Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. Nvidia and several AI chip plays are working on the bases.
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The stock market pulled back last week, highlighted by Thursday’s downside reversal that pushed the uptrend “under pressure.” But the major indexes bounced back on Friday. A few leaders sparked buy signals, but along with that, a series of fake heads continued. Many are close to initial entries or working on new consolidations.
Investors should take a closer look and may consider some additional purchases. However, it is still a range-bound market.
Nvidia ( NVDA ) fell last week but is close to making a new base. Broadcom (AVGO), Taiwan Semiconductor (TSM) and the recent IPO Astera Labs (ALAB) are also working on potential bases, while ARM Holdings (ARM) already has one. Super Microcomputer (SMCI), which is closely related to AI chips, is also building a foundation.
Tesla ( TSLA ) retreated amid weak first-quarter shipments and other negative headlines. But shares rose on Friday night as Elon Musk said Tesla would unveil a robotaxi on August 8.
Nvidia and ARM stocks are on the IBD leaderboard. Nvidia stock and Arm Holdings are on the IBD 50. Nvidia, Broadcom and Super Micro Stocks are on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures open at 6 PM ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Stock market rally
The stock market rally had a modest to solid weekly loss, but ended on a high note on Friday.
The Dow Jones Industrial Average fell 2.3 percent in last week’s stock market trading, but regained the 50-day line on Friday. The S&P 500 index fell 0.95% and the Nasdaq Composite shed 0.8%, but both finished above their 21-day lines. The small-cap Russell 2000 fell 2.9 percent, failing to close above its 21-day high on Friday.
On Thursday, stocks suffered sharp declines on Middle East tensions. But they rebounded on Friday, even with a strong jobs report, perhaps with Middle East fears easing.
The Dow, which dipped below its 50-day line on Thursday, rebounded on Friday. The S&P 500, Nasdaq and Russell 2000 regained their 21-day moving averages. The Nasdaq and Russell 2000 jumped above their 10-week moving averages.
Still, Friday was an insider’s day for the major indexes, while volume fell compared to Thursday.
Despite some daily swings, the Nasdaq has been trading relatively strongly since early March, with the 10-week line finding support. Russell 2000 is at the top of a consolidation from the tail end of 2023. This has allowed many leading stocks to return to fundamentals or key support. Several leaders tried to clear the entries during the week, but many quickly backed out.
The 10-year Treasury yield jumped 18.5 basis points to 4.38%, a 2024 high. The odds of a June Fed rate cut have fallen to just 49 percent.
U.S. crude futures rose 4.5 percent for the week to $86.91 a barrel, touching their best level since October.
ETFs
Among growth ETFs, the iShares Expanded Tech-software Sector ETF ( IGV ) fell 1.3% for the week. VanEck Vectors Semiconductor ETF ( SMH ) fell 1%. Nvidia is a massive SMH holding, with Broadcom and Taiwan Semiconductor also key holdings.
The SPDR S&P Metals & Mining ETF ( XME ) gained 2.9% last week. The Global X US Infrastructure Development ETF ( PAVE ) fell 0.2 percent. The US Global Jets ETF ( JETS ) fell 4.2%. The SPDR S&P Homebuilders ETF ( XHB ) retreated 2.7%.
The Energy Select SPDR ETF ( XLE ) jumped 3.9% and the Healthcare Select Sector SPDR Fund ( XLV ) fell just over 3%. The Industrial Select Sector SPDR Fund ( XLI ) fell 0.2%. The Financial Select SPDR ETF ( XLF ) fell 1.3%.
Reflecting more speculative stories, the ARK Innovation ETF ( ARKK ) sold off 5.9% last week and the ARK Genomics ETF ( ARKG ) fell 7.1%. Tesla stock is a key holding in ArchInvest’s ETFs.
Time the Market with IBD’s ETF Market Strategy
Nvidia stock
Nvidia stock fell 2.6% to 880.08, its second straight weekly decline after a strong 11-week run. Shares staged a rebound on Friday to close above their 21-day line. The AI ​​chip leader has been in a potential flat base for four weeks now. The buy point would be 974, which marks the day’s high for NVDA stock’s big reversal on March 8. Another week could significantly end the bullish 10-week streak.
