On Sunday evening, the futures for Dow Jones, S&P 500, and Nasdaq will all be accessible. The earnings report from Nvidia ( NVDA ) holds significant importance for the stock market recovery and various artificial intelligence ventures. The recent dismissal of Sam Altman from OpenAI raises additional concerns for Microsoft and other AI firms.
These entities include Palantir Technologies ( PLTR ), Super Micro Computer ( SMCI), the parent company of Google Alphabet ( GOOGL), Meta Platforms ( META ), and Microsoft ( MSFT).
The stock market witnessed another robust week supported by stable prices and declining Treasury yields. Towards the end of the week, the major indices took a brief pause without showing signs of decline. A temporary setback or a slight sell-off could be advantageous, allowing certain leaders to consolidate their positions or facilitating new entries.
The Nasdaq is poised for a potential “power surge,” possibly occurring on Monday. Power surges necessitate both extreme actions and disciplined strategies.
Considering the status of PLTR and Super Micro stocks, as well as the performance of Nvidia, Microsoft, Meta, and Google investments, it is evident that they are all in favorable positions. The upcoming earnings report from Nvidia is expected to have a substantial impact, either positively or negatively.
Leading the IBD Leaderboard are Meta Platforms, Nvidia, and Microsoft assets. The SwingTrader platform includes META assets. The IBD Long-Term Leaders list features MSFT assets. Additionally, Microsoft, Super Micro, and Nvidia investments are all part of the IBD 50 list. The IBD Big Cap 20 comprises shares of Microsoft, Meta Platforms, and SMCI.
The accompanying video in this article delves into the analysis of MongoDB ( MDB), Novo Nordisk ( NVO ), and NVDA stocks, alongside a review of the weekly market performance.
Dow Jones Futures Today
At 6 p.m. ET on Sunday, the S&P 500 and Nasdaq 100 futures will also be accessible.
It is important to note that trading in Dow futures and other markets immediately does not always translate to actual trading during the subsequent standard stock market session.
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Stock Market Rally Overview
The stock market witnessed a surge following a benign inflation report on Tuesday, with marginal gains extending throughout the week.
The upcoming week in stock market trading saw a 1.9% rise in the Dow Jones Industrial Average, a 2.2% increase in the S&P 500 index, and a 2.4% uptick in the Nasdaq composite.
Despite facing rejection from the 200-day moving average, the small-cap Russell 2000 soared by 5.4%. The Invesco S&P 500 Equal Weight ETF ( RSP) gained 3.4% to reclaim its 200-day position.
The First Trust Nasdaq 100 Equal Weighted Index ETF ( QQEW ) surged by 2.9% to surpass its October highs, serving as a reliable indicator for growth stock leadership.
The Nasdaq 100 is approaching a 52-week low just below July’s levels.
Both the Nasdaq composite and S&P 500 are hovering near their short-term peaks from September 1st, with the July 52-week highs posing as the next significant hurdles.
While the market shows signs of hesitancy, it is not indicative of a downturn. The S&P 500 and Nasdaq have been on a winning streak for four consecutive days. Various sectors such as technology, software, e-commerce, financial services, travel, and industrial/aerospace are displaying strength.
The 10-year Treasury yield hit a two-decade low, dropping by nearly 19 basis points to 4.44%.
U.S. crude oil futures witnessed a 1.7% decline, settling at $75.89 per barrel. Although crude oil prices dipped during the week, a 4.1% rebound was recorded on reports suggesting potential further production cuts by OPEC +.
Power Surge Trends
Not all market trends exhibit the same strength; while some trends are robust and enduring, others are volatile and short-lived. The concept of a power surge trend represents the latter.
Several criteria contribute to defining a power surge trend, with some already meeting the specified conditions.
The Nasdaq has consistently traded above the 21-day exponential moving average for at least 10 consecutive sessions. Moreover, the 50-day moving average is on an upward trajectory.
What remains to be seen is whether the 21-day EMA will close above the 50-day limit for five consecutive sessions. This crucial milestone will be reached on Monday.
The commencement of the power surge trend hinges on the success of Monday’s Nasdaq session. Failure to achieve this on Monday will defer the onset of the energy pattern to the subsequent trading day.
Power surge trends advocate for a more aggressive approach, emphasizing a proactive stance towards high-growth opportunities.
These shifts in energy often follow significant market upswings but can also dissipate rapidly. Hence, it is imperative to closely monitor evolving market trends.
