Home Economy Knightsbridge’s Take on Market Dynamics $TSLA $MSFT $FLS $MNDY

In the after-hours trading session, Dow Jones futures saw marginal changes, mirroring a similar trend in S&P 500 futures and Nasdaq futures. Notably, the overnight earnings reports featured Costco Wholesale (COST) and Lennar (LEN), the latter being a prominent homebuilder.

Despite minor gains in major indices, the broader stock market rally showcased robust advances. Treasury yields continued their descent, with the 10-year rate dipping below 4%.

The Russell 2000 and S&P MidCap 400 both achieved 2023 highs, emphasizing strength in industrials, regional banks, semiconductor stocks, and housing-related sectors.

However, Adobe (ADBE) faced a setback due to weak guidance, influencing other software giants like Microsoft (MSFT) and ServiceNow (NOW). Megacap tech stocks, including Apple (AAPL), Nvidia (NVDA), Amazon.com (AMZN), Meta Platforms (META), and Google’s parent Alphabet (GOOGL), experienced a challenging session.

Insurers and certain pharmaceutical stocks faced headwinds. Tesla (TSLA) stood out as the sole significant gainer among the Magnificent Seven, signaling an early buy opportunity. Other notable developments included Monday.com (MNDY) breaking out of consolidation, along with new buy signals for Flowserve (FLS), Beacon Roofing Supply (BECN), and DDOG stock.

Dow Jones Futures Today:

Dow Jones futures exhibited a flat performance compared to fair value, with S&P 500 futures showing a slight decline, and Nasdaq 100 futures experiencing marginal changes. It’s essential to note that overnight movements in Dow futures may not necessarily translate into actual market actions during regular trading hours.

Earnings Highlights:

COST stock saw a slight rise in extended trading after reporting earnings that exceeded expectations, accompanied by sales in line with forecasts. Lennar’s LEN stock experienced a modest dip overnight despite surpassing earnings estimates, with concerns raised about gross margins and guidance. Notably, Lennar shares soared during regular trading hours, reaching a new high as mortgage rates continued to decline.

Stock Market Rally:

The overall stock market rally persisted, marked by gains in small-cap and midcap segments. The Dow Jones Industrial Average rose by 0.4%, the S&P 500 index climbed by 0.3%, and the Nasdaq composite advanced by 0.2%. While these indices came off their morning 52-week highs, they rebounded from afternoon lows.

Market breadth remained robust, with the Russell 2000 surging by 2.7%, and the S&P MidCap 400 rising by 2.4%—both reaching fresh 52-week highs. Additionally, several ETFs, including the Invesco S&P 500 Equal Weight ETF (RSP) and the First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW), recorded gains.

Notable Movers:

Microsoft stock faced a decline of 2.25%, falling below its cup-base buy point and the 21-day line. Apple stock held steady, Amazon found support at the 21-day line, and Meta stock maintained its position above the 21-day line.

Nvidia stock displayed resilience, climbing 0.5%, while ServiceNow stock experienced a 4.9% dip but remained above the 21-day line. Adobe stock tumbled by 6.35%, finding support at the rising 50-day/10-week line.

Tesla Stock Highlights:

Tesla stock emerged as a significant gainer, jumping by 4.9% to 251.05 in heavy volume. The stock cleared a trendline dating back to July, signaling an aggressive entry point. Thursday’s move followed a brief dip below the 50-day line on Wednesday, showcasing the stock’s volatility. Despite Tesla’s weak fundamentals in 2023, falling Treasury yields contributed to favorable conditions for growth stocks.

Other Stocks In Focus:

Monday.com stock surged by 5.1% to 190.77, breaking out of a five-month consolidation. Flowserve stock rose by 3.5%, clearing resistance levels, while Beacon Roofing stock reclaimed a cup-with-handle buy point with a 4.75% jump. Datadog stock rose by 2.9%, clearing a high handle from a consolidation since late July.

Market Outlook:

The ongoing stock market rally appears to be in its early stages, with some new buying opportunities emerging. However, caution is advised as several leading stocks are stretched. Investors may consider adding exposure cautiously, taking profits in extended stocks, and shifting positions to maintain a balanced portfolio. Monitoring watchlists and staying vigilant for potential opportunities is crucial in the current market environment.

Shayne Heffernan

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