Finance
Dow Jones Futures: S&P 500 Power Trend Begins; Tesla Rival leads 7 stocks in buy zones
Dow Jones futures open Sunday evening, along with S&P 500 futures and Nasdaq futures.
↑
X
S&P 500 enters the power trend; Broadcom, Comfort Systems, NextEra Energy in focus
The stock market rally saw mixed action last week. The Dow Jones hit an all-time high, while the S&P 500 moved higher and the Russell 2000 lower. The Nasdaq composite lagged, as did Nvidia (NVDA) profits failed to impress. But the tech-heavy composite did recover its 50-day line during a solid Friday bounce.
The S&P 500 has entered a power trend, a positive sign for the market recovery. A number of stocks have broken out or set up over the past week.
ServiceNow (NOW), Netflix (NFLX), AppLovin (APP), Comfort systems (TO REPAIR), NextEra Energy (NO) And Spotify (PLACE) are all in buying areas.
This also applies to the Chinese EV giant BYD (BYDDF). The Tesla (TSLA) The archrival broke out on Friday, with BYD reporting a big jump in sales on Sunday. Several other Chinese EV makers also reported deliveries in August.
Broadcom (AVGO), Samsara (IOT) And Dick’s sporting goods (DKS) are around buy points and earnings are expected next week.
Investors will receive the August jobs report on Friday.
Nvidia and ServiceNow shares are up IBD rankings. Comfort systems are switched on IBD Swing Trader. Nvidia stock, Netflix, Samsara and Comfort Systems are in the market IBD50.
The video embedded in this article discussed the market action on Friday and for the week. It also analyzes Broadcom stock, Comfort Systems and NextEra Energy.
Dow Jones futures today
Dow Jones futures open at 6:00 PM ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
US stock markets will be closed on Monday for Labor Day, although other stock markets around the world will be open. Dow futures will trade normally.
Remember, overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading during the next regular stock market session.
Join IBD experts as they analyze leading stocks and the market on IBD Live
Stock market rally
The stock market rally had mixed effects throughout the week, but ended strongly on Friday.
The Dow Jones Industrial Average rose 0.9% during last week’s stock market trading. The S&P 500 index rose 0.2%. The Nasdaq composite fell 0.9% but gained 1.1% on Friday. The small-cap Russell 2000 lost a fraction.
The S&P 500 closed the week slightly below the top of its recent range and just below its all-time high. On Friday, the benchmark index entered a power trend. It is a positive sign, but not a buy signal in itself. Mike Webster, IBD’s chief market strategist, said Friday on IBD Live:
“It is very important to know that (the beginning of a power trend) … is not a buying signal. It’s just a different phase. So what it does is you treat extra buying signals differently. That does not mean that you take additional buying signals. action today, but if we get more buy signals next week or the week after while the power trend is still going, if you were to go on margin, if things are on sale, if you make progress and the power trend is still going on on, that would be the time to do it.”
The Nasdaq still has some work to do before it arrives at its own power trend. At this point, it needs to decisively reclaim the 50-day line and then clear its recent range and the 18,000 level. On the other hand, there is a risk that the Nasdaq breaks below the 21-day line.
More broadly, recent moves in the Nasdaq, Nvidia and megacaps indicate that the tech sector will lag the non-tech sector for a while.
Ten-year government bond yields rose 10 basis points to 3.91%, but have fallen 77 basis points over the past four months.
U.S. crude futures fell 1.7% to $73.55 a barrel last week.
ETFs
Among the growth ETFs is the Innovator IBD 50 ETF (FFTY) fell 1.85% last week. The iShares Expanded Tech-Software Sector ETF (IGV) advanced 0.5%. ServiceNow stock is a big IGV position, with Samsara also in the ETF. The VanEck Vectors Semiconductor ETF (SMH) fell by 2%. Nvidia shares are SMH’s dominant holding, with Broadcom also a major member.
SPDR S&P Metals & Mining ETF (XME) rose about 0.1% last week. The Global X US Infrastructure Development ETF (PAVE) rose by 0.5%. The SPDR S&P Homebuilders ETF (XHB) fell by 1.5%. The Energy Select SPDR ETF (XLE) rose 1% and the Health Care Select Sector SPDR Fund (XLV) gained 1.1%.
