Stock market rally shows change in character with Tesla, Apple In Focus; Here’s what to do now

The stock market rally showed increasing momentum last week, with the major averages all making big moves. Dow Jones futures will open Sunday night, along with S&P 500 and Nasdaq futures.




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Market rally leadership remains narrow, concentrated in the artificial intelligence space, as well as chips and software. Many of these stocks are extensive. But if the breadth of the market continues to improve, a wider range of buying opportunities will develop.

Already, You’re here (TSLA) erupted on Friday. DexCom (DXCM), Lennar (The Internet JPMorgan Chase (JPM) flashed the first entries at the end of the week. Marriott International (MAR) is probably also an action.

All reflect possible areas of leadership. Tesla’s stock joins EV rivals such as BYD (BYDDF) in buy point compensation. DXCM stock is one of many medical product stocks trying to push higher. The LEN stock is among a number of homebuilders rebounding again. JPM stock stands out among financials, but the sector is rebounding. The MAR stock is part of a travel industry undergoing a renaissance.

Investors should look to add exposure amid the promising bullish turn. But be prepared to take a step back.

In the meantime, Apple (AAPL) is set to show off its mixed reality headset on Monday, its first new hardware product since the Apple Watch in 2015. The headset will take on rivals such as the Meta Quest from Metaplatforms (META). Apple stock is poised to hit its January 2022 highs and is approaching a market capitalization of $3 trillion.

Tesla stock joined the IBD ranking on Friday, joining Meta stock. LEN stock joined SwingTrader on Friday. Lennar was Friday’s IBD stock of the day.

Dow Jones Futures Today

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

Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.


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


Stock market rally

The stock market rally showed strong and broad gains, especially over the weekend.

The Dow Jones Industrial Average jumped 2% in stock trading last week. The S&P 500 index rebounded 1.8%. The Nasdaq composite gained 2%. The small-cap Russell 2000 jumped 3.3%.

The 10-year Treasury yield fell 13 basis points to 3.69% for the week, but rose 8 basis points on Friday.

U.S. crude oil futures fell 1.3% to $71.74 a barrel last week, even with Friday’s 2.3% rebound.

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Among growth ETFs, the Innovator IBD 50 ETF (FFTY) jumped 3.6% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 1.7%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 2.1%. ETF VanEck Vectors Semiconductor (SMH) fell 0.8%.

Reflecting more speculative stocks, ARK Innovation ETF (ARKK) jumped 6.45% last week and ARK Genomics ETF (ARKG) jumped 4.9%. Tesla stock is the top position among Ark Invest’s ETFs. Cathie Wood’s Ark also owns BYD stock.

The SPDR S&P Metals & Mining (XME) ETF rebounded 4.2% last week. The Global X US Infrastructure Development ETF (PAVE) jumped just over 3%. The US Global Jets ETF (JETS) climbed 3.1%. The SPDR S&P Homebuilders ETF (XHB) jumped 3.5%. ETF Energy Select SPDR (XLE) rose 1.4%. The SPDR health care sector fund (XLV) climbed 2.2%. DXCM stock is XLV.

The Financial Select SPDR ETF (XLF) rose 2.15% in a bullish outside week. The JPM stock is a major XLF component.

The SPDR S&P Regional Banking ETF (KRE) jumped 4.8%.


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Apple Mixed Reality Headset

Apple will showcase its latest hardware and software innovations in a keynote presentation Monday at 10:00 a.m. PT at its annual Worldwide Developers Conference. It will detail the latest operating systems for iPhone, iPad, Mac, Apple TV and Apple Watch. But the buzz is about a mixed reality headset, possibly called Reality Pro. It would be the first new hardware product since the launch of the Apple Watch in 2015. The expected price of $3,000 could deter buyers. Metaplatforms (META) recently unveiled their latest Meta Quest headset.

Apple stock rebounded 3.15% last week to 180.95. This is just below the January 2022 peak of 182.94.

Tesla Stock

Tesla stock jumped 10.8% to 213.97 for the week, including a 3.1% jump on Friday. Stocks cleared their 200-day moving average on Tuesday. On Friday, TSLA stock moved above a buy point of 207.89 from what is either a cup or a double-bottom base. The electric vehicle giant has advanced on above-average volume for five consecutive sessions, following few such days in the previous three months.

