Dow Jones futures will open for trading Sunday night, along with S&P 500 futures and Nasdaq futures. The stock market rally continued to strengthen, with the S&P 500 Index and the Dow Jones hitting all-time highs, while the Nasdaq posted a second straight solid weekly gain.
After weeks of wondering if a split market rally would survive, the Dow Jones and S&P 500 are at risk of spreading, increasing the odds of a pullback.
Floor and decoration (FND), Square (SQ), JPMorgan Chase (JPM), Mosaic (MOS) and Apple (AAPL) provider Skyworks solutions (SWKS) are stocks in or near buy zones that offer some portfolio diversity amid a still difficult market rally.
Megacap technicians were big winners, with Microsoft (MSFT), Facebook (FB) and Google parent Alphabet (GOOGL) exploding while Apple stocks and Amazon.com (AMZN) jumped as they tried to get rid of months of slow action.
All five stocks are members of the S&P 500 and Nasdaq, with Apple and Microsoft stocks also components of Dow. So when these giants go live, the major indices do too.
FND and Microsoft shares are on IBD’s leaderboard. Google shares are on SwingTrader. MSFT shares are in IBD Long-Term Leaders. Floor & Decor and Square stock is at IBD 50.
Chinese regulators imposed an antitrust fine of $ 2.8 billion vs. Alibaba (BABA) for abusing his dominance of the market over traders and rivals. The record-breaking penalty against Alibaba comes amid unprecedented scrutiny against the Chinese e-commerce giant and its founder Jack Ma.
BABA shares, along with rivals JD.com (JD), Pinduoduo (PDD) and Tencent Holdings (TECHY) have been under heavy pressure in recent months.
Dow Jones Futures Today
Dow Jones futures will open at 6pm. Sunday ET, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they discuss actionable stocks in the stock market rally on IBD Live.
Coronavirus cases worldwide reached 135.94 million. Deaths from Covid-19 exceeded 2.93 million.
Coronavirus cases in the US have reached 31.86 million, with deaths above 575,000.
Stock market rally last week
Overview of the US Stock Market
|Index||Symbol||Price||gain loss||% Change|
|S&P 500||(0S and P5)||4128.75||+31.58||+0.77|
Last Updated: 4:12 PM ET 4/9/2021
The stock market rally had another strong week, with the major indices closing on a high note.
The Dow Jones Industrial Average rose nearly 2% in trading last week, while the S&P 500 Index rose 2.7%, both hitting all-time highs. The Nasdaq Composite, after hitting its 50-day line in the prior week, rallied 3.1% in the past week, topping its short-term highs in March. The large-cap Nasdaq 100 jumped 3.9% to an all-time closing high.
The laggard was the Russell 2000, which fell 0.5% but remained above its 50-day line.
Among the best ETFs, the Innovator IBD 50 (FFTY) ETF was up 2%, while the Innovator IBD Breakout Opportunities (BOUT) ETF was up 2.7%. The iShares Expanded Tech-Software Sector ETF (IGV) jumped just over 4%, with MSFT shares being its main stake. The VanEck vectors Semiconductor (SMH) ETF gained a relatively modest 1.2%. The SWKS action is a component of SMH.
The reopening of plays was delayed or decreased last week. SPDR S&P Metals & Mining ETF (XME) sank 2.2% and Global X US Infrastructure Development ETF (PAVE) rose 0.2%. The US Global Jets ETF (JETS) was up almost 1%.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) advanced 2% while ARK Genomics ETF (ARKG) sank 2%. Square’s stock is a notable holding for ARK Investments.
Read The Big Picture every day to stay in sync with the direction of the market and top stocks and sectors.
These five 2020 winners are gearing up for another race
Actions near points of purchase
While these five actions wouldn’t affect all leading market sectors, they could be part of a nutritious breakfast, so to speak.
Stock of floor and decoration
Shares of Floor & Decor rose 9.9% last week to 108.69. On Wednesday, FND shares surpassed a buy point of 101.84 points. On Friday, stocks soared higher, hitting a record and settling alternate entries of 108.14 or 108.64.
