Dow futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures. Nvidia (NVDA) chip maker Taiwan Semiconductor (TSM) will announce sales data on Friday.
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The stock market rally was solid Thursday, with the Dow Jones rising for a seventh straight session. Leading stocks showed bullish or constructive action.
Working on a possible handle, Nvidia stock fell slightly for the third straight day. Broadcom (AVGO) is close to various entries. The chip equipment giants Applied Materials (AMAT) and KLA Corp (KLAC) are also close to buy points.
Taiwan semiconductor stocks traded between two buy points heading into April sales data. TSMC makes chips for Nvidia, Broadcom, apple (AAPL) and many others. It is also a major buyer of chip gear.
Taiwan semiconductor sales data follows earnings reports from AI chip IPOs. Arm Holdings (ARM) and Astera Labs (ALAB).
Meanwhile, Tesla stock dropped to a critical level with just Tesla (TSLA) rival BYD (BYDDF) in the buy area.
Nvidia is on the IBD leaderboard, Taiwan Semiconductor and ALAB are on the stock leaderboard watch list. Nvidia stock is on SwingTrader and the IBD 50. KLAC stock is on the IBD Long-Term Leaders. AVGO stock is on the IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures rose 0.15 percent versus fair value. S&P 500 futures and Nasdaq 100 futures rose 0.1 percent.
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 rallied on Thursday.
The Dow Jones Industrial Average rose 0.9 percent in Thursday's stock market trading. The S&P 500 index climbed 0.5%. The Nasdaq Composite rose 0.3 percent. The small-cap Russell 2000 rose 0.9 percent.
The Dow Jones has hit record highs for seven consecutive sessions. So is the S&P 500. The Nasdaq and Russell 2000 have been stagnant for the past few days. All are above their 50-day moving averages.
Well-known stocks continue to perform well. Apart from various tech names, a large number of restaurant, financial, medical, builders and infrastructure plays are showing strength.
U.S. crude oil rose 0.3 percent to $79.26 a barrel.
The yield on the 10-year Treasury fell 3 basis points to 4.45 percent, its lowest close in a month.
ETFs
Among developing ETFs, iShares' Expanded Tech-Software Sector ETF ( IGV ) fell 0.1 percent. VanEck Vectors Semiconductor ETF ( SMH ) fell 0.6%. Nvidia and TSM stocks are the two largest SMH holdings, with Broadcom, KLA and AMAT stocks also being key members.
Reflecting more speculative storied stocks, the ARK Innovation ETF ( ARKK ) retreated 0.6% and the ARK Genomics ETF ( ARKG ) added 1.9%. Tesla is the No. 1 ETF in ArchInvest. Cathie Wood's Ark also owns a small stake in BYD.
The SPDR S&P Metals & Mining ETF ( XME ) gained 2.1% and the Global X US Infrastructure Development ETF ( PAVE ) rose 1.2%. The SPDR S&P Homebuilders ETF ( XHB ) gained 2.1 percent. The Energy Select SPDR ETF ( XLE ) gained 1.3 percent and the Healthcare Select Sector SPDR Fund ( XLV ) added 0.9 percent.
The Industrial Select Sector SPDR Fund ( XLI ) gained 1% while the Financial Select SPDR ETF ( XLF ) added 0.75%.
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AI Chip Stocks
Taiwan Semiconductor fell 0.6 percent to 142.79 on Thursday. Shares are trading at 148.43 double bottom bp. TSM stock reclaimed the 50-day line on May 3 and crossed the downward sloping trend line.
Nvidia stock fell 1.8 percent to 887.47 on Thursday, its third straight minor decline, still holding the 50-day line. According to MarketSurge, the AI ​​chip leader has a 974 consolidation buy point. It looks like NVDA stock is starting to work on a handle, which would provide a lower buy point. Nvidia's earnings are on May 22.
Broadcom stock fell 1.5 percent to 1,305.67 on Thursday, just below the 50-day line. AVGO stock's 1,438.17 is a consolidation buy point, although investors can use 1,403.98 as an initial entry. A decisive move above the 50-day, perhaps clearing the 1,355 area, could be an aggressive entry.
Applied Materials stock fell 0.5 percent to 206.33 on Thursday, still above the 50-day line. 214.91 is the flat base buy point for the shares. Investors can use the May 7 high of 209.47 as an entry. But Applied Materials' revenue is due on May 16.
KLA stock retreated 0.9% to 710.67 on Thursday, slightly below the 727.64 flat-base entry.
Arm stock fell 2.3 percent to 103.59 on Thursday, off an intraday low of 97.76. Shares have rallied slightly over the past few weeks, but have only recovered a fraction of their big losses in mid-April. Late Wednesday, the AI ​​and wireless chip designer beat fiscal Q4 views and guided for Q1, but gave a lower full-year sales target.
Astera Labs stock rose 1.2% to 70.06 on Thursday, but after falling 9.1% on Wednesday. Late Tuesday, AI chip IPOs beat Q1 views by a good margin and led into the current quarter, but it wasn't enough. ALAB stock has a 95.21 buy point from its IPO base, though the April 29 high of 88.59 might be a better entry. However, it may take time before an arm like Astera Labs can reset.
Tesla stock
Tesla stock fell 1.6 percent to 171.97, just shy of the 50-day line. Shares have given up most of their 15% gain on April 29. It comes as Tesla clears major hurdles to introducing fully self-driving in China.
Rich Otto announced Wednesday that he resigned as Tesla's head of new product launches last week, citing weak morale amid rapid, ongoing layoffs.
Elon Musk has announced layoffs of more than 10 percent. It axed the supercharger and new vehicle teams entirely, amid weak demand and an apparent shift away from new vehicles. A large number of senior officials have resigned or been sacked over the past few months.
B.P (BP) said Thursday it wants to buy Tesla Supercharger sites in the U.S.
Meanwhile, China's BYD rose 1.8 percent to 28.95. BYD stock, the only EV maker due in 2024, is above the 200-day line and capable of a brief consolidation. The EV giant is set to unveil the Sea Lion on Friday, a Model Y rival with fast charging, smart car tech and other features. BYD will officially launch a plug-in hybrid pickup on May 14.
What should be done now?
Nasdaq's recent pause has allowed stocks like Nvidia to work on potential bases or handles, while fast-growing stocks quickly gain relative strength.
This gives investors more time to update their watchlist, but don't despair. Leading stocks continue to give buy signals. You can gradually add exposure as the market rally continues to work well.
Remember, if these positions fall, or if major indexes break below their 50-day lines, you may want to scale back. So get your exit plans ready.
Read The Big Picture every day to stay in tune with market direction and leading stocks and sectors.
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