Meanwhile, BYD stock rose 5.6% to 31.50 over the week. Friday’s 2.3% gain pushed the Chinese electric vehicle and battery giant back above a buy point of 31.17 cups with handle originally cleared on May 10. On Thursday, BYD reported record shipments in May, surpassing its late-2022 peak.

Tesla now says its base Model 3 gets the full $7,500 US tax credit, along with all other Model 3 and Model Y vehicles, according to information released late Friday. It’s unclear how, but perhaps Tesla is now using 2170 cells made at the Nevada site versus LFP batteries made in China.

Other actions close to buy points

DXCM jumped 6.5% to 122.57 last week. On Thursday, DexCom recovered its 50-day line, then added gains on Friday in above-average volume. Early entry is offered. The continuous blood glucose monitor maker has a buy point above 126.44 in a flat new base, just off two more consolidations, according to MarketSmith analysis. Several other manufacturers of medical products and systems are worth watching, including medical shock wave (SWAV) and Intuitive surgery (ISRG).

LEN stock rebounded 3.6% to 112 on Friday, bouncing above the 50-day line, providing an aggressive entry into an emerging consolidation. On Wednesday, Lennar stock fell to test an earlier buying point. Several other homebuilders made bullish price gains on Friday, but LEN shares traded in strong volume.

JPM stock jumped 3% to 140.47, closing downtrend in a new flat base alongside previous consolidation. It is also not extended from its 50-day line. JPMorgan looks much healthier than other banks, but bank stocks made bullish moves on Friday.

MAR stock gained 3.55% to 177.22 on Friday after recovering its 50-day line on Thursday. Arguably Marriott is offering early entry from an emerging flat base. Royal Caribbean (RCL) is soaring, but most other travel stocks are like Marriott, trying to get off the ground after bumps.

Market rally analysis

The stock market rally has strengthened further this week, with some encouraging signs of improving momentum and leadership.

The Nasdaq continued to rise, hitting a 13-month high on Friday. But last week it wasn’t just about AI games.

The S&P 500 has decisively broken through its 2023 range and is approaching its August 2022 highs.

The Dow Jones, which was testing its 200-day line for much of the week, broke above its 50-day line on Friday. The Russell 2000, which broke below its 50-day line on Wednesday, hit the highest levels since early March, crossing the 200-day line for the first time since then as well.

The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) advanced 1.4% for the week to hit a 52-week high.

The Invesco S&P 500 Equal Weight (RSP) ETF jumped 1.9% for the week. Friday’s 2.2% gain pushed the RER sharply above its 50- and 200-day lines, breaking a downtrend dating back to early February.

The advances beat the losers on Thursday and Friday. On Friday, the winners were trailing more than 5 to 1 on the NYSE and nearly 3 to 1 on the Nasdaq. Still, the long-term trend has been weak. And a downward trending A/D line is essential.

Both the Nasdaq and the Nasdaq 100 were extended, with the latter now 9.5% above the 50-day line. Ideally, large-cap tech, especially AI gaming, would slow or stall while other sectors ramp up. That was generally the trend on Friday, with the Dow Jones, Russell 2000 and RSP easily outpacing the Nasdaq 100’s 0.75% gain.

This creates buying opportunities, like Tesla, Lennar, DexCom and JPMorgan.

Of course, a few strong days do not guarantee that a broad market advance is underway. From a macro perspective, the debt ceiling is no longer a concern. The Fed, which appeared to be headed for a rate hike on June 14 just a few days ago, now looks set to take a break. As earnings season (finally) draws to a close, the news cycle could be relatively quiet.


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What to do now

As the market rally gathers momentum and begins to broaden, investors should take note. Yes, this could be another fake head. The narrow advance could resume or, worse, the overall market recovery could flag or collapse.

But right now the market is sending bullish signals. If you wait until a strong bull market has undeniably taken hold, the major stocks will all be well extended.

Investors should look to add exposure, especially if they have invested primarily in cash. But do it gradually, to minimize the impact of sudden market reversals.

It is important to be flexible. And, just as you don’t want to lock yourself into a bearish mindset, don’t be a blind bull if the broader market or your positions falter.

This is an important time to build your watchlists. Have a select group of stocks to focus on, but be sure to cast a wide net to keep an eye out for a wide range of potential leaders.

Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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