Square shares rose 14% to 261.65 last week, with above-average volume over the past three days. Shares in SQ are approaching a buy point of 283.29, according to MarketSmith’s analysis, after offering early tickets.
JPMorgan shares rose 1.7% last week to 156.28. JPM’s stock has been trading at its 21-day line in tight action for several weeks. In fact, it has a tight four-week pattern with an official buy point of 161.79. Aggressive investors could buy JPMorgan stock now, trading above most of recent action, with one big caveat: JPMorgan earnings are available Wednesday. Buying a stock just before earnings is very risky, unless you are using an earnings strategy.
(Goldman sachs (GS), Citigroup (C) and Wells fargo (WFC) also have tight patterns, but are also reporting gains next week.)
Investors may want to wait for these bank gains to see if the shares of JPM and its peers will break out.
Big picture: the rally at the end of the session comes with this great development
Shares of Mosaic rose 0.6% to 31.47 last week, rising Thursday and Friday to find support at its 50-day line and recovering its 21-day line. Investors could buy MOS stock right here, although it has already had multiple 50-day / 10-week line bounces after its most recent base. A little more strength and Mosaic’s stock could break out of a short downtrend, offering an opportunity for a partial position as the fertilizer game works on a new basis.
Several economic recovery and reopening works have modestly fallen to key support in recent weeks.
Skyworks is a supplier of 5G chips and Apple iPhone. SWKS shares rose just 0.55% last week to 188.73, retreating after Monday’s solid gain, as were the SMH ETF and many chip stocks. Skyworks shares have a purchase point of consolidation of 195.92. But if it stays in its recent range for one more day, it will have a handle with an entry of 192.07.
As for Apple shares, the iPhone behemoth rallied 8.1% to 132.99 last week, breaking through its 50-day line and providing a big boost to the Dow, S&P 500 and Nasdaq composite. But the volume was below normal over the five days, although on Friday it was close to breakeven. That, coupled with a weak RS line, gave little reason to be aggressive on Apple’s stock. But it is working towards a buy point of 145.19.
Market rally analysis
Over the past two weeks, the stock market recovery has improved dramatically, with the Nasdaq going from a de facto correction to a race to all-time highs. The Dow Jones and the S&P 500 continue to hit all-time highs.
The small-cap Russell 2000 is the relatively laggard, but holds the 50-day line. That is a much higher floor than the Nasdaq which lives below its 50 and 21 day lines.
The Dow Jones and the S&P 500 are about 5.5% above their 50-day moving averages. That is not extensive, but it is very close to being so. The Nasdaq has been on a hot streak in recent weeks. Therefore, a pullback in the major indices and many leaders would not be surprising and could even be healthy. A modest recall would allow the 50 days to catch up and let stocks like Skyworks finish handles.
What to do now
The stock market rally is rewarding cautious optimism. Investors should have taken advantage of this market rally, increasing exposure in recent weeks.
Investors may want to be careful when adding significant new exposure to the very short term, given the possibility of some kind of pushback. But otherwise the stock market recovery is in good shape.
Tech stocks are rebounding, from megacaps like Apple and Google to chips and even software. Some big winners of 2020 are on the rebound, but that doesn’t mean they all are. There is a big difference between Square’s stock chart and the technical action of Teladoc (TDOC).
In the meantime, don’t ignore non-tech names. FND stocks are just one of many home-related retailers doing well. Mosaic and Caterpillar (CAT) are among many recovery or reopening plays that are working on new bases.
It is still important to have a balanced portfolio, avoiding too much exposure to a particular stock, sector or topic. You want to focus on a small number of leaders, just have some variety between those names.
If you have a 100% portfolio of 10 stocks and a share falls 5%, that’s just a 0.5% portfolio decline. That’s easy to handle, especially if your other stocks are generally on the rise. But if eight of your stocks drop 5%, that’s a 4% portfolio loss. A few days of that can be punishment and will force you to act even if individual actions still look good.
Don’t just diversify between individual groups. You also don’t want to exclusively hold reopening / recovery stocks or traditional “growth” names. (A number of mega-cap technologies, including Apple, Microsoft, Facebook, and Google, arguably are games of growth and recovery.)
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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