Dow Jones, S&P 500 at highs, bulls running; New economic stimulus for China

Dow Jones futures open Sunday evening, as do S&P 500 futures and Nasdaq futures. Economic news from China is in focus as earnings rise in the coming week.

The stock market rally was a consistently positive week. The S&P 500 and Dow Jones hit record highs on Friday, while the Nasdaq topped key levels. The Russell 2000 small-cap index rebounded from a key test. A number of leading stocks issued buy signals while others were on the rise while many others continued to run.

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Bulls Charge Ahead as Power Trend Gains Strength; Uber, CEG, Generac Flash Buy Signals

Uber technologies (UBER) gaped as Tesla (TSLA) had a “toothless” robotaxi event. Tesla stock plummeted, triggering a major sell signal.

Nvidia (NVDA) issued several buy signals during this time Taiwan Semiconductor (TSM) and Broadcom (AVGO) issued buy signals. Taiwan Semi earnings are expected this week.

But market leadership extended far beyond AI chip names.

This is a time when investors are highly exposed, continuing to look for new purchases while shedding laggards. Pay close attention to earnings season, both for what you own and for key names that could impact your stocks.

In addition to Taiwan Semiconductor, key gains in the coming week include: Netflix (NFLX), UnitedHealth (UNH), Intuitive surgery (ISRG) and Goldman Sachs (GS). All trade around buy points or alternative entries.

Nvidia stock is on the IBD Leaderboard, SwingTrader and IBD 50. Uber was the IBD Stock of the Day on Friday.

Late Friday, Boeing (BA) announced that it plans to cut 10% of its global workforce, or about 17,000 jobs, and delay the launch of its 777x aircraft, and also warned that third-quarter revenue will be well below analyst consensus . This comes amid a crippling strike where labor talks have failed. The Dow Jones giant fell slightly on Friday evening and was already at its lowest level in 23 months.

Dow Jones futures today

Dow Jones futures open at 6:00 p.m. ET on Sunday, as do S&P 500 futures and Nasdaq 100 futures.

Keep in mind that overnight performance in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.

Join IBD experts as they analyze leading stocks and the market on IBD Live

China economic stimulus plan

China’s Finance Ministry held a news conference on Saturday in which it unveiled new stimulus measures that were generally in line with expectations. This included Beijing borrowing more to help local governments finance their off-balance sheet borrowings. Local governments can use the funds to buy unsold homes and convert them into subsidized housing. Large state banks are supported in increasing their capital. More broadly, officials said there was room to increase the central bank’s deficit spending, but did not lay out any plans.

There were no measures specifically aimed at empowering vulnerable consumers.

Notably, Treasury officials did not provide specific details about the actual size of the spending, which could be a concern for investors. Further details may be announced in a few weeks. Additionally, China’s parliament could use a session later this month to boost spending.

Saturday’s news came after a key planning agency failed to provide incentives on October 8. This was followed by interest rate cuts and various attempts to boost lending, property purchases and stock prices.

Chinese stocks and related securities surged on these initial stimulus measures, but then fell after the October 8 disappointment.

If Chinese markets respond positively on Monday, some China-related plays could provide buying opportunities. This also includes the e-commerce giant PDD holdings (PDD), Tesla rival BYD (BYDDF) and Southern Copper (SCCO), which are China-linked stocks near buy points.

Five Chinese stocks near buy points amid stimulus bets

Stock market rally

The stock market rally brought modest gains across major indexes, but it was an important week. The S&P 500 and Dow Jones hit record highs, while the Nasdaq also broke above key levels.

The Dow Jones Industrial Average rose 1.2% in trading last week. The S&P 500 Index and the Nasdaq Composite rose 1.1%. The small-cap Russell 2000 index rose 1% thanks to Friday’s 2.1% rise.

As the major indexes emerged from a few weeks of tense trading, leading stocks were released, with numerous breakouts, early entries or follow-on buying.

