Dow futures were little changed Sunday night, along with S&P 500 futures and Nasdaq futures.
The stock market rally fell for most of the past week towards key support, but picked up again on Friday, led by the apple (AAPL), Tesla (TSLA) and bank stocks. The Nasdaq is close to reaching its 2023 highs again, along with the S&P 500 and Dow Jones. But we’ve been here before.
Warren Buffett Berkshire Hathaway (BRKB) reported Saturday’s earnings.
Buying opportunities are still limited. Dow Jones giant visa (Fifth), advanced micro devices (AMD) And Cos TJX. (TJX) hover over the entries. Visa stock is in a buy territory, but it could also have other entries. AMD, fed Microsoft (MSFT) pretentious artificial intelligence, on the cusp of early entry. So is TJX stock.
Tesla stock is still a long way from a buying point, but it’s worth watching again.
Despite the rebounds on Friday, Backwest Bancorp (PACW) and other regional banks have been awesome weeks. So keep an eye on PACW stock, Western Alliance Bancorp (WAL) and regional banks in general.
Investors should remain cautious about increasing exposure until the market rally – still “under pressure” – shows more strength and breadth. But this could come soon.
Microsoft stock is in IBD Long-Term Leaders.
The video embedded in the article discussed and analyzed another complex week of the market Kings (DKNG), Visa and TJX.
Dow Jones futures contracts
Dow futures contracts were slightly above fair value. S&P 500 and Nasdaq 100 futures have changed little.
Crude oil futures rose slightly.
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 rise
The stock market rally eased for most of the week, but rebounded on Friday to finish mixed.
The Dow Jones Industrial Average fell 1.2% in last week’s trading on the stock market. The S&P 500 fell 0.8%. The Nasdaq Composite Index gained 0.1%. Small cap Russell 2000 fell 0.4%.
The 10-year Treasury yield lost a fraction to 3.445% for the week, amid some big daily moves.
US crude oil futures fell 7.1% to $71.34 a barrel last week, even as Friday rose just over 4%.
Exchange Traded Funds
Among the ETFs, the Innovator IBD 50 ETF (fifty(down 0.3% last week, while the Innovator IBD Breakout Opportunities ETF)fit) decreased by 1.2%. iShares Expanded Technology and Software ETF (IGV) decreased by 1.1%. MSFT stock is a core component of IGV. VanEck Vectors Semiconductor Corporation (SMH) increased by 0.6%. AMD stock is a major SMH property.
Reflecting more speculative stories, the ARK Innovation ETF (ARK)ark(up 4.1% last week and the ARK Genomics ETF)ARKG) gained 2.6%. Tesla stock is the number one stock ETF held by Ark Invest. TSLA stock jumped 5.5% on Friday, just below its 21-day moving average. It still needs to retake the 50 day line to start approaching potential buy points. Meanwhile, archenemy Tesla has its enemies BYD (BYDDF) is set up near a suitable point of purchase. Cathie Wood’s Ark owns a small stake in BYD stock.
SPDR S&P Metals & Mining ETFs (XME) fell 1.9% last week. Global Infrastructure Development Fund X US (cradle) increased by 1.4%. US Global Gates Foundation ETF (Planes) fell 0.7%. SPDR S&P Homebuilders ETF (XHB) decreased by 0.2%. Energy Defined Fund SPDR ETF (xle) decreased by 5.8%. SPDR Health Care Sector Selection Fund (XLV) was just above the break-even point.
SPDR Financial Selection Fund (XLF) fell 2.5% for the week, but rebounded 2.4% on Friday. XLF is largely made up of banking giants, but Berkshire Hathaway is the largest company it owns, and Visa stock is a major component.
SPDR S&P Regional Banking ETF (KRE) rose 6.3% on Friday but is still down 10.1% for the week. KRE hit a 31-month low on Thursday. PacWest stock was up 82% on Friday, but it’s still down 43% for the week. WAL stock jumped 49% on Friday, down 27% for the week.
On Friday night, PacWest cut its quarterly dividend to 1 cent per share from 25 cents.
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Berkshire Hathaway earnings
Berkshire Hathaway reported operating profit of $8.065 billion, up 12.6% from the previous year. Insurance investment and underwriting income jumped, while the operations of BNSF Rail and its energy subsidiary saw profits decline.
Net earnings, including short-term investment gains, rose to $35.5 billion from $5.58 billion a year earlier, destroying perspectives by $8.1 billion. Warren Buffett says investors should focus on operating results.
