As Dow Jones futures prepare to open Sunday evening, along with S&P 500 futures and Nasdaq futures, the recent performance of the stock market rally is drawing attention. The major indexes have seen significant gains in November, approaching their 2023 highs. While many leading stocks are extended, there are still notable buying opportunities and setups to monitor.
Despite the overall positive outlook, caution signals are emerging. The market fear gauge, represented by the CBOE Volatility Index (VIX), is at its lowest levels since before the Covid crash. Additionally, other indicators suggest that the market may be “due” for a pullback. Investors are advised to keep these factors in mind.
Stocks To Watch
- Nvidia (NVDA): Despite a fall from record highs, NVDA remains in a buy zone following earnings and concerns related to China.
- Amazon.com (AMZN): Holding in a buy zone as the holiday season officially kicks off.
Recent developments include Novo Nordisk (NVO) breaking out, while Affirm Holdings (AFRM) has reclaimed a buy point. Taiwan Semiconductor (TSM), closely linked to Nvidia and Apple (AAPL), is near a buy point. Warren Buffett-backed Nu Holdings (NU) is moving back toward a buy point, and both Booking Holdings (BKNG) and Carpenter Technology (CRS) are setting up.
Nvidia, Novo Nordisk, and AMZN stock are part of the IBD Leaderboard lineup, with BKNG stock on the Leaderboard watchlist. Nvidia stock, Novo Nordisk, and Carpenter Technology are featured on the IBD 50.
Dow Jones Futures Today
Dow Jones futures are set to open at 6 p.m. ET on Sunday, alongside S&P 500 futures and Nasdaq 100 futures. It’s essential to note that overnight movements may not necessarily translate into actual trading during the regular stock market session.
Stock Market Rally
The stock market rally demonstrated solid performance in the holiday-shortened trading week. The Dow Jones Industrial Average rose by 1.3%, the S&P 500 advanced by 1%, and the Nasdaq composite gained 0.9%. November has seen substantial growth, with the Dow up by 7.1%, the S&P 500 by 8.7%, and the Nasdaq by 10.9%.
All major indexes have surpassed key levels, with the summer 2023 highs representing the next significant hurdle. The market fear gauge, measured by the VIX, hit its lowest levels since January 2020.
Caution Signals
While the market rally appears healthy, caution signals are emerging. Excessive bullishness and a decline in the VIX for five consecutive weeks suggest a potential overbought market. However, a pullback may not be immediate or severe.
ETFs
Among growth ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) reached its highest levels in nearly two years, while the VanEck Vectors Semiconductor ETF (SMH) dipped after hitting record highs. Reflecting more speculative stocks, ARK Innovation ETF (ARKK) and ARK Genomics ETF (ARKG) showed gains.
Other notable ETFs include SPDR S&P Metals & Mining ETF (XME), SPDR S&P Homebuilders ETF (XHB), Energy Select SPDR ETF (XLE), and Health Care Select Sector SPDR Fund (XLV), all contributing to various sectors’ performance.
Stocks In Buy Zones
- Nvidia (NVDA): Despite a recent fall, NVDA is just above a buy point from a double-bottom base.
- Novo Nordisk (NVO): Cleared a flat-base buy point after a 2.3% rise on Friday.
- Amazon.com (AMZN): Reclaimed a consolidation buy point.
- Affirm Holdings (AFRM): Popped 5.9%, reclaiming a cup-base buy point.
- Taiwan Semiconductor (TSM): Near a cup-with-handle buy point.
- Booking Holdings (BKNG): Setting up with a new handle offering a buy point.
- Carpenter Technology (CRS): Has a buy point from a short cup-with-handle base.
- Nu Holdings (NU): Rose 1.5%, nearing a buy point.
What To Do Now
The market rally continues to exhibit strength, entering a power trend on Nov. 20. While buying opportunities are not as abundant, investors can still add exposure. It’s crucial to watch for potential signals of a market pullback, keeping in mind that a modest and constructive pullback may provide new buying opportunities.
Investors are advised to work on watchlists, casting a wide net to capture emerging leadership while focusing on selected stocks for potential purchase. Earnings season is not over, with notable names like Zscaler (ZS), CrowdStrike (CRWD), UiPath (PATH), and others set to report in the coming week.
It’s essential to remain vigilant, assess market indicators, and adapt strategies accordingly in the evolving market environment.
