Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures.
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The stock market rally continued to advance, with the Nasdaq composite hitting a record high, joining the S&P 500.
Taiwan Semiconductor Manufacturing (TSM), Monolithic Power Systems (MPWR), Microsoft (MSFT), Palantir Technologies (PLTR), Deckers Brands (DECK), Eli Lilly (LLY), Coherent (COHR) and Uber Technologies (UBER) are stocks to watch. All are market rally leaders that have been consolidating for a few weeks, offering new chances to buy them.
Several of these are AI plays, with Nvidia (NVDA) and chipmaker Taiwan Semi riding the wave for advanced semiconductors.
However, the Nasdaq and S&P 500 are extended once again. After a brief window, investors may want to be cautious again.
Uber stock is on IBD Leaderboard. Microsoft, Palantir, Eli Lilly and Taiwan Semiconductor stock are on SwingTrader. Microsoft stock is on IBD Long-Term Leaders, with Monolithic Power on the Long-Term Leaders watchlist. Palantir stock is on the IBD 50. Deckers stock, Palantir and Uber Technologies are on the IBD Big Cap 20.
The video embedded in this article highlights the week’s market action and analyzes Taiwan Semiconductor stock, Tidewater (TDW) and Confluent (CFLT).
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.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Stock Market Rally
The stock market rally generally moved higher in the past week, led by tech and small-cap stocks.
The Dow Jones Industrial Average dipped 0.1% in last week’s stock market trading, with Apple stock and UnitedHealth (UNH) acting as drags. It’s still close to all-time highs. The S&P 500 index rose 0.9%, marking a record high on Friday. The Nasdaq composite gained 1.7% for the week, hitting a record high Friday for the first time since November 2021.
The small-cap Russell 2000 jumped nearly 3%, just topping December’s 22-month high.
The Nasdaq’s pause for a few days, and really since Feb. 12, had let a number of stocks forge new buying opportunities, including Taiwan Semiconductor, Microsoft and more.
However, with the strong finish to the week, the Nasdaq is now 5.8% above its 50-day moving average, slightly extended once again. The S&P 500 is 5.1% above that level. They could certainly get more extended, but the risks of a pullback would continue to rise.
The 10-year Treasury yield tumbled 8 basis points to 4.18%, backing off 2024 highs.
U.S. crude oil futures jumped 4.55% to $79.97 a barrel last week, topping $80 intraday Friday for the first time since November.
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ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) rebounded 2.6%. Microsoft is a huge IGV holding with Palantir also in the ETF. The VanEck Vectors Semiconductor ETF (SMH) soared 5.5% to a record high, with Taiwan Semiconductor stock and Monolithic Power both components.
SPDR S&P Metals & Mining ETF (XME) rose 2.2% last week. The Global X U.S. Infrastructure Development ETF (PAVE) advanced 2.35%, extending a weekly win streak and setting another high. U.S. Global Jets ETF (JETS) edged down 0.2%. SPDR S&P Homebuilders ETF (XHB) stepped up 2.9%. The Energy Select SPDR ETF (XLE) climbed 1.4% to a four-month high.
The Health Care Select Sector SPDR Fund (XLV) fell 1%, but rebounded Friday from the 21-day line. LLY stock is a big XLV holding. The Industrial Select Sector SPDR Fund (XLI) added 1.1% for the week to another record high.
The Financial Select SPDR ETF (XLF) closed down 1 cent, right around a two-year high.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) bounced 5.6% last week and ARK Genomics ETF (ARKG) ran up 4.7%.
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Stocks To Watch
Taiwan Semiconductor popped 4.1% to 133.90 on Friday, briefly clearing a short consolidation after a strong run following earnings on Jan. 18. TSM stock is actionable from a short trendline or the Feb. 27 high of 131.97. Taiwan Semiconductor, the world’s largest chip foundry, makes semiconductors for Nvidia, Apple (AAPL) and many others. Taiwan Semi earnings are expected to rebound in 2024, led by AI chips. It’ll report February sales on March 8.
Monolithic Power stock rose 3.3% to 743.75 on Friday, extending Thursday’s bounce from the 21-day line and clearing a short downward-sloping trendline. Monolithic makes data center chips, riding the AI wave but not competing with Nvidia. The chipmaker has been consolidating for three weeks after an earnings gap-up.
Microsoft stock has consolidated since hitting a record 420.82 on Feb. 9 following a solid run from a flat base, base-on-base formation. Shares bounced off the 21-day line late last week after finding support there. MSFT stock is just above a short trendline, offering an entry. Investors also could use the Feb. 22 short-term high of 415.86.
Palantir stock jumped 8.5% to 24.93 last week, though it reversed slightly lower from a two-year high on Friday. PLTR stock is consolidating modestly above a prior base after a powerful move on earnings in early February. Clearing the recent action could offer a buy or add-on entry.
PLTR stock fell late Friday, perhaps on disappointment that it will not join the S&P 500.
Deckers stock cleared a short consolidation on Friday, climbing 2.6% to 903.29 for the week. That could provide at least an add-on entry for existing holders. DECK stock rose late Friday on news that Deckers will join the S&P 500 index on March 18.
Eli Lilly stock popped 3.8% to 782.12 on Friday, a new closing high, as Bank of America hiked its price target to 1,000. Shares had dipped earlier in the week as Viking Therapeutics (VKTX) skyrocketed on strong trial results for its weight-loss drug. Existing holders could add a few LLY shares here.
Coherent stock jumped 6.7% to 63.63 on Friday, breaking the downtrend of a short consolidation following a big earnings gap-up, offering an entry. Investors could view the recent action as a high handle to a very deep base going back to June 2023 or as a handle to a huge consolidation going back to April 2022. The industrial laser play’s earnings have tumbled for several quarters, but are expected to rebound soon.
Uber stock rose 3.6% to 81.03 for the week, near the Feb. 15 high of 81.86. Clearing that level could offer an add-on entry, though a longer pause or pullback would be positive.
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What To Do Now
This is a strong market rally, so investors ideally should be significantly or heavily invested. But over the past several weeks, the market has paused for a few days, run up for a few days, then paused or pulled back briefly again.
That start-stop action has created some buying opportunities, but usually not for long. So investors need to be patient, but ready to act quickly, buying as close to entry points as possible.
That requires a lot of work ahead of time, running screens, analyzing charts and having your focus list ready.
Make sure to cast a wide net. If you already own, say, Nvidia and Advanced Micro Devices (AMD), do you want to add more AI chip plays like Taiwan Semi, or even more AI plays generally?
While this article looked at market rally leaders setting up again, several with an AI theme, investors also should look at emerging stocks from other sectors that are now coming on, such as Tidewater. They may have somewhat lagging relative strength but offer true bases.
If you were quick to take advantage of recent buying opportunities, you have to be nimble in getting out. Have your exit strategies in place.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
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