Dow futures loom after best market week of 2023; How aggressive should you be?

Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures. Warren Buffett Berkshire Hathaway (I ride) reported a big jump in operating profits on Saturday.

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The stock market rally had its best week of 2023, as Treasury yields fell on generally weak economic data, comments from Federal Reserve Chairman Jerome Powell and a slowdown in Treasury issuance. The Nasdaq staged a follow-up day on Wednesday, with the S&P 500 and Dow Jones providing further confirmation on Thursday.

An increasing number of stocks are flashing buy signals. It’s time for investors to increase exposure, but do so carefully. The market rally still faces several major resistance points.

Nvidia (NVDA) remains a top stock to watch. The AI ​​chip leader retraced the 50-day moving average on Friday, closing at a buy point.

while, Lululemon Athletica (Lulu), Shopify (Shop), Kings Project (DKNG), Zscaler (ZS) And netease (NTES) are stocks in or near buy zones.

in addition to, Tesla (TSLA) rebounded from multi-month lows, but reached resistance at key levels on Friday. Tesla shares, along with Shopify and DraftKings, are notable ETF holdings in Cathie Wood’s Ark Invest fund.

Nvidia stock is on IBD Leaderboard, with DKNG stock joining the list on Friday. SHOP stock is on the leaderboard watchlist. ZS stock is on SwingTrader. LULU and DraftKings shares are on Bahraini dinar 50. DraftKings was IBD’s Stock of the Day on Friday.

The video embedded in this article discusses the weekly bullish move in depth, while also analyzing DraftKings, Zscaler, and NVDA stocks.

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Berkshire earnings

Warren Buffett’s Berkshire Hathaway reported third-quarter operating profits rose 41% to $10.8 billion. The group’s insurance companies led the way, while profits at utilities, energy and railways fell.

After-tax operating earnings rose 42% to about $7,436 per Class A share, easily beating the FactSet consensus of $6,540.

Berkshire has a record $157.24 billion in cash, up from $147.4 billion as of June 30.

Warren Buffett continued to trim his stock holdings, selling a net $5 billion in the third quarter, bringing his year-to-date total to about $23 billion.

Buffett’s sprawling company bought back $1.1 billion of its stock for $1.4 billion in the second quarter. Berkshire’s total buybacks year-to-date are $7 billion.

BRKB stock jumped 6.1% last week to 351.81, rebounding from the 200-day line to test the 50-day line. Shares are on a flat base with a buy point of 373.34.

Apple stock is Berkshire’s largest stock holding to date. Shares fell significantly in the third quarter and continued to decline in October. But AAPL stock rose 5% last week, holding its 50 even with Friday’s decline after Apple’s less-than-stellar earnings and guidance.

Dow jones futures today

Dow Jones futures open at 6pm EST on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Remember, an overnight move in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.

Join IBD experts as they analyze leading stocks and the market on IBD Live

Stock market pool

The stock market rally had a huge week, with major indexes coming back from multi-month lows

The Dow Jones Industrial Average rose 5.1% in stock market trading, its best week in a year. The S&P 500 jumped 5.85% and the Nasdaq Composite jumped 6.6%, both their best weeks since early November 2022. All staged follow-up days to confirm the new high as part of their best weekly gains in months.

The Dow Jones, S&P 500 and Nasdaq all ended their 50-day streaks on Friday, but not decisively.

Market breadth was very strong again, after weeks of poor results. The applicants crushed the losers again. New highs surpassed new lows for the first time in more than a month.

The small-cap Russell 2000 index jumped 7.6%, its best week in three years after falling to a three-year low. Invesco S&P 500 Equal Weight Fund (RSP) jumped 5.9%. Both are moving towards the deteriorating 50-day line, still well below the 200-day line.

The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) by 6.1%, finally crossing the 200-day line on Friday and reaching the 50-day line. The Nasdaq 100 jumped 6.5% to a 50-day high and approaching the trend line.

The yield on the 10-year Treasury note fell by 29 basis points to 4.56%. The 10-year Treasury yield closed at the 50-day line after falling to that key level for the first time since May.

US crude oil futures fell 5.9% to $80.51 per barrel last week.

Market rise analysis

Major indices made a big turnaround this week. An increasing number of stocks are issuing buy signals from a variety of market areas.

The Nasdaq’s follow-up day on Wednesday was encouraging, but market breadth was not impressive, while all other major indexes were below their 200-day lines. By Friday’s close, all major indexes were above their 50-day lines.

Clearly, falling Treasury yields were a major catalyst for the new market rally, just as rising yields led to a three-month market decline.

After a big rally, and with major indexes just above their 50-day lines, a market halt wouldn’t be a huge surprise — especially if Treasury yields stop falling or rebounding.