Additionally, Nvidia and AI chip companies, cybersecurity firms and cruise lines had a big week. Several buy signals flashed, including carnival (CCL) and CyberArk software (CYBR). JPMorgan Chase (JPM) jumped on Friday on earnings, one of several financial stocks that sent buy signals during the session. Insurers are doing well after some ups and downs as a result of Hurricane Milton.

Many industrial and aviation companies as well as foreign e-commerce companies are still leading. Sweet green (SG) erupted on Friday as some restaurants looked tasty. Oil and gas stocks are up, with Exxon Mobil (XOM) right around buy points.

A number of medical stocks are under construction.

The 10-year Treasury yield rose nine basis points to 4.07%.

U.S. crude oil futures rose 1.6% last week to $75.56 a barrel.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.8% last week. The iShares Expanded Tech-Software Sector ETF (IGV) gained 3.25%. The VanEck Vectors Semiconductor ETF (SMH) rose 3.6%. Nvidia stock is the largest holding in SMH, with Taiwan Semiconductor and Broadcom as major members.

The ARK Innovation ETF (ARKK) posted a gain of 0.2% last week. Tesla stock remains an important component of Ark Invest’s ETFs. Cathie Wood also owns a lot of Nvidia.

The SPDR S&P Metals & Mining ETF (XME) rose 1.5% last week. The US Global Jets ETF (JETS) rose 1.7%. The SPDR S&P Homebuilders ETF (XHB) closed a fraction lower. The Energy Select SPDR ETF (XLE) fell 0.4%, with Exxon a large contributor.

The Health Care Select Sector SPDR Fund (XLV) gained 1.5%. The Industrial Select Sector SPDR Fund (XLI) gained 2.15%, with Uber shares a key member. The Financial Select SPDR ETF (XLF) climbed 1.8%, with JPMorgan a key member.

Plan the market with IBD’s ETF market strategy

Sell signal for Tesla shares

Tesla shares fell 12.9% to 217.81, their worst weekly loss since April. Friday’s 8.8% decline pushed Tesla well below its 50-day line on heavy volume. This is a notable Tesla sell signal. Current buyers are probably sitting at a loss. Longer-term holders who have a low cost base may choose to maintain this as well.

Stocks began the week by extending losses from third-quarter deliveries reported Oct. 2. Friday’s sell-off followed the much-hyped Tesla robotaxi event. Elon Musk presented the Cybercab and the Robovan and once again predicted true self-driving next year. However, he did not give any specific reasons for assuming that things would be different this time.

Tesla also hasn’t unveiled an “affordable” model, a yet-unknown electric vehicle with production scheduled to begin in early 2025. That, along with a refreshed Model Y, is key to Tesla being able to increase or at least maintain delivery numbers next year.

Tesla Dives After Robotaxi Event; BYD near buy zone after powerful move

Uber Technologies is flying

Uber shares rose 10.8% to 86.34 on Friday, crossing a base. Shares rose 16.2% this week. Investors could use the 82.14 consolidation high as a buy point, which roughly coincides with Uber’s intraday low on Friday. The shares are now just outside the buy zone. Investors may wait to see if Uber consolidates for a few days and retains most of Friday’s gains.

Analysts don’t see a Tesla robotaxi as a threat in the next few years, which would remove a major overhang on Uber stock.

Stock market: If not now, when

The stock market is at an all-time high and has just cleared some key levels. Leading stocks are doing well. If not now, when?

This is the time to invest heavily or fully. If you are an experienced trader and have a high risk tolerance, you can bet on margin.

Hopefully you have been heavily exposed for some time. So the goal should be to optimize your portfolio through gradual purchases and various sales. The optimal portfolio should contain leading stocks from various top groups.

With the market looking so strong, it’s also time to own some high-flyers with big daily swings. However, you also want more stable services.

So take some time to review your holdings individually and collectively. Go through your screens. A large number of stocks have buy signals or are in an upward trend.

Earnings season is just around the corner and holds the potential for major swings in individual stocks, as well as sectors and the overall market. Learn which of your holdings and top potential buys have profits due, and get the earnings dates of key companies that could change your positions.

Read The Big Picture daily to stay up-to-date on market direction and the leading stocks and sectors.

Please follow Ed Carson in threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.

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