Dow Jones futures will begin trading on Sunday night, along with S&P 500 futures and Nasdaq futures.
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This week's stock market rally sent mixed messages but ended on a bearish note. The Nasdaq set a record with its Thursday closing price. Nvidia Large-cap stocks such as (NVDA) and AI stocks rebounded. However, the S&P 500, Dow Jones, and Russell 2000 struggled due to high inflation and tensions in the Middle East, with the Dow and small-cap Russell falling below their 50-day lines.Nasdaq just rose for the week
The CBOE Volatility Index, which measures market fear, soared to its highest level on Friday since late October on concerns that Iran could attack Israel directly and raise the possibility of a larger Middle East conflict.disappointing JP Morgan Chase (JPM) Guidance, big Arista Networks (ANET) decline and China's predicament intel (INTC) and Advanced Micro Devices (AMD) was also affected.
All of this prompted a shift to risk-off, especially heading into the weekend.
Investors need to be aware of Friday's market expectation breaker and react accordingly.
late friday, tesla (TSLA) has reduced the price of its Full Self-Driving subscription from $199 to $99 per month. Stock prices rose slightly.
salesforce.com (CRM) is in the final stages of negotiations to acquire data management software maker Informatica (INFA), The Wall Street Journal reported Friday night.
Significant future earnings
goldman sachs (GS) and charles schwab (SCHW) reported early Monday morning. Goldman stock fell below its 50-day line on Friday, but Schwab maintains it in a buy zone.
Major chip equipment manufacturer ASML (ASML) and Nvidia chip manufacturer taiwan semiconductor (TSM) could be the two most important gains next week. Their results and guidance will have a major impact on the chip space, including NVIDIA. broadcom (AVGO), ram research (LRCX), applied materials (AMAT) and KLA Co., Ltd. (KLAC).
All of these chip stocks have the potential for new locations and entry.
Nvidia stock is listed on IBD Leaderboard, SwingTrader, and IBD 50. KLA stock is listed on the IBD Long-Term Leaders list. Nvidia, ASML, and Broadcom stocks are included in the IBD Big Cap 20.
Dow Jones futures today
Dow Jones futures, along with S&P 500 futures and Nasdaq 100 futures, open at 6pm ET on Sunday.
Please note that overnight trades such as Dow futures do not necessarily translate into actual trades in the next regular stock market.
IBD experts analyze leading stocks and markets on IBD Live.
stock market rise
Stock market gains had a tough week with a hot CPI inflation report and Middle East unrest, with Friday's decline canceling out Thursday's bullish signal.
The Nasdaq, which hit a record high on Thursday, fell 1.6% in stock market trading on Friday, ending the week with a loss of 0.45%. Although the composite index fell below the 21-day line, it ended slightly above the 50-day and 10-week lines. It is also still trading ahead of the big reversal date on April 4th.
Conditions in the rest of the market appear to have worsened.
The S&P 500 index fell 1.55% for the week, its lowest decline in 21 days. The benchmark index finished slightly above its 50-day line but below its 10-week line.
The Dow Jones Industrial Average fell 2.4% to its lowest since late January, and the small-cap Russell 2000 index fell 2.9% to its lowest since late February. Both are clearly less than 50 days.
The Invesco S&P 500 Equal Weight ETF (RSP) fell 2.6% on Friday, falling below its 50-day line. The First Trust Nasdaq 100 Equal Weight Index ETF (QQEW) fell 1.7%, below its 50-day line, its worst level since late February.
Crude oil fell 1.4% on the week to $85.66 a barrel, down from Friday's intraday high of $87.67. Gold rose 1.3% to $2,356.20 an ounce, also well below Friday's high.
The 10-year Treasury yield rose 12 basis points (bp) to 4.5%, from Thursday's peak of 4.59%, its highest level in five months. Investors see a slim chance that the Fed will cut rates in June, and are only leaning towards a cut in July.
Stock market fear gauge soars
The CBOE Volatility Index rose 16.1% to 17.31 on Friday, with the trading peak of 19.20 the highest since late October. Excessive fear could portend at least a short-term bottom. However, the market's level of fear is still far from its October peak, let alone the all-time high of coronavirus infections.
Another sentiment indicator, particularly the bulls vs. bears indicator, was close to excessively bullish levels heading into last week.
If tensions in the Middle East ease, stock prices could rebound sharply. However, a direct conflict between Iran and Israel could cause a far greater rise in fear and a significant pullback in stock prices.
ETF
Among growth stock ETFs, the iShares Expanded Technology Software Sector ETF (IGV) fell 1.7% for the week. The VanEck Vector Semiconductor ETF (SMH) fell 0.9%. Nvidia and Taiwan Semiconductor are his largest SMH holdings, and ASML, Lam Research, KLA and AMAT stocks are also members.
SPDR S&P Metals Mining ETF (XME) fell 1% last week. The Global XUS Infrastructure Development ETF (PAVE) fell 3.4%. The U.S. Global Jets ETF (JETS) fell 2.6%. The SPDR S&P Home Builders ETF (XHB) fell 4%. The Energy Select SPDR ETF (XLE) fell 2% and the Healthcare Select Sector SPDR Fund (XLV) fell 3%. The Industrial Select Sector SPDR Fund (XLI) gave up 2.2%.
The Financial Select SPDR ETF (XLF), whose main constituent is JPMorgan, fell 3.6%. The SPDR S&P Regional Banking ETF (KRE) fell 3.5%.
Reflecting more speculative story stocks, the ARK Innovation ETF (ARKK) fell 1.25% and the ARK Genomics ETF (ARKG) fell 3% last week.
Timing the Market with IBD's ETF Market Strategy
ASML, Taiwan's quasi-revenue
Dutch chip equipment giant ASML reported on Wednesday morning, and chip foundry giant Taiwan Semiconductor is expected to make an announcement early Thursday morning.
Analysts expect ASML's profits to fall in the first quarter but recover in the second half. Taiwan Semi's earnings are expected to be flat, but the unofficial target could be higher after the foundry giant reported better-than-expected first-quarter sales on April 10.
Taiwan Semi is benefiting from strong demand for AI and other advanced chips. TSMC's guidance on earnings and capital spending will be key for the industry.
ASML stock fell 1.8% last week to 961.84, closing just near its 50-day and 10-week lines. Currently, the buy point is 1,056.34 on a flat basis. Investors can take advantage of the trendline entry near 1000 to initiate a position from the 10-week or April 1 high of 1002.66.
TSM stock rose 0.85% this week to 142.56. The stock has been consolidating for several weeks, but it needs another week to establish a proper footing. If Taiwan Cicada stock makes a profit and moves higher, investors could use the April 10 high of 148.43 as an entry point.
chip stock
Nvidia stock rose 0.2% on the week to 881.86. Stocks rebounded from their 10-week line from Wednesday to Thursday, pared back their gains on Friday, and remained at their 21-day line. NVDA stock currently has a flat base with a buy point of 974. At this point, investors could use Thursday's high of 907.39 as an early entry.
Broadcom stock rose 0.35% this week to 1,344.07, finding support at the 21-day and 10-week lines during the close, but hitting resistance near the 1,400 level. AVGO stock is currently consolidating with a buy handle at its April 4 high of 1,403.98.
Lam Research stock fell 1.2% on the week to 957.04, with support at the 10-week line. According to MarketSurge, the stock's flat-base buy point is 1,007.39. Lam's own financial results are scheduled for April 24.
Applied Materials stock was unchanged this week at 207.86, holding steady near its 21-day line. Investors could treat the recent consolidation as a de facto sideways base with a buy point of 214.91. A tight 3-week pattern yields a slightly lower entry at 213.33 based on the April 11 high.
KLAC stock fell 0.3% to 680.78, just near its 50-day and 10-week lines. KLA's flat base buy point is 729.15. A decisive move from the 50-day line could result in an early entry. KLA's earnings are scheduled to be released on April 25th.
what to do now
Thursday's strong moves raised expectations that the market, especially leader stocks such as Nasdaq and Nvidia, would continue to rise.
Instead, there was a mass withdrawal on Friday. A direct conflict between Iran and Israel is a wild card, but JP Morgan and Arista were not helped.
But whatever the reason, this is still a flat market for the Nasdaq, and they're hard to deal with. The Dow and Russell 2000, and perhaps the S&P 500, are increasingly showing signs of a pullback or new correction.
Investors need to reevaluate the past Friday and the past week. If you took a new position from Wednesday to Thursday, you may need to reduce your position or exit completely.
It's still time to work on your watchlist. If the drumbeat of war fades and the reaction to future earnings is positive, you should be prepared. However, you also need to be prepared to scale out more aggressively.
As earnings season begins, know when your stock holdings will be reported. You also need to know when the major rivals, customers, and suppliers to your holdings are active.
Read The Big Picture every day to stay on top of market direction and key stocks and sectors.
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