Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally last week went nowhere — fast. The major indexes tumbled on Monday, but then roared back, with a slew of leading stocks flashing buy signals.
Bottom line: The stock market rally is back in a confirmed uptrend.
Tesla stock broke out past a proper buy point on Friday. CEO Elon Musk said Tesla (TSLA) is pushing back the release of FSD Beta 10.1 by another 24 hours, but its FSD Beta request button will go live tonight. That Beta request button will let Full Self-Driving owners or subscribers opt in to FSD Beta.
Meanwhile, Microsoft stock, Advanced Micro Devices (AMD), and Google parent Alphabet (GOOGL) have rallied slightly from their 50-day and 10-week lines. AMD stock and Google are potentially actionable here or with a little more strength. Finally, Snapchat parent Snap (SNAP) broke out of a flat base on Friday after already flashing an early entry.
Tesla stock, Microsoft, Google and Snap are on IBD Leaderboard. Microsoft (MSFT) and Google stock are on IBD Long-Term Leaders. Snap stock is on SwingTrader. GOOGL stock and Snap are on the IBD 50. AMD stock and Google are on the IBD Big Cap 20.
The video embedded in this article analyzes a pivotal week for the market rally, while also discussing Tesla, Snap and Costco Wholesale (COST).
Dow Jones Futures Today
Dow Jones futures open at 6 p.m. ET on Sunday. So will S&P 500 futures and Nasdaq 100 futures.
Coronavirus cases worldwide reached 231.86 million. Covid-19 deaths topped 4.75 million.
Coronavirus cases in the U.S. have hit 43.66 million, with deaths above 703,000.
New cases are falling sharply in the U.S. and worldwide, with deaths also declining.
Stock Market Rally
The stock market rally last week looked like it was buckling on Monday but rebounded bullishly as the week went on.
The Dow Jones Industrial Average rose 0.6% in last week’s stock market trading. The S&P 500 index climbed 0.5%. The Nasdaq composite closed a hair above flat. The small-cap Russell 2000 edged up 0.3%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 2.1%, hitting all-time highs. The Innovator IBD Breakout Opportunities ETF (BOUT) popped 2.5%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1.3%, with Microsoft and Snap stock key components. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.5%, with AMD stock a notable holding.
SPDR S&P Metals & Mining ETF (XME) fell 2.3%, as the sector has come under heavy pressure. The Global X U.S. Infrastructure Development ETF (PAVE) eked out a 0.35% gain. The U.S. Global Jets ETF (JETS) soared 6.8% in a big week for travel stocks. SPDR S&P Homebuilders ETF (XHB) fell 1.1%. The Energy Select SPDR ETF (XLE) rallied 3.3% and the Financial Select SPDR ETF (XLF) 1.7%.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) tumbled 3.6% and ARK Genomics ETF (ARKG) plunged 6.2%. Tesla stock is still the No. 1 holding across ARK Invest’s ETFs, despite some recent sales. Snap stock also is an ARK stock.
Tesla Breaks Out
Tesla stock rose 2.75% on Friday to 774.39, clearing a 764.55 handle buy point in its eight-month consolidation, after previously moving past some aggressive entries. Tesla did have something approaching a shakeout within the handle on a daily chart — including on Monday — though not for long. But on a weekly chart, Tesla doesn’t have any handle, rising for five straight weeks. That’s fine for existing holders, but it’s less than ideal for taking a new position.
Still, it’s hard to quibble at a stock that climbs steadily. The relative strength line for TSLA stock, though still well off all-time highs, is at its best levels since late April. The RS line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500 index.
Investors also could use 780.89, just above the April peak, as yet another TSLA stock entry.
Tesla FSD Beta To Go Public?
Tesla was set to go live with its FSD Beta request button Friday night, Musk said to let Full Self-Driving owners and subscription use FSD Beta. But Tesla will study each driver’s habits for seven days before giving them access. That means FSD Beta should get a wider release on Oct. 1 or later.
Tesla was set to release FSD Beta 10.1 on Friday night. But the latest version of its driver-assist software will be released 24 hours later for some final improvements. The software is still prone to a lot of mistakes, so that should keep drivers alert. But will complacency set in after a few weeks?
