Dow Jones futures open on Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally had a generally positive week, with the Nasdaq and small caps leading the way.
But with the major indices at resistance levels following strong recent gains, the market rally has shown resilience amid some mixed headlines.
Berkshire Hathaway (BRKB) operating income increased 39% from a year earlier to $9.28 billion. But the Warren Buffett conglomerate suffered a net loss of $43.8 billion. That reflects a loss of $53 billion in investments amid the plummeting stock market that bottomed out in June.
Berkshire bought back just $1 billion in its shares in the second quarter, up from $3.2 billion in the first quarter. Berkshire charges instead Occidental Petroleum (OXY)
Buffett’s company had $105.4 billion in cash at the end of June, up from 106.3 billion at the end of March.
BRKB shares fell 2.8% to 292.07 last week, trading between the 200-day and 50-day lines. Berkshire stocks have bounced back from their June lows, but are still a long way from the late March high of 362.10.
Chip stocks are recovering, a positive sign for any market rally. Monolithic Energy Systems (MPWR), KLA (CLACK), Analog Devices (ADI), Axcelis Technologies (ACLS) and Onsemi (ON) are on the rise, but are currently in no man’s land, extended from early registrations but below the traditional points of sale.
Apple (AAPL) may still be in the range of early entry, but investors may want to wait to see if AAPL stocks can forge a handle.
Tesla stock sold out on Friday, but the EV giant needs to take a break. Meanwhile, the California DMV has accused Tesla (TSLA) of false advertising in promoting Autopilot and Full Self-Driving.
Finally, Celsius (CELH) went into heat check after massive gains over the past few days and weeks. What Should Investors Do With CELH Stocks With Profits On Tap Tuesday?
MPWR stocks are listed on IBD Long-Term Leaders. KLAC stocks are on the list of long-term leaders. CELH shares, Axcelis Technologies, Onsemi, KLA and Monolithic Power are all on the IBD 50. ADI shares, Onsemi and Monolithic Power are on the IBD Big Cap 20. ACLS shares were Friday’s IBD share. day. Monolithic Power and ON stock were Stock Of The Day earlier this week.
The video embedded in this article discussed and analyzed the market action Vertex Pharmaceuticals (VRTX), EQT (EQT) and ACLS stocks.
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.
Keep in mind that an overnight action in Dow futures and elsewhere does not necessarily lead to actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks during the stock market rally on IBD Live
stock market rally
The Dow Jones Industrial Average fell 0.1% in trading last week. The S&P 500 index rose 0.4%. The Nasdaq composite shot up 2.15%. The small-cap Russell 2000 rose 1.9%.
The 10-year Treasury yield rose 20 basis points to 2.84%, including 16 basis points on Friday after the hot jobs report. The odds of a 75 basis point Fed rate hike on Sept. 21 rose to two-thirds from about 40% before the employment data.
US crude oil futures fell 9.7% for the week to $89.01 a barrel, reaching the lowest level since before the Russian invasion of Ukraine in late February.
One of the best ETFs was the Innovator IBD 50 ETF (FFTY) last week down 2.9%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 0.7%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 3.7%. The VanEck Vectors Semiconductor ETF (SMH) gained 2.7%.
SPDR S&P Metals & Mining ETF (XME) climbed 0.5% last week. The Global X US Infrastructure Development ETF (PAVE) rose 0.15%. US Global Jets ETF (JETS) rose 3.2%. SPDR S&P Homebuilders ETF (XHB) was up 0.2%, its seventh consecutive weekly advance. The Energy Select SPDR ETF (XLE) plunged 6.8% and the Financial Select SPDR ETF (XLF) fell 0.1%. The Health Care Select Sector SPDR Fund (XLV) fell 0.7%, despite the strong position of biotech.
As a result of more speculative story stocks, ARK Innovation ETF (ARKK) raced nearly 11% higher and ARK Genomics ETF (ARKG) 10.5% last week. Tesla stock remains a major holding in Ark Invest’s ETFs.
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Monolithic Power shares rose nearly 15% last week to 532.33 on strong gains. Perhaps investors could have bought MPWR stock on the Aug. 2 earnings gap as it cleared some other areas of resistance. But as of Friday’s close, Monolithic stock was 17% above the 200-day line and 24% above the 50-day line. The relative strength line is already high, pointing to the MPWR stock’s outperformance against the S&P 500 index. The stock has a buy point of 580.10 as of consolidation going back to the end of November. But ideally, stocks would pause and form a handle. That would offer a lower entry and allow the moving averages to catch up a bit.
