Aug. 18 at 2:19 AM
$SPY $DIA $TSLA $MU $APP
From Investor's Business Daily:
"Dow Jones Futures: Fed Chief Powell May Back Rate Shift; Tesla, Micron, AppLovin Eye New Buy Points"
Dow Jones futures rose slightly Sunday night, along with S&P 500 futures and Nasdaq futures. Tesla (TSLA), Micron Technology (MU) and AppLovin (APP) are near buy points with Federal Reserve chief Jerome Powell set to give a big speech.
The stock market rally continued to hit new highs, with solid weekly gains despite some weakness later on. Many growth stocks, including a variety of AI-related plays, came under some selling pressure. But small caps and several other sectors came to the fore.
President Donald Trump's Alaska summit with Russian President Vladimir Putin ended with no agreement Friday evening, but he said the talks were "very productive. Trump will meet with Ukrainian President Volodymyr Zelenskyy and several European leaders in Washington on Monday.
Tesla, AppLovin and Micron stock are working on handle buy points. Tesla stock and AppLovin are on Leaderboard, with Micron on the Leaderboard watchlist.
Walmart (WMT) and Home Depot (HD) will lead a slew of retail earnings reports this week.
-- Fed Chief Powell's Big Speech --
But the big news may be Fed chief Powell's annual Jackson Hole speech Friday morning. Powell has used that event to signal key policy changes in prior years. Markets will be looking to see if Powell confirms market expectations of Fed rate cuts. The odds of a Sept. 17 rate cut are around 85%, but that's down from a virtual lock before some hot inflation and economic data this past week. Investors are betting on another cut by year-end, with a decent chance of a third.
-- Dow Jones Futures Today --
Dow Jones futures climbed 0.2% vs. fair value. S&P 500 futures advanced 0.2%. Nasdaq 100 futures rose 0.4%.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
-- Stock Market Rally --
The stock market rally largely shrugged off hot inflation reports, with investors still betting on a Fed rate cut next month. The S&P 500 and Nasdaq continued to hit fresh highs while the Dow Jones topped its late November all-time high on Friday.
The Dow Jones Industrial Average leaped 1.7% in last week's stock market trading. The S&P 500 index climbed 0.9%. The Nasdaq composite rose 0.8%, though it drifted lower late in the week. The small-cap Russell 2000 soared 3.1%, hitting a six-month best on Wednesday.
The Invesco S&P 500 Equal Weight ETF (RSP) jumped 1.5%, just below all-time highs.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) lagged with a 0.6% increase, fading to close just below the 21-day line.
A lot of AI hardware and related names saw selling amid negative earnings reactions to CoreWeave (CRWV), Applied Materials (AMAT), Coherent (COHR) and Cisco Systems (CSCO). But many are holding key levels after big runs.
Meanwhile, financials, homebuilders, airlines and biotechs have stepped up.
The 10-year Treasury yield rose four basis points to 4.325%.
U.S. crude oil futures fell 1.7% to
$62.80 a barrel last week.
--ETFs --
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) advanced 1.3% last week. The iShares Expanded Tech-Software Sector ETF (IGV) declined 0.5%, with AppLovin stock in IGV. The VanEck Vectors Semiconductor ETF (SMH) gained 0.7%, slashing weekly gains on Friday. Micron stock is a notable SMH component.
ARK Innovation ETF (ARKK) popped 3% last week and ARK Genomics ETF (ARKG) surged 8%. Tesla stock is the No. 1 holding across ARK Invest's ETFs.
SPDR S&P Metals & Mining ETF (XME) rose 0.6% last week. U.S. Global Jets ETF (JETS) surged 8.4%. SPDR S&P Homebuilders ETF (XHB) jumped 4.8%. The Energy Select SPDR ETF (XLE) was up 0.7% and the Health Care Select Sector SPDR Fund (XLV) ran 4.65% higher.
The Industrial Select Sector SPDR Fund (XLI) dipped 0.3%. The Financial Select SPDR ETF (XLF) advanced 1.2%.
-- Tesla Stock --
Tesla stock popped above a 338 short-term high on Monday, reaching 348.98 intraday Wednesday before fading to close up 0.3% to 330.56. The official consolidation buy point is 367.71. Tesla stock could be working on a handle with a 348.98 entry. The relative strength line is off consolidation highs and well off the 52-week high set at the end of last year, reflecting some underperformance vs. the S&P 500.
Investors buying Tesla have to rely on the technicals. Earnings are on track for a third straight annual decline.
-- Micron Stock --
Micron stock rose 1.7% to 120.87 for the week, but also faded like Tesla. The memory-chip maker popped Monday after raising guidance amid strong AI demand. Shares neared a 129.85 cup-base buy point, but then faded amid broader AI worries and weak guidance from Applied Materials (AMAT). MU stock could have a handle in two days, with a slightly lower 128.60 entry.
-- AppLovin Stock --
AppLovin stock fell 3.8% to 438.68 for the week, but rebounded slightly Friday after testing a 428.99 buy point. Shares had cleared the cup base on Aug. 7 following earnings, according to MarketSurge. Investors could still use that, or use the Aug. 11 peak of 473.70 as a high handle entry. That could also be viewed as a traditional handle to a broader six-month consolidation.
-- What To Do Now --
The stock market continues to march higher.
Investors may have wanted to take some profits and trim exposure to the AI sector, though that may vary based on specific trading styles, conviction, AI concentration and the action of individual holdings.
It's still time to be heavily invested, perhaps diversifying into emerging leadership. A number of stocks from a variety of sectors have forged or cleared handles recently, reflecting "handles" in the key indexes and equal-weight ETFs.
Definitely have your watchlists up to date and exit strategies ready.
In addition to Walmart and Home Depot, notable earnings this week include Lowe's (LOW), TJX Cos. (TJX), Amer Sports (AS) and Palo Alto Networks (PANW).
But Powell may end up being the big story.