Jennifer Homendy, the new head of the National Transportation Safety Board, has urged Tesla not to go ahead with an FSD Beta wide release. The NTSB has long urged tougher regulatory action vs. Tesla. The National Highway Traffic Safety Administration, or NHTSA, recently began a probe of a series of Tesla Autopilot crashes involving parked emergency vehicles.
A successful rollout of FSD Beta could burnish the Tesla brand and spur more Full Self-Driving adoption. But if FSD Beta results in a flurry of accidents, the fallout could be severe.
Meanwhile, Tesla will release third-quarter deliveries in early October, possibly as soon as next Friday. Tesla should set a record, modestly above 200,000, with the Model Y entering Europe for the first time. Elon Musk said Friday he expects the chip shortage to be over soon. He’s lamented chip supplies many times this year, but it’s unclear if that’s affected production substantially, like it has other automakers.
Chipmaker AMD’s stock rose 1.85% to 105.80, bouncing back from Monday. It’s trying to rebound from the 50-day line. It’s also right on a trend line. A little more strength — ideally on volume — would offer an early entry here. AMD stock has consolidated long enough to have a proper base, a double-bottom base with a 114.59 entry.
MSFT stock dipped 0.2% to 299.35, but found support again at its 10-week line. It now has a flat base on a weekly chart with a 305.94 buy point. Investors could buy it here or wait for a little more power, even the traditional breakout.
The RS line for Microsoft stock is just below all-time levels.
Google stock rose 1% to 2,844.30 for the week, after bouncing off support at its 50-day and 10-week lines. Shares also closed just above the 21-day moving average. Investors could buy GOOGL stock at these levels, or use a short trendline break as their target. Google has been trading tight for a few weeks, and is on track to have a flat base after next week if it stays in its current range.
The RS line for GOOGL stock is right at highs.
Snap stock had a very strong week, surging 11% to 83.09, hitting record highs. After retreating 4% Monday in light volume, Snap rattled off four high-volume gains. On Tuesday and Wednesday, Snap rebounded from the 50-day line and flashed other early entries. On Friday, SNAP cleared the official 80.95 buy point, according to MarketSmith analysis. It’s still in buy range from that flat base, but it’s generally been a good idea to take advantage of early entries.
The RS line for Snap stock soared last week to a new high.
Snap’s surge comes as Facebook (FB) warned of headwinds. FB stock fell noticeably for a second straight week.
Market Rally Analysis
The stock market rally started off with a sharp sell-off, with the Nasdaq joining the S&P 500 and Dow Jones below their 50-day lines. But the market roared back, with the Nasdaq, S&P 500 and Russell 2000 rebounding above their 50-day lines and breaking downtrends by Thursday’s close.
On Friday, the major indexes initially retreated, with the S&P 500 and Nasdaq 100 testing their 50-day lines, but they came off lows to lose little changed.
Leading stocks have looked even better, with a slew of bullish rebounds, early entries and outright breakouts. The breadth of leadership is impressive as well.
Even though the indexes only closed flat to slightly higher for the week, the overall market looks much stronger than a week ago. The indexes found support at a crucial moment, while leading stocks really outperformed, offering a slew of buying opportunities.
The stock market rally, under pressure as of Sept. 17, shifted back into a confirmed uptrend on Sept. 23.
What To Do Now
This week shows the importance of being flexible. On Monday, most investors probably should have been selling — ideally they were scaling back in the prior two weeks, taking some partial profits. After Monday, the risks were high that the market was going to fall into a correction. As it turned out, the market rebounded. By Thursday at least, investors should have been taking advantage of the large number of buying opportunities. Many are still actionable, while a number of stocks are on the cusp.
This weekend you should go over your portfolio. Whether it’s old positions or new buys, how are they performing? Are you in sync with the market and leading stocks and sectors? Meanwhile, run those screens thoroughly. After the past week, your watchlists need to be refreshed. Cast a wide net to spot possible buys from a wide range of industries.
If the major indexes and leading stocks continue to perform well, you can add to your exposure. However, if the market reverses lower in the coming days, be ready to adapt.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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