The Industrial Select Sector SPDR fund (XLI) rose 1.7%, while the Financial Select SPDR ETF (XLF) jumped by 2.95%.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) fell 3.1% last week and ARK Genomics ETF (ARKG) fell by 2.15%. Tesla shares are still a major stock in Ark Invest’s ETFs. Cathie Wood has also built a significant position in Nvidia and owns a small stake in BYD stock.
Time the market with IBD’s ETF market strategy
Nvidia stock
NVDA shares fell 7.7% to 119.37 last week. Shares rose 1.5% on Friday, but still closed just below the 50-day line.
Nvidia reported earnings per share of 152% late Wednesday, heading toward third-quarter revenue growth. But the beat-and-raise wasn’t as big as in previous quarters.
After Friday’s close, Nvidia stock has a handle, hitting a lower official buy point of 131.26.
Stocks in buy zones
ServiceNow rose 3.2% to 855 last week, continuing its recovery from the August 5 low. On Friday, NOW stock broke past an 850.33 buy point from a new flat base.
AppLovin shares rose 3% to 92.87. On Friday, APP stock finally closed above a 91.91 buy point after several intraday attempts following a V-shaped consolidation. The relative strength line, which tracks a stock’s performance against the S&P 500, is near multi-year highs.
Netflix shares rose 2.1% last week to 701.35, just above a base buy point of 697.49.
Comfort Systems shares rose 4.4% to 353.52. The AI-adjacent Heating and Cooling play on Friday closed above a 347.73 buy point, as well as an alternate entry at 352.47, the top of the base.
NextEra shares rose 1.1% to 80.51 and just regained a buy point of 80.47 on August 26.
Spotify shares rose 0.1% to 342.88, but held support at the 21-day line and remain within range of a 331.08 buy point. according to MarketSurge. Stocks have been trading tight for weeks. Investors could use 350.32 as a de facto four-week tight entry within an emerging consolidation.
BYD shares broke out of their cup-with-handle base on Friday, rising 5.2% to 30.50 for the week. With an increase of 10.2% in 2024, BYD is the only EV manufacturer positive this year.
Chinese EV sales
On Sunday or Monday, BYD reported August sales of 373,083, a big jump from July’s record of 342,383, although it was rumored to be closer to 400,000.
Among fellow Chinese EV manufacturers, Li Auto (LI) reported that August deliveries fell from July’s record high. Nio (NIO) deliveries fell slightly, but remained above 20,000 for the fourth month in a row. XPeng (XPEV) And Zeekr (ZK) reported big month-over-month gains. All four EV stocks are down sharply in 2024.
Shares of Tesla fell 3.8% on Friday, but fell 2.8% for the week to 214.11 and fell below the 50-day index.
Stock market analysis
Although the market rally is on pause, it has made a lot of progress from the August 5 low. More and more stocks are putting on bases that are no longer so V-shaped, with the handles also taking shape.
The S&P 500 entering a power trend reflects this broader picture.
Investors who have made a series of purchases since the August 13 follow-through day may want to be cautious about significantly increasing their exposure until the current pause resolves itself.
If the S&P 500 and Nasdaq can clean up their recent short-term ranges, it would be very bullish, and almost certainly coincide with some breakouts.
But if the Nasdaq were to break clearly below the 50- and 21-day lines, many recent purchases and setups would fail, especially in the technology sector.
Don’t be too exposed to AI and technology. Financial stocks, utilities and some retail and footwear stocks are showing strength, along with a variety of medical stocks.
Make sure your watchlists are up to date and monitor your portfolio.
Read The Big Picture every day to stay informed about market direction and the most important stocks and sectors.
Follow Ed Carson on Threads at @edcarson1971 and X/Twitter on @IBD_ECarson for stock market updates and more.
You might also like:
Best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock lists, tools and analysis today
Tesla vs. BYD: EV giants battle for crown, but which is the better buy?
S&P 500 Giants Meta and Eli Lilly lead 5 stocks near buy points