Equity investments rose in the first quarter. Apple stock, Buffett’s single largest holding, hit an eight-month high on Friday after earnings topped views.
Berkshire also increased significantly Occidental Petroleum (OXY) share over the past year. Buffett said on Saturday that Berkshire will not take full control of the oil producer. OXY stock has struggled for several months amid weak oil prices. West’s earnings are due Tuesday.
Berkshire sold a net $10.4 billion in stock in the first quarter. It bought back $4.4 billion of its shares, the most since the first quarter of 2021. However, its cash stock swelled to $130.62 billion from $128 billion in the fourth quarter.
BRKB stock works at 331.94 buy points on a 13-month cup-by-handle basis. Investors can also see it as a shelf above a bottoming base. The handle is part of a narrow three week streak on the weekly chart.
Stocks near buy points
Visa stock rebounded from the 50-day line on Friday to regain 227.51 buy points with a double bottom. Shares fell just 0.4% for the week to 231.78, extending the narrow move. V stock has a tight four-week pattern with an entry of 235.67. Visa and competitor Master Card Credit Card (Master’s) is expected to deliver strong earnings growth over the next two years, benefiting from strong cross-border payments. The MA stock is also in a buy range.
AMD stock rose 0.5% to 89.84 this week, amid high volatility. Stocks fell Wednesday on weak AMD guidance, then picked up again Thursday after a report that it was collaborating with Microsoft on an AI chip. Microsoft later denied that it was developing an in-house AI chip but did not say whether it was funding AMD’s efforts. On Friday, stocks extended gains, once again closing above the 50-day line. A move above Thursday’s high of 91.64 would indicate a decisive move above the 50-day line and a downward sloping trend line.
As for Microsoft stock, Dow tech rose 1.1% during the week to its highest level in 52 weeks.
TJX fell 0.4% to 78.50 last week, and continued to find support at the 50-day line. The official buy point is 83.23, but investors can use 79.81 as a legitimate early entry. This is above the fractional handle which is too low to be adequate. This “handle” is also tight for three weeks with the same entry level of 79.81.
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Market rally analysis
The stock market rally saw some notable turnarounds during the week, but ultimately closed narrowly mixed.
Major indexes fell during the week to test their 50-day or 10-week lines, but rebounded strongly on Friday on Banks, Apple, Tesla and the April jobs report. Friday’s gains came as trading volume fell.
The Nasdaq briefly hit a three-month high on Friday, just below its 2023 highs. But major indexes have been threatening to do so for weeks.
The winners crushed the losers on Friday, but the Nasdaq advance/down line was bottoming out as the NYSE A/D line deteriorated as well.
First Trust Nasdaq 100 Equal Weighted Mutual Fund (QQEWIt returned above the 50-day line and the 21-day line on Friday, trimming its weekly loss to just 0.35%. Invesco S&P 500 Equal Weight Fund (RSP) is down 1.45% for the week, although on Friday it only bounced back between the 200-day and 50-day lines.
The market lead was tight, with few buying opportunities. Many of Friday’s top movers were stocks below the 200-day lines.
Banks remain a major primary card. If the regional banking crisis ends and bank stocks recover significantly over time, that would be a huge boost to the overall market, as it showed on Friday. But the risk of a renewed sell-off is likely to persist for a long time.
Markets also rebounded on Friday on the back of the strong jobs report that may have hit stocks just a few days ago. With the Federal Reserve seemingly stalled, investor concerns are turning to recession risks. Will this continue indefinitely, or is it just a flash?
However, if the major indices can break decisively higher – with a wide range – then the market rally may have room to run.
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What are you doing now
The market rally remains under pressure, with a range of indicators limited and broad market conditions weak.
Not many stocks are made consistently. Buying opportunities have been sparse of late, with many of those coming from large profit gaps that are particularly risky in an uneven market. Many of the stocks that rallied ended up making solid gains.
If the Nasdaq can lead the indices to their highest levels in 2023, more stocks will make upward moves closer to buying points, and then continue to advance. Investors can build up their exposure gradually.
So investors should be prepared. Watchlists need to be refreshed after earnings left some promising stocks stretched significantly and many others down sharply. It is not clear which sectors will lead.
But also be prepared for the downside. While the market ended higher on Friday, the market ultimately made no headway. A decisive breakout of the market or individual stocks will be a strong exit signal.
Read the big picture every day to stay in sync with market trend, leading stocks and sectors.
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