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The stock market rally had a strong week, even as the major indexes paused after Wednesday. Falling Treasury yields fueled gains for much of the week, though yields rebounded on Friday.
It’s a confirmed market uptrend, with leading stocks acting well. Investors should be taking part with discipline.
The Magnificent Seven stocks — Apple, Microsoft, Google, Nvidia, Amazon, Tesla and Meta Platforms — have lived up to their title in 2023. Nvidia stock, the clear leader of the AI market rally, is in range. Apple, Amazon and Google stocks are also looking attractive. Meta, Microsoft and Tesla are hitting key resistance but could offer entries soon.
Let’s analyze the current market conditions and outlook for the Magnificent Seven and other leading stocks.
Table of Contents
- Recent Stock Market Action
- The Magnificent Seven Analysis
- Market Rally Technical Analysis
- Sector ETFs In Focus
- What To Do Now
- Key Takeaways
Recent Stock Market Action
The Dow Jones Industrial Average climbed 1.4% last week. The S&P 500 index popped 2.5% and the Nasdaq composite jumped 3.25%.
The 10-year Treasury yield declined nearly 7 basis points for the week to 4.17%, but that’s with Friday’s 8 basis-point gain. The benchmark yield is down from the 15-year high of 4.36% set on August 22.
U.S. crude oil futures surged 7.2% to $85.55 a barrel, ending the week at its highest close of the year. Copper futures climbed 1.3%.
The stock market rally roared higher earlier in the week, then held those gains as the major indexes reclaimed their 50-day moving averages.
The Magnificent Seven Analysis
The megacap stocks dubbed the “Magnificent Seven” have all done well in 2023, propelling the market rally. But there’s no doubt Nvidia is the stock and company of 2023, leading the AI revolution.
NVDA stock rose 5.4% last week to 485.09, rebounding from its 21-day line to hit a new closing high on Thursday before dipping Friday. Nvidia stock is still in range from a 480.88 buy point, though it’s close to extended vs. the 50-day line.
With Nvidia the clear AI leader, can investors afford not to be invested in this name?
AAPL stock shot up 6.1% to 189.46 last week, reclaiming the 50-day moving average decisively and offering an early entry. Apple stock has an official buy point of 198.23 from a cup base. Apple’s so-so fundamentals are a concern.
The company is expected to unveil the Apple iPhone 15 at a September 12 event.
AMZN stock bounced from the 50-day/10-week line early in the week, then rallied off its 21-day line Thursday, also breaking a short trendline. That offered an early entry. Shares rose 3.65% to 138.12. Amazon stock is working on a short consolidation that could turn into its own base.
GOOGL stock rose 4.45% last week to 135.66. Shares cleared a short consolidation just above a prior base. That offered a new, 133.74 buy point. The relative strength line has been trending higher for several weeks.
META stock climbed 3.8% this past week to 296.38, but has been hitting resistance at the 50-day line. A decisive move above that level, just below 300, would offer an early entry. Meta stock is working on its first new base since March.
MSFT stock fell back from a record high on July 18, with some heavy-volume losses around earnings. Shares have bounced back modestly, albeit in lighter volume. Microsoft stock rose 1.8% to 328.66, but hit resistance at its falling 50-day line Friday. A decisive move above that could offer an early entry. MSFT stock has an official consolidation buy point of 366.78.
TSLA stock surged back above its 50-day line Tuesday, but never decisively cleared that key level. It then tumbled 5.1% Friday. Still, Tesla stock rose 2.7% for the week to 245.01. A move above Thursday’s high could offer an early entry.
Tesla unveiled an upgraded Model 3 in China Friday, with a higher price coming as a surprise. Meanwhile, Tesla cut Model S and X prices in the U.S., while also lowering FSD price to $12,000.
Those moves undermine the bull case that Tesla price cuts are almost finished, with profit margins set to rebound. Still, the upgraded Model 3 will likely generate strong demand.
Market Rally Technical Analysis
It was a big, bullish week for the stock market rally. The major indexes roared back above their 50-day lines on Tuesday’s follow-through day, just three trading days after the downside reversal on August 24.
Growth stocks are leading the charge, including Nvidia, but leadership is expanding. Market breadth is improving, with winners outpacing losers.
The Russell 2000 moved above its 50-day line Friday, with bank stocks bouncing on a less-inverted yield curve. However, the S&P 500 Equal Weight ETF is struggling at that key level.
The Dow Jones is testing its 21-day and 50-day lines. It wouldn’t take much for the S&P 500 or Nasdaq to undercut their 50-day lines.
The Nasdaq and broader market could keep running, though a pause wouldn’t be a surprise. That could let some stocks build the right side of bases or form handles.
Sector ETFs In Focus
Among growth ETFs, the Innovator IBD 50 ETF jumped 5.2% last week. The iShares Expanded Tech-Software Sector ETF, with Microsoft a huge holding, gained 4.6%. The VanEck Vectors Semiconductor ETF leapt 4.8%.
The SPDR S&P Metals & Mining ETF jumped 5.5% last week. The Global X U.S. Infrastructure Development ETF advanced 3.6%, right at record highs.
The Financial Select Sector SPDR ETF rose 2.1% and the SPDR S&P Regional Banking ETF leapt 4.6% as bank stocks bounced on a less-inverted yield curve.
Reflecting more-speculative story stocks, ARK Innovation ETF ran up 6.5% last week and ARK Genomics ETF soared 6.7%.
What To Do Now
The stock market rally is giving investors many opportunities. Growth stocks are strong, energy names are revving higher and housing, industrials, metals, insurance brokers and more are showing strength.
This is the time to take advantage if we’re in the early stage of a new market rally leg. Run screens and update your watchlists. Look for stocks setting up in a variety of sectors.
Take advantage of buy opportunities gradually and with discipline. Don’t chase extended stocks. Wait for proper buy points and consider taking partial profits along the way.
Manage your risk and exposure carefully. Have sell rules ready in case the market starts breaking down again.
The major indexes reclaimed their 50-day lines decisively last week
Leading growth stocks like Nvidia are flashing buy signals
Apple, Amazon and Google stocks are in position to break out
Meta, Microsoft and Tesla face resistance but could offer entries soon
Market breadth and sector rotation are improving in the rally
Gradually increase exposure as stocks set up, but with discipline
The market uptrend appears intact and leading stocks are signaling opportunities. By selectively taking advantage at the right time with sound strategy, investors can capitalize on the current rally.
Stay tuned to IBD analysis for ongoing actionable market insights. Their time-tested system can help you successfully navigate these bullish yet turbulent times.