Tesla and Apple Grab Spotlight in Shifting Stock Market Rally: Key Strategies for Investors

The recent surge in the stock market rally has gained significant momentum, with notable movements in the major averages. As we approach the opening of Dow Jones futures, along with S&P 500 futures and Nasdaq futures on Sunday evening, the market rally's leadership remains focused on the artificial intelligence, chip, and software sectors. While many of these stocks are currently overextended, a broader range of buying opportunities may emerge if market breadth continues to improve.

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Several stocks have already shown breakout potential, including Tesla (TSLA), which broke out on Friday. Other notable stocks like DexCom (DXCM), Lennar (LEN), and JPMorgan Chase (JPM) also displayed early entry signals late in the week. Marriott International (MAR) is another stock worth considering for potential action.

These stocks represent areas of possible leadership in the market rally. Tesla's breakout aligns with other electric vehicle (EV) rivals, such as BYD (BYDDF). DXCM stock is part of a group of medical products companies attempting to gain upward momentum. LEN stock is among a number of homebuilders experiencing a rebound. While JPM stock stands out in the financial sector, the overall sector is also showing signs of recovery. MAR stock is one of several travel-related stocks witnessing a broad resurgence.

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Investors should consider adding exposure to capitalize on this promising shift in the market. However, it is crucial to remain vigilant and be prepared to step back if necessary.

In other news, Apple (AAPL) is expected to unveil its mixed-reality headset on Monday, marking its first hardware product since the launch of the Apple Watch in 2015. This headset will compete with rivals like the Meta Quest from Meta Platforms (META). With Apple stock on the verge of surpassing its January 2022 highs and inching closer to a $3 trillion market cap, all eyes are on this anticipated announcement.

Tesla stock recently joined IBD Leaderboard, along with Meta stock. LEN stock was added to SwingTrader. Lennar was recognized as Friday's IBD Stock Of The Day.

As we await the opening of Dow Jones futures today, let's reflect on the stock market rally's impressive performance. Last week saw substantial gains across the board, with the Dow Jones Industrial Average surging by 2% in stock market trading. The S&P 500 index rallied 1.8%, while the Nasdaq composite gained 2%. The small-cap Russell 2000 outperformed, jumping 3.3%.

While the 10-year Treasury yield fell by 13 basis points to 3.69% for the week, it did experience an 8 basis points increase on Friday. U.S. crude oil futures dipped by 1.3% to $71.74 a barrel last week, despite a 2.3% bounce on Friday.

Looking at ETFs, the Innovator IBD 50 ETF (FFTY) recorded a notable 3.6% increase, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 1.7%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 2.1%, but the VanEck Vectors Semiconductor ETF (SMH) experienced a slight dip of 0.8%.

In the realm of speculative story stocks