The Dow Jones has tested the trend line since the beginning of the downtrend. The Nasdaq and S&P 500 breaking their downtrends would provide stronger evidence that this market rally has staying power.

ETFs

iShares Extended Technology Software Fund (ETF)IGV) took off at 6.3%. VanEck Vectors Semiconductor ETF (Trait) by 8.1%, with Nvidia stock ranking first. Both SMH and IGV restored their lines for 50 days.

Reflecting more speculative stocks, the ARK Innovation ETF (Ark) rose 18.6% last week and the ARK Genomics ETF (Arkj) 17.1%. Tesla stock is a prime holding across Ark Invest’s ETFs. DKNG and SHOP stocks are also Cathie Wood’s top 10 holdings.

SPDR S&P Metals and Mining Fund (XME) advanced 3.7% last week. SPDR S&P Homebuilders ETF (XHB) by 11%. Energy Select SPDR ETF (XLE(up 2.4% and the Healthcare Sector SPDR Fund)Forty-fifth) by 3.5%. Selected Industrial Sector SPDR Fund (forty-first) rebounded by 5.35%.

Financial Select SPDR ETF (XLF) by 7.4% and the SPDR S&P Regional Banking Fund (ETF)Cree) broke out 12.2%.

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Nvidia stock

Nvidia stock pared recent lows during the day on Tuesday, but rose again 11.1% on the week to 450.05. Stocks cleared their 50-day line on Friday. NVDA stock has a double bottom buy point of 476.09. Investors can use the trend line, which is currently around 460, as an early entry.

Note: On the daily or weekly chart, Nvidia has multiple spikes in trading volume to the downside, but nothing to the upside.

If nothing else, investors should view Nvidia as a leader for the market rally and AI boom.

Stocks near buy points

LULU stock rose 5.5% on the week to 407.93, rebounding from its 50-day line to reclaim its buy level of 406.94. However, all of this week’s gains were below average. Many fashion apparel makers and retailers remain pockets of consumer power.

SHOP stock rose 22% Thursday on strong earnings, jumping from multi-month lows within a 36% double-bottom base, according to a MarketSmith analysis. The official buy point is 67.60, but SHOP stock crossed the downtrend line on Friday. Investors can buy Shopify stock here, or look for a potential ticker at some point.

DKNG stock jumped 16.5% on Friday to 33.75 after strong earnings and guidance. Shares rose above the 50-day line and cleared several early entries to hit their best close since December 2021. On Friday morning actionable, the online sports betting giant appears to be extending from its 50-day line. DraftKings stock has an official buy point of 34.49, but ideally it will pause and form a handle. The relative strength line is already at a new high.

ZS shares jumped 6.5% to 164.37 last week. Friday’s 3.25% high volume rebound provided a buying opportunity in the cybersecurity play. Zscaler shares have been consolidating in chaotic fashion since mid-June.

NTES stock rose 5.6% to 112.72, surpassing a 110.82 buy point from a flat two-month base. Shares of the Chinese online gaming giant have rebounded from just below the 50-day line over the past two weeks. But NetEase stock appears to be extending from its 50-day line.

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Tesla shares

Tesla stock started the week by breaching the 200 level for the first time since May, but rebounded to post a weekly gain of 6.1% to 219.96. On Friday, stocks reclaimed the 200-day line, but faced resistance at the 21-day line.

In any case, Tesla needs to move decisively above the 50-day line before it looks interesting again.

Since the decline in weak third-quarter earnings, Elon Musk’s warnings about the Cybertruck, and more, Tesla’s status as a growth company has come into greater question. Tesla deliveries should rebound in the fourth quarter as deliveries of the new Model 3 begin in China and Europe. But deep discounts on Model Y inventory are increasing.

But with margins now operating like a traditional automaker, the bull case for TSLA stock rests largely on successful bets on self-driving, robotics and artificial intelligence.

What are you doing now

Investors should take advantage of the new market rally and recent buying opportunities. But do it gradually. If the market continues to make progress, you can add to your portfolio.

With earnings season past its peak and major economic news clearing up, some big uncertainties have been lifted.

But it’s still possible that the new market rally will stall around the 50-day line again, especially if yields rebound again. A pause can be healthy, as it allows some recent big winners to take a breather and potentially create new buying opportunities. Other shares that have not been transferred can be created.

It’s definitely a weekend to turn on the screens, and create an extensive watchlist of interesting stocks. Focus on a smaller group of stocks that you might want to target early next week.

Read The Big Picture every day to stay on top of market trend and leading stocks and sectors.

Please follow Ed Carson on X/Twitter at @IBD_ECarsonTopics in @edcarson1971 And Bluesky V @edcarson.bsky.social For stock market updates and more.

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