Market Overview
Dow Jones futures are set to open Sunday evening, alongside S&P 500 and Nasdaq futures. Bitcoin, often viewed as a potential weak link in the market, experienced a notable rebound over the weekend, rising toward $87,000 after hitting seven-month lows below $81,000 early Friday.
This past week, the stock market faced significant losses, with major indexes breaking below key levels despite strong earnings from Nvidia (NVDA). A Friday bounce, fueled by renewed Fed rate cut hopes and potential Nvidia chip sales to China, faded in the final 90 minutes of trading. Growth stocks, in particular, suffered major damage, and Bitcoin saw a sharp decline.
Key Stock Movements
- Apple (AAPL), RTX (RTX), and Medpace (MEDP) have all formed bullish tight patterns, indicating potential breakout opportunities.
- Eli Lilly (LLY) made history by reaching a $1 trillion market cap, becoming the first healthcare company to join this elite club. The stock is featured on multiple IBD lists, including Leaderboard and IBD 50.
- Nvidia stock fell 5.9% for the week, breaking below its 50-day moving average and a flat-base buy point. However, reports of potential eased restrictions on AI chip exports to China provided some support.
Bitcoin's Impact
Bitcoin plunged 10.3% last week, hitting a seven-month low of $80,587.89. Some analysts suggest that forced selling in Bitcoin may have contributed to broader market woes, especially affecting high-beta and speculative growth assets. The weekend rebound offers a glimmer of hope, but the overall market remains in a "risk off" mindset.
ETF Performance
Several growth ETFs struggled last week:
- Innovator IBD 50 ETF (FFTY) slumped 3.3%.
- iShares Expanded Tech-Software Sector ETF (IGV) dived 6.1%.
- VanEck Vectors Semiconductor ETF (SMH) plunged 5.5%, with Nvidia as its top holding.
Defensive sectors like healthcare showed relative strength, with the Health Care Select Sector SPDR Fund (XLV) advancing 1.3%, largely driven by Eli Lilly.
Investor Strategy
Given the market's recent volatility, investors are advised to adopt a defensive stance. Exposure should be minimal, with a focus on resilient stocks showing relative strength. While Friday's bounce was encouraging, it may not signal a sustained rally. Key indicators to watch include the Nasdaq and S&P 500 reclaiming their 50-day and 21-day moving averages, and the potential for a follow-through day to confirm a new uptrend.
Keep working on watchlists and prioritize stocks holding key levels, as they may lead the next market rally—or be the next to break.
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