Finance
Dow Jones Futures Rise; Nvidia chipmaker Taiwan semi-on tap with 5 AI stocks near buy points
Dow Jones futures rose slightly overnight, along with S&P 500 futures and Nasdaq futures. Nvidia (NVDA) chip maker Taiwanese semiconductor (TSM) will release sales data on Friday.
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The stock market rally was solid on Thursday, with the Dow Jones rising for the seventh straight session. Leading stocks showed bullish or constructive action.
Nvidia shares fell slightly for the third day in a row as a potential handle was worked on. Broadcom (AVGO) is close to several entries. Giants of chip equipment Applied materials (AMAT) And KLA Corp. (KLAC) are also near buying points.
Shares of Taiwan Semiconductor 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 huge buyer of chip equipment.
Taiwan Semi’s sales data tracks earnings reports from AI chip IPOs Arm positions (ARM) And Astera Labs (ALAB).
Meanwhile, Tesla shares just undercut a key level Tesla (TSLA) rival BYD (BYDDF) in a shopping area.
Nvidia is on IBD rankings, with Taiwan Semiconductor and ALAB stocks on the Leaderboard watchlist. Nvidia shares are listed on SwingTrader and the IBD50. KLAC stock is ranked IBD Long-Term Leaders. The AVGO shares are on the list IBD Bigcap 20.
Dow Jones futures today
Dow Jones futures rose 0.2% versus fair value. S&P 500 futures and Nasdaq 100 futures moved higher.
Remember, overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading during the next regular stock market session.
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Stock market rally
The stock market rally saw big gains on Thursday.
The Dow Jones Industrial Average rose 0.9% during stock market trading on Thursday. The S&P 500 index rose 0.5%. The Nasdaq index rose 0.3%. The small-cap Russell 2000 gained 0.9%.
The Dow Jones has risen for seven consecutive sessions and is approaching record highs. This also applies to the S&P 500. The Nasdaq and Russell 2000 have stood still in recent days. They are all above their 50-day moving averages.
Leading stocks continue to do well. In addition to various technology names, a large number of restaurants, financial institutions, medical companies, construction companies and infrastructure companies are showing their strength.
US crude oil prices rose 0.3% to $79.26 per barrel.
The yield on ten-year government bonds fell by 3 basis points to 4.45%, the lowest level in a month.
ETFs
Of the growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) fell by 0.1%. The VanEck Vectors Semiconductor ETF (SMH) fell by 0.6%. Nvidia and TSM shares are the two largest SMH holdings, with Broadcom, KLA and AMAT shares also being major members.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) retreated 0.6% and ARK Genomics ETF (ARKG) rose by 1.9%. Tesla is the number 1 holding in Ark Invest’s ETFs. Cathie Wood’s Ark also owns a small stake in BYD.
SPDR S&P Metals & Mining ETF (XME) rose 2.1% and the GlobalPAVE) gained 1.2%. The SPDR S&P Homebuilders ETF (XHB) rose by 2.1%. The Energy Select SPDR ETF (XLE) rose 1.3% and the Health Care Select Sector SPDR Fund (XLV) added 0.9%.
The Industrial Select Sector SPDR fund (XLI) rose 1%, while the Financial Select SPDR ETF (XLF) advanced 0.75%.
Time the market with IBD’s ETF market strategy
AI chip stocks
Taiwan Semiconductor fell 0.6% to 142.79 on Thursday. The stock is working toward a double-bottom buy point of 148.43. TSM stock reclaimed the 50-day line on May 3 and crossed a downtrend line.
Nvidia shares fell 1.8% to 887.47 on Thursday, a third slight decline in a row, while still holding the 50-day mark. The AI chip leader has a consolidation buy point of 974, according to Market wave. NVDA stock appears to be starting to work out, which would yield a lower buy point. Nvidia’s earnings will be released on May 22.
Broadcom shares fell 1.5% to 1,305.67 on Thursday, just below the 50-day mark. AVGO stock has a consolidation buy point of 1,438.17, although investors could use 1,403.98 as an early entry. A decisive move above the 50-day, perhaps clearing the 1,355 area, could be an aggressive entry.
Applied Materials shares fell 0.5% to 206.33 on Thursday, still holding the 50-day mark. Shares have a flat-base buy point of 214.91. Investors could use the May 7 high of 209.47 as an entry. But Applied Materials earnings are due May 16.
KLA shares fell 0.9% to 710.67 on Thursday, slightly below a flat base entry of 727.64.
Arm shares fell 2.3% to 103.59 on Thursday, after hitting an intraday low of 97.76. Stocks have recovered somewhat in recent weeks, but have only recovered some of the massive losses seen in mid-April. Late Wednesday, the AI and wireless chip designer beat fourth-quarter expectations and led the way in the first quarter, but gave a lackluster full-year sales target.
Astera Labs shares rose 1.2% to 70.06 on Thursday, but fell 9.1% on Wednesday. Late Tuesday, the AI chip’s IPO beat first-quarter expectations and pulled ahead of the current quarter, but it wasn’t enough. ALAB stock has a buy point of 95.21 from an IPO basis, although the April 29 high of 88.59 might be a better entry. However, Astera Labs, like Arm, may need time before they can restart.
Tesla shares
Tesla shares fell 1.6% to 171.97, just shy of the 50-day mark. The shares have given up most of their 15% gain on April 29. That came after Tesla cleared major hurdles in introducing full self-driving in China.
Rich Otto announced Wednesday that he resigned last week as Tesla’s head of new product launches, citing poor morale amid sharp, ongoing layoffs.
Elon Musk has announced layoffs of more than 10%. He scrapped the Supercharger and the new vehicle teams folded completely, amid weak demand and a marked shift away from new vehicles. A large number of top executives have resigned or been fired in recent months.
BP (BP) said Thursday it wants to buy Tesla Supercharger sites in the US
Meanwhile, China’s BYD rose 1.8% to 28.95. BYD stock, the only EV maker with upside in 2024, is useful above the 200-day line and a short consolidation. The EV giant will unveil the Sea Lion, a Model Y rival, on Friday with fast charging, smart car technology and other features. BYD will formally launch a plug-in hybrid pickup on May 14.
What to do now
The Nasdaq’s recent pause has allowed stocks like Nvidia to work on potential bases or handles, while surging stocks are quickly gaining relative strength.
That also gives investors more time to update their watchlists, but don’t do it for too long. Leading stocks continue to give buy signals. You can add exposure gradually as the market rally continues to work well.
Keep in mind that if these positions falter, or if the major indices break below their 50-day line, you’ll want to scale back. So make sure you have your exit plans ready.
Read The Big Picture every day to stay informed about market direction and the most important stocks and sectors.
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