ETF Performance
The iShares Expanded Tech-Software Sector ETF ( IGV ) surged by 2.65%, reaching a 52-week high, solidifying its position as a top-performing growth ETF. Both PLTR and MSFT stocks are prominent holdings within this ETF. The VanEck Vectors Semiconductor ETF ( SMH) climbed by 3.4% to attain an all-time high, with Nvidia investments playing a pivotal role.
The ARK Innovation ETF ( ARKK) witnessed a remarkable 10% spike last week, while speculative story stocks within the ETF surged by 14.4%.
The SPDR S&P Metals & Mining ETF (XME) recorded a 6.5% increase last week. Additionally, the Global X U.S. Infrastructure Development ETF ( PAVE ) advanced by 3.6%. The SPDR S&P Homebuilders ETF ( XHB) surged by 6.3%. The Energy Select Sector SPDR Fund (XLE ) observed a 1.5% uptick, while the Health Care Select Sector SPDR Fund (XLV ) rose by 1.6%. The Industrial Select Sector SPDR Fund (XLI ) also gained ground, registering a 3% increase.
The SPDR S&P Regional Banking ETF (KRE ) saw a notable 9.3% surge, while the Financial Select Sector SPDR Fund (XLF ) recorded a 3.2% uptick.
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Nvidia Earnings Outlook
The upcoming earnings report from Nvidia is scheduled for Tuesday evening. Wall Street analysts are anticipating a staggering 481% year-over-year growth in fiscal Q3 earnings and a 173% surge in revenue to $16.19 billion. However, investors may have heightened expectations following two consecutive instances of surpassing earnings estimates.
Market analysts will be keen on Nvidia’s commentary regarding the impact of stricter trade regulations in China.
Nvidia stocks rose by 2% last week to \(492.98, emerging from a double-bottom base and entering the buy zone with an established purchase point of \)476.09. Post the earnings announcement, NVDA stock exhibited a period of consolidation, mirroring the broader market sentiment and the performance of other major players.
AI Industry Insights
Following a 1.7% decline from its peak, Microsoft stocks closed at \(369.84, registering a modest 17-cent gain. The shares are currently trading near a key buy point of \)366.78. A brief consolidation phase could provide an opportunity for moving averages to align.
In a strategic move to reduce its dependency on Nvidia and its competitors, Microsoft introduced an internal AI tool earlier this week.
The departure of CEO Sam Altman from Microsoft-backed OpenAI on Friday due to a loss of trust from the board had a significant impact on market dynamics. Greg Brockman, the president and co-founder of OpenAI, also announced his resignation on the same day, citing recent developments.
The repercussions of the OpenAI leadership changes were reflected in Microsoft’s stock performance, which witnessed a 1% decline after hours on Friday.
Despite a 1.2% decline on Friday, Google’s stock surged by over 2% to \(135.31 last week, reclaiming its position above the 50-day moving average. Investors may consider utilizing the high of \)137.22 from Thursday as an early entry point into a potential flat base, with the official buy point set at $141.22.
Recent reports suggest that Google has postponed the launch of Gemini, a potential competitor to OpenAI’s ChatGPT 4, until early 2024.
Within the buy range of a consolidation phase dating back to late July, Meta stocks rose by 1.9% to $335.04.
Market analysis reveals that PLTR stocks climbed by 4.2% to \(20.49, surpassing a cup-base buy point of \)20.24. A consolidation phase around these levels, ideally at least 23% above the 50-day moving average, would be beneficial. However, Palantir stocks have yet to exhibit strong momentum towards this target.
SMCI stocks surged by 8.5% last week to \(288.59, primarily driven by a notable 14.9% spike on Tuesday. With a buy point of \)317.50 from an imperfect double-bottom setup, Super Micro investments are consolidating near significant levels while displaying an upward trendline. A potential breakout could occur with a move above Wednesday’s high of $297.48.
These are just a few examples of numerous AI-related investments that could influence Nvidia’s financial performance and strategic direction.
Market Rally Analysis
The ongoing strength trend in the market rally effectively captures the sustained performance of the stock market. Investors may opt to await fresh market developments and Nvidia’s earnings report before making further investment decisions.
The upcoming year is poised to witness a plethora of significant earnings reports. Apart from Nvidia, companies such as Abercrombie & Fitch ( ANF), American Eagle Outfitters ( AEO ), Urban Outfitters ( URBN), and China’s Miniso ( MNSO ) are scheduled to announce their earnings on Tuesday.