Thursday’s high of 906.34 will offer an initial entry from a very short trendline.
A new base will let investors join or join the clear leader of the AI ​​stock market rally. Nvidia’s breakout will have a big impact on the broader market, especially other AI chipsets.
Mike Webster on staying in SMCI stock
AI Chip Stocks
Broadcom stock rose 1.1 percent last week to 1,339.43, hitting a 21-day high and rebounding from a 10-week line. On Thursday, AVGO stock briefly cleared a downward-sloping trendline before reversing to the downside. Shares are five weeks into a potential base with a potential 1,438.17 entry. Investors can use Thursday’s intraday high of 1,403.98 as an initial entry.
ARM stock was down 0.1 percent for the week at 124.82, hitting 10-week support but hitting 21-day resistance. Shares have formed a base with a 164 buy point. But the downward sloping trendline or the March 26 high of 145 could be places where a minimum position could start.
Taiwan Semiconductor stocks rose 1.2 percent to 141.37, hitting 21-day support. Foundry, the giant that makes chips for Nvidia, apple ( AAPL ) and many others, are a few weeks into the potential foundation. Investors can use Thursday’s high of 146.75 as an initial entry.
Taiwan Semi reports March sales on April 10, with Q1 earnings due on April 18. This could have a big impact on AI chip makers as well as chip device makers.
Astera Labs stock fell 3.8 percent last week to 71.34, but rallied on Friday. The AI ​​networking chipmaker started trading on March 20 and hit a record high of 95.21 on March 26. ALAB stock is eight days into the potential IPO base, which could be as short as two weeks or 10 days. A potential buy point would be 95.21, although investors may look for early entries, with the 75-area resistance area.
Super Microstock is a complimentary AI chip play, its servers are a favorite for chips from Nvidia and others. SMCI stock fell 6.1 percent last week to 948.02, below its 21-day line. A test of the 10-week line may begin, while Super Micro stock nears a new base. Investors can use Thursday’s high of 1,057.18 as an initial entry.
Astera Labs is the star in AI networking chips.
Tesla stock
Tesla stock fell 6.2 percent for the week to 164.90, once again retreating near its 10-week moving average. Shares briefly hit 11-month lows on Friday.
EV Dev on Tuesday reported first-quarter shipments that fell well short of the most bearish estimates. Meanwhile, Reuters reported Friday that Tesla is scrapping plans for the $25,000 EV, once again focusing on a robotaxy with no steering wheel.
If true, this would suggest that Elon Musk is betting Tesla’s future development almost entirely on autonomous driving.
Musk responded on his social media site X, writing that “Reuters is lying (again).” But he didn’t say what was wrong.
Late Friday, Musk said Tesla will unveil a robotaxi on August 8. He didn’t give any other details, such as whether fans will see a prototype, design or just an image.
Tesla’s fully self-driving is still a Level 2 system, which means human drivers must be willing to take the wheel.
But TSLA stock rose 3.8 percent after the close popped.
What should be done now?
The stock market rally is taking a nice break, with the moving average closing the gap. This could set the stage for another leg up, but there’s no guarantee it will happen soon or at all.
In the meantime, sideways action has been difficult, with many leading stocks flirting with buy points before quickly pulling back. Investors could try a few purchases, but they might have to cut a lot of slack.
With Treasury yields at 2024 highs and the market poised to push back on another Fed rate cut, the market rally faces significant potential headlines.
Investors may want to wait for more persuasive strength, such as the Nasdaq and S&P 500 clearing Thursday’s intraday highs and testing all-time levels before significantly adding exposure.
A market-wide initiative like this could be just what Nvidia, ARM and other AI chip leaders need to get ahead.
Be sure to work on your watchlist, looking for these emerging setups. While this article focuses on AI chip plays, a number of software stocks are peppering the entries with well-known stocks from various sectors.
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