Dow Jones Futures: Market Rise Even Stronger Than It Looks; Tesla leads 5 stocks in buying territories

Dow Jones futures open Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally revived over the past week, with the major indices moving above the main resistance.




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It is not a final victory, although it is close. Leading stocks and other indicators point to a market rally that is healthier than just the big cap indices indicate. While there are still plenty of market challenges ahead, investors should gradually add exposure and prepare for a deeper dive.

Tesla (TSLA) stock, Arista Networks (A NET), Enphase Energy (ENPH), Neurocrine Life Sciences (NBIX) and Pure storage (PSTG) are in or near buying areas. Tesla (TSLA) and ANET stocks are arguably around early entries, while Pure Storage clearly did so on Friday. ENPH shares initially plunged Friday but bounced back after staying above a trendline. NBIX stocks also hold just above a trendline.

NBIX shares are listed on IBD Leaderboard. PSTG shares are listed on SwingTrader. TSLA shares, Arista Networks, Enphase Energy and Pure Storage are on the IBD 50. ENPH shares and Arista are also on the IBD Big Cap 20.

The video in the article analyzed the action of last week’s market rally and analyzed Tesla, GlobalFoundries (GFS) and PSTG stocks.

Dow Jones Futures Today

Dow Jones futures open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Keep in mind that an overnight action in Dow futures and elsewhere does not necessarily lead to actual trading in the next regular trading session.


Join IBD experts as they analyze actionable stocks during the stock market rally on IBD Live


stock market rally

The stock market rally expanded on Tuesday’s recent losses, but then rebounded for strong weekly gains.

The Dow Jones Industrial Average rose 2.7% in stock trading last week. The S&P 500 index fell 3.65%. The Nasdaq composite rose 4.1%. The small-cap Russell 2000 rose just over 4%.

10-year government bond yields rose 13 basis points to 3.32%, the sixth weekly advance and close to the 11-year high in June of 3.48%.

US crude oil futures hit their lowest levels since January during the week, but rebounded to finish just 0.1% lower at $86.79 a barrel. Natural gas futures plunged 9%.

ETFs

One of the best ETFs was the Innovator IBD 50 ETF (FFTY) which rose 2.6% last week while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 2.55%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 5.6%. The VanEck Vectors Semiconductor ETF (SMH) rose 4.35%.

SPDR S&P Metals & Mining ETF (XME) shot up 6.1% last week. The Global X US Infrastructure Development ETF (PAVE) rose 5.1%. US Global Jets ETF (JETS) rose 5.2%. SPDR S&P Homebuilders ETF (XHB) rose 4.5%, even with higher government bond yields. The Energy Select SPDR ETF (XLE) gained 0.8% and the Financial Select SPDR ETF (XLF) added 4.5%. The Health Care Select Sector SPDR Fund (XLV) rose 4.4%.

As a result of more speculative story stocks, ARK Innovation ETF (ARKK) shot up 9.9% and ARK Genomics ETF (ARKG) 8.85% last week. Tesla stocks are a major holding in Ark Invest’s ETFs.


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Stocks to watch

Tesla shares rose 10.9% to 299.68 last week, rebounding from the 50-day line to climb back above the 200-day moving average. However, the volume was anemic. Investors could potentially buy TSLA stock here or just above the 300 level, with 314.74 being a quasi-handle entry. The EV giant is still a long way from official buying points.

Tesla has recovered from Covid restrictions and has significantly expanded production capacity. But rivals are also on the rise, with mostly Chinese EV makers producing new models in volume and vastly expanding their international presence. It’s sure to be some interesting months in the EV space.

ANET stock rose 6.1% last week to 124.11, rebounded from the 10-week moving average and retook the 200-day and 21-day lines, albeit with moderate volume. Arista Networks shares have a double bottom buy point of 132.97, but investors can start early around current levels. Arista’s earnings and revenue growth has accelerated over the past three quarters.

ENPH shares rose 9.5% over the past week to 305.70. Shares regained their 21-day line on Tuesday, arguably providing an early entry into a short-term consolidation after earnings surged to new highs. On Wednesday, Enphase stock was definitely usable and hit new highs. On Friday, ENPH stock fell to 294.20 intraday after an analyst downgrade, but bounced from lows after never undercutting the trendline or hitting the 21-day line.

The relative strength line, barring Friday’s dip, has risen to record highs as Enphase stocks race past the S&P 500.

NBIX shares rose 3.4% in the short week to 106.51, recovering from the 10-week line. Shares made a trend line in Thursday and held above it Friday.

PSTG shares climbed 3.9% to 30.30 for the week after testing the 50-day and 200-day lines. After a breakout flopped in August, a new handle formed with a buy point of 31.62. But on Friday, the stock broke that lever’s downtrend and moved above the 21-day line, providing an early entry.


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Market rally analysis

On Tuesday, the stock market rally seemed to be in its last moments. Major indices began to lose track of their 50-day line after falling back from the 200-day line in mid-August. The Nasdaq composite punctuated the late July lows, but notably failed to close below that area.

From there, the main averages recovered.

On Friday, the S&P 500 and small-cap Russell 2000 gained their 50-day moving averages on opening, along with the Nasdaq in the afternoon. The Dow Jones briefly cleared its 50-day mark but closed just below that key level.

While the S&P 500 now has some room above the 50-day mark, it may be premature to say that the overall market rally has finally passed its key test.

One reason is that mega-cap stocks have seen noticeable setbacks to the big-cap Dow, S&P 500 and Nasdaq composite, masking the underlying bullish action.

NYSE frontrunners crushed losers 5-1, while Nasdaq winners beat the losers 5-to-2.

The S&P MidCap 400 regained its 50-day line on Thursday and pushed past the 21-day line on Friday.

The Invesco S&P 500 Equal Weight ETF (RSP), which does not include mega caps like Apple (AAPL), Microsoft (MSFT) and Tesla regained their 50-day line on Wednesday, added to gains on Thursday and convincingly climbed above the 21-day line on Friday.

To be fair, mega caps did fine on Friday. Tesla shares posted solid gains, while Apple shares and Microsoft moved to significant levels.

Despite ENPH’s pullback on Friday, solar stocks remain market leaders, along with pollution control and several medical names. But tech stocks like ANET stocks and Pure Storage are also starting to emerge.

Steel names are bouncing back as there is scattered strength in shops and restaurants.

Oil and gas names stabilized with underlying commodity prices after falling early in the week.

The market rally remains “under pressure”.

It wouldn’t take much for the indices to fall back below the 50-day line and revisit last week’s lows. On the plus side, the 200-day moving average is still a huge test.

In addition to the technical hurdles, the consumer price index from Tuesday for August is looming large. The CPI inflation report is unlikely to stop the Federal Reserve from raising interest rates by 75 basis points for a third consecutive meeting on Sept. 21. But a tame report could bolster expectations for slowing rate hikes later in the year.


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What to do now

The stock market rally has made real progress over the past three sessions. Investors should probably add some exposure at this point.

If the Nasdaq finally clears the 50-day moving average, investors could likely become more aggressive, with a little room to run before the indices hit the 200-day mark.

Build your watchlists. Cast a broad network in general, but definitely focus your attention on useful or potentially useful names.

Stay flexible when looking for opportunities. If the market rally falters again, be ready to switch back to a more defensive mindset and portfolio.

Read The Big Picture every day to stay up to date on market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.

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