Narrow Rally Still A Stock Picker’s Market; 5 New Buys

Dow Jones futures will start trading on Sunday evening, along with S&P 500 futures and Nasdaq futures.

The stock market rally faced a major week of earnings and economic news. The Dow Jones and S&P 500 reached new all-time highs on Friday, while the Nasdaq rebounded to a two-year high boosted by Meta Platforms (META) and Amazon.com (AMZN). Big Tech earnings were mixed but generally positive, supporting the sector.
Nevertheless, market breadth weakened, and small caps struggled. Despite this, there have been numerous stocks to select from.
Buy signals were seen in Adobe (ADBE), Axon Enterprise (AXON), MongoDB (MDB) and Synopsys (SNPS) on Friday. SNPS stock is part of IBD Long-Term Leaders, and Synopsys, Samsara and MDB stock are in the IBD 50. Synopsys and Axon stock are part of the IBD Big Cap 20.

Earnings reports from various notable companies are expected in the coming week, including Caterpillar (CAT), Chipotle Mexican Grill (CMG), Eli Lilly (LLY), ELF Beauty (ELF), Arm Holdings (ARM) and Pinterest (PINS).

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. The overnight action in Dow futures and elsewhere does not necessarily lead to actual trading in the next regular stock market session.

Stock Market Rally
The stock market rally encountered some struggles midweek when Federal Reserve chief Jerome Powell mostly ruled out a March rate cut, and Google-parent Alphabet (GOOGL) weighed on techs. However, the major indexes rallied strongly afterward.
The Dow Jones Industrial Average and S&P 500 index rose 1.4% last week, both reaching record highs. The Nasdaq composite climbed 1.1%, backed by over-1% gains on Thursday and Friday.

Meta Platforms (META) and Amazon.com (AMZN) delivered strong earnings while Microsoft (MSFT) ultimately rallied in its results. These positive results offset tough weeks for Google parent Alphabet (GOOGL) and Apple (AAPL).
Even as the major indexes rallied to highs, losers surpassed winners on Friday, indicating weakened market breadth.
The small-cap Russell 2000 dropped 0.8% for the week, falling below the 21-day line but holding support at the 50-day. The Invesco S&P 500 Equal Weight ETF (RSP) and First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) both rose 0.4%, significantly lagging the S&P 500 and Nasdaq 100.
The Nasdaq closed Friday 5.4% above its 50-day moving average with the S&P 500 up 4.9%. The Nasdaq 100 is 6% above its 50-day, indicating potential overextension.
The 10-year Treasury yield decreased by 13 basis points to 4.03%, despite a 17 basis-point jump following the hot jobs report on Friday. U.S. crude oil futures plunged 7.35% to $72.28 a barrel last week due to demand concerns and hopes for an Israel-Hamas ceasefire.

ETFs
Several ETFs such as the iShares Expanded Tech-Software Sector ETF (IGV), VanEck Vectors Semiconductor ETF (SMH), ARK Innovation ETF (ARKK), ARK Genomics ETF (ARKG), Global X U.S. Infrastructure Development ETF (PAVE), Industrial Select Sector SPDR Fund (XLI), Health Care Select Sector SPDR Fund (XLV), SPDR S&P Metals & Mining ETF (XME), U.S. Global Jets ETF (JETS), SPDR S&P Homebuilders ETF (XHB), Energy Select SPDR ETF (XLE), and Financial Select SPDR ETF (XLF) reached new highs or climbed significantly, albeit with some exceptions like SPDR S&P Regional Banking ETF (KRE) which tumbled 7.2% on fresh lending concerns.

Stocks In Buy Zones
Several stocks including MongoDB, Axon Enterprise, Adobe, Synopsys, and Samsara showed positive movements on Friday. Investors could consider these stocks for potential buying opportunities.
Tesla Stock
Tesla stock showed a slight rise on Friday, breaking a six-week losing streak. However, it remains the S&P 500’s worst performer in 2024, down 24.4%. Tesla’s weak Q4 earnings and 2024 growth warning led to Wall Street analysts projecting this year’s earnings to remain flat compared to 2023’s tumble to $3.12 a share.

What To Do Now
The stock market rally continues to rise, despite weakened market breadth. Investors should remain cautious as many leaders are currently extended. It is crucial to review your portfolio and consider potential buying opportunities. Keep following The Big Picture to align with the market direction and leading stocks and sectors.