It’s the same story for Axcelis, Onsemi and KLAC stocks, all of which have reported gains in the past two weeks, and are now expanding from moving averages but under traditional breakouts. ADI stock is much the same, although Analog Devices earnings are available on Aug. 17.
Apple shares rose 1.75% to 165.35, the fifth consecutive weekly gain. Investors could have bought AAPL shares when it cleared the 200-day line on July 29 after the gains. At 3.7% above the 200 day mark, it is still arguably usable as an early submission. The RS line for Apple stock is already at an all-time high. The official buy point is 183.04, but a handle, at the current level or slightly higher, would be attractive.
Tesla shares fell 6.6% to 864.51 on Friday, down 3% for the week as it erased much of a seven-day winning streak. That also pushed stocks back below the 200-day mark. But if TSLA stocks can pause for a few days around current levels, breaking above Thursday’s high of 940.82 could be an aggressive entry. It would be too low for a traditional handle.
At Tesla’s annual meeting Thursday night, shareholders approved a 3-for-1 stock split, although that had been expected for months. CEO Elon Musk spoke at length about Tesla’s prospects, but said nothing dramatic. Elon Musk’s ongoing Twitter saga could weigh on TSLA stock.
Legal experts say: Twitter (TWTR) has a strong argument that Musk should go ahead with its $54.20 per share takeover deal. The Musk-Twitter lawsuit will take place in October. Amid the latest legal filings, TWTR stock rose 3.6% to 42.52 on Friday, regaining the 200-day line and hitting its best level in nearly three months.
Meanwhile, on July 28, the California Department of Motor Vehicles accused the EV giant of misleading customers about Autopilot and FSD capabilities, according to documents first reported by the Los Angeles Times. But if the state DMV wins its action, Tesla will likely just have to adjust its advertising and marketing.
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Celsius stocks have been in a massive rift since breaking above the 200-day line on July 5. On August 1, the news broke that PepsiCo (PEP) took a major stake in CELH and would be the lead distributor for the energy drink maker.
On Friday, CELH stock fell 9% to 98.62, though it bounced off its 10-day line and was still up nearly 11% for the week. Celsius will rise from the small-cap S&P 600 to the S&P MidCap 400. But fewer mutual funds and ETFs track the mid-cap fund versus the S&P 600, so the result is that fewer index funds are allowed to hold CELH stocks. Also leader energy drink Sample drink (MNST) fell 5% Friday on weak gains.
Celsius earnings are expected Tuesday, so investors must make decisions. If you bought CELH stocks near the 200 day or resistance around 72, you still have plenty of cushion. You can choose to lock in some of the profits. For those who bought extended, say on Monday’s Pepsi news, you could have a little cushion or be at a loss on your way to results. Celsius stocks tend to move a lot on earnings.
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Market rally analysis
It was a mixed week for the stock market rally. Growth stocks and small caps led the way while the Dow Jones and S&P 500 changed little
But given the deluge of earnings and a red-hot jobs report pointing to major Fed rate hikes for some time to come, the market rally could have stalled hard late last week after stocks climbed to resistance levels. But at the most they were silent. Friday’s action was especially encouraging.
The Nasdaq is above the early June highs but is moving towards a trendline from the start of the year. The Russell 2000 is right at its early June high, while the S&P 500 and Dow Jones are still operating at that important level.
A longer break or modest withdrawal would be healthy. The market rally has come a long way, with most of the progress coming at relatively low volume.
Meanwhile, many leading stocks or potential leaders could use a breather. The major indices that pause or pull back would give companies like Monolithic Power and Onsemi the opportunity to forge handles, create lower entries and catch up with moving averages.
The same goes for Apple stock, Tesla and many others.
Market leadership is expanding. Biotech, chips, aerospace/defense, solar, steel and energy, to name a few, are showing strength.
These are encouraging signs. But this could still be a bear market rally that eventually runs out.
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What to do now
Investors should play in this market, but not for all marbles. There are still reasons to be cautious with the current market. At any given time, not many stocks give buy signals, while shakeouts and sector rotations can make holding positions difficult.
So add lighting carefully. There is still an argument for taking some partial profits.
Build your watchlists. Make sure to cast a wide net so that you see potential leaders from a variety of industries.
Read The Big Picture every day to stay up to date on market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.
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