Sunday evening, Dow Jones futures, S&P 500 futures, and Nasdaq futures all declined marginally.
The stock market rally experienced another week of sideways action, as the Dow Jones, S&P 500, and Nasdaq composite all drifted lower in continued close trading. Investors anticipate earnings reports from Microsoft (MSFT), Amazon.com (AMZN), Meta Platforms (META), and Alphabet, the parent company of Google (GOOGL).
Opportunities to purchase have been scarce, and many have faded or failed. In the coming week, earnings season will be in full swing, presenting an opportunity for the market to break out of its impasse.
Microsoft, Amazon, Meta, and Google are particularly vital. Microsoft and, possibly, Amazon stock are currently tradeable. The Google stock price is close to a buy position, whereas Facebook’s parent company, Meta, is retreating after a massive run.
They have a significant impact on the main indexes on their own. And their predictions regarding the future development of key markets such as cloud computing, artificial intelligence, e-commerce, and personal computers will have a significant impact on the technology industry and beyond.
First Solar (FSLR), Dexcom (DXCM), Mobileye (MBLY), Boeing (BA), ServiceNow (NOW), Cloudflare (NET), Align Technology (ALGN), Fair Isaac (FICO), Visa (V), and Chipotle Mexican Grill (CMG) are among the notable companies reporting next week with stocks near or in buy zones.
MBLY stock has a particularly eventful week, with the expiration of its IPO lockup on Monday and earnings on Wednesday.
Bed Bath & Beyond (BBBY) filed for Chapter 11 bankruptcy on Sunday, citing mounting debts and falling sales. BBBY stock has been falling for quite some time, but meme stock rose 23% last week despite the company’s potential bankruptcy.
Keep a watch out for news regarding Shockwave Medical (SWAV) in the interim. SWAV stock surged on Friday following news that Boston Scientific (BSX) is considering a takeover proposal for Shockwave. However, the companies have not commented.
Microsoft stock is included on IBD’s Long-Term Leaders list.
Dow Jones Futures Compared to true value, Dow Jones futures fell 0.3% today. S&P 500 futures fell 0.25 percent, while Nasdaq 100 futures fell 0.25 percent.
Crude oil futures declined 1%.
Keep in mind that overnight activity in Dow futures and elsewhere is not necessarily indicative of the next regular stock market session.
Stock Market Rally
In the past week, the stock market rally lacked significant direction.
The Dow Jones Industrial Average decreased 0.2% during trading on the stock market last week. The S&P 500 declined by 0.1%. The Nasdaq composite index declined 0.4%. The Russell 2000 small-cap index rose 0.6%.
The yield on the 10-year Treasury note rose 5 basis points to 3.57 percent.
Last week, U.S. crude oil futures fell 5.5% to $77.87 per barrel.
ETFs
The Innovator IBD 50 ETF (FFTY) increased by 2.7% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) declined by 0.4%. MSFT stock was a significant holding in the iShares Expanded Tech-Software Sector ETF (IGV), which fell 0.1%. SMH lost 1.5%.
Last week, the ARK Innovation ETF (ARKK) decreased by 3% and the ARK Genomics ETF (ARKG) increased by 1% in response to the increased speculative nature of story equities.
Last week, the SPDR S&P Metals & Mining ETF (XME) fell 4.2%. The Global X U.S. Infrastructure Development ETF (PAVE) advanced by 0.55 percent. The U.S. Global Jets ETF (JETS) rose 1.8%. The SPDR S&P Homebuilders ETF (XHB) increased by 3.4%. After five consecutive weekly gains, the Energy Select SPDR ETF (XLE) and the Health Care Select Sector SPDR Fund (XLV) declined by 2.6% and 0.2%, respectively.
The Financial Select SPDR ETF (XLF) rose by 1%, with JPM stock constituting a significant holding. The SPDR S&P Regional Banking ETF (KRE) increased by 1.5%, but it has a long way to go before it recovers.
Market Upswing Analysis
The rally on the stock market continues to move sideways, with the major indexes declining marginally. In practice, the S&P 500 and Nasdaq composite have four-week-tight patterns. Late in the week, the Nasdaq tested support at the 21-day line and the 12,000 level.
Globally, the major indexes are trapped between their highs from early 2023 and their 50-day moving averages.
The market breadth remains unimpressive, particularly on the Nasdaq. The advance-decline line has weakened in recent days.
This past week, the Invesco S&P 500 Equal Weight ETF (RSP) closed fractionally higher and held firmly to its 50-day line.
Homebuilders appear robust, with more reports forthcoming this week. Boston Scientific and SWAV stocks, among others, have been among the market’s top performers.
The SMH ETF closed Friday just below its 50-day line, following a month-long decline in semiconductor equities. This could be a beneficial pause, but chip investors have had a difficult time. This past week, other tech hardware manufacturers struggled due to IT expenditure concerns.
Microsoft, Google, Amazon, and Meta will shed light on larger IT expenditure plans. For key suppliers like Arista Networks, their own expenditure plans and growth projections will be essential.
The market will eventually burst out of its recent range, for better or for worse. Earnings season in the coming weeks, along with significant economic data and the Fed meeting in early May, could spark a decisive rally or decline. Or, they could provide a plethora of muddled signals that increase the market’s volatility.
Market Timing Using IBD’s ETF Market Strategy
What Should You Do Now?
The current market rally hasn’t done anything incorrect, but it’s also not doing anything remarkable.
Sideways action and short-lived rallies, along with sector rotation, are not favorable conditions for buying equities, particularly on conventional breakouts. By the time a stock makes a strong move and flashes buy signals, there is a good possibility that it will decline again.
In all honesty, it’s probably a good thing that the market rally and leading equities didn’t take off just before Microsoft, Google, and hundreds of others reported earnings.
Now that earnings season is about to reach its peak, it is crucial to know not only which holdings will report, but also which competitors, suppliers, and customers will do so.
If the market reacts favorably to earnings, numerous purchasing opportunities may arise. Even so, investors should progressively increase their exposure. The possibility of specific equities or the market as a whole giving back gains remains high.
But be prepared to capitalize on early entries. Keep watchlists current. Maintain a large list of equities that are performing well or preparing to do so, focusing in particular on those that are nearing their buy points.
Daily perusal of The Big Picture will keep you abreast of market direction and prominent stocks and sectors.