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.5% last week. The iShares Expanded Tech-Software Sector ETF (IGV) rose 2.2% and reclaimed the 50-day line. Cybersecurity plays CRWD stock, Qualys and Palo Alto are all IGV members. The VanEck Vectors Semiconductor ETF (SMH) rose 2.3%, with Nvidia stock taking the No. 1 spot. CDNS shares are located in SMH and IGV.
The ARK Innovation ETF (ARKK) fell 1.2% last week and the ARK Genomics ETF (ARKG) plunged 5.7%, reflecting more speculative story stocks. Tesla stock remains the No. 1 ETF on Ark Invest.
The SPDR S&P Metals & Mining ETF (XME) lost 3.2% last week. The Global X US Infrastructure Development ETF (PAVE) fell 0.4%. The US Global Jets ETF (JETS) fell 1.5%. The SPDR S&P Homebuilders ETF (XHB) fell 2.1%. The Energy Select SPDR ETF (XLE) fell 5.2% and the Health Care Select Sector SPDR Fund (XLV) rallied 1%, with LLY stock a notable member. The Industrial Select Sector SPDR Fund (XLI) lost 0.6%.
The Financial Select SPDR ETF (XLF) fell 0.4%, with CME shares as a member.
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Stocks in buy zones
Nvidia shares rose 2.4% to 457.62 on Friday and were up 5.2% for the week, crossing the 50-day line, providing an early entry. As of Friday’s close, NVDA stock has a new base with a 502.66 buy point. As The Information reported, stocks fell on Friday evening Microsoft (MSFT) will unveil an AI chip next month to reduce its reliance on Nvidia GPUs.
Meta shares rose 3.5% to 315.43 on Friday, clearing a 310.64 buy point for cups with handles and a 312.87 entry point.
Arista shares rose 3.2% on Friday and 45.5% for the week to 194.02. Shares made an early entry of 189.90. ANET stock now has a flat base with a 198.70 buy point.
Eli Lilly shares rebounded from their 50-day line on Friday, jumping 4.4% to 565.22 and moving above the 21-day moving average. This presented a new buying opportunity. LLY stock fell below its 50-day line on Tuesday but regained it on Thursday. Eli Lilly had a bullish outside week.
Qualys shares rose 4% to 160.97 on Friday, clearing short-term resistance around 155 and a current 52-week high of 157.88. This recent range could be viewed as a de facto flat base or a starting point for a base extending back to September 2022.
CrowdStrike shares rose 6.9% to 176.69 on heavy volume Friday, breaching the 21-day line to put behind a few months of chaotic consolidation. However, CRWD stock closed 11.4% above its 50-day line.
Palo Alto shares rose 4.2% to 246.69 on Friday, jumping from near the 50-day line and clearing some very short-term levels. PANW stock has a consolidation buy point of 258.88. However, investors could use 254.23 or a trendline around 250 as other early entry points.
CME stock rose 4.85% to 211.93 in a big week that spanned the last two months of trading. On Thursday, shares rebounded from the 50-day line. Shares broke above the flat-base buy point of 209.31 on Friday, according to MarketSmith analysis.
Vertiv shares rose 6.9% for the week to 39.77, including Friday’s 4.2% rise. Shares rebounded from the 21-day and 10-week lines while clearing short-term levels, providing an early entry. VRT stock, one of 2023’s big winners, now has a new flat base with a 40.41 buy point.
Cadence Design shares rose 3.9% to 243.95 on Friday, rebounding from the 50-day line and breaking a downtrend of a handle, allowing for an early entry. CDNS stock is working at a buy point of 247.50 cups with handles.
Tesla stock
Tesla shares rose 4.1% this week to 260.53. On Wednesday, shares rose 5.9%, rocketing above the 50-day line and offering an early entry. Shares fell back to the 50-day line on Friday morning but recovered and posted a slight increase. A move above Thursday’s intraday high of 263.20 could provide a fresh early entry by breaking a downtrend in hand. Tesla shares have a 278.98 cup with handle base.
Tesla showed surprising strength in the face of a deluge of seemingly bad news. Early Monday, Tesla reported third-quarter deliveries fell significantly more than expected. Monday night, Tesla launched a new, cheaper Model Y that’s $3,750 cheaper than the previous base variant. Late Thursday, Tesla cut prices for Model 3 and Model Y in the United States and for Model Y in Norway.
Bulls are looking forward to an updated Model 3 with deliveries starting soon in China and Europe, as well as the upcoming Cybertruck and more speculative long-term bets on self-driving, AI and robotics.
Plan the market with IBD’s ETF market strategy
What now
The equity market’s attempted rally trended upwards to end the week, with major indices turning higher on Friday and a large number of leading stocks issuing buy signals.
Investors could and perhaps should have added some exposure on Friday. If the market continues to perform well, you should continue to withdraw cash, but gradually.
Remember, stocks rallied on Friday as Treasury yields peaked, but the rise in market interest rates continues. It’s easy to imagine major indexes collapsing again as the 10-year Treasury yield nears 5 percent.
So be prepared to take a step back if the market or your positions start to wobble.
But this weekend is the time to prepare. Make sure your watch lists are up to date. Pay particular attention to stocks that are actionable or close to actionable.
Next week investors will receive the CPI and PPI inflation reports. Earnings season begins with JPMorgan Chase (JPM), UnitedHealth (UNH) and Delta Airlines (DAL) among the headliners.
Read The Big Picture daily to stay up-to-date on market direction and the leading stocks and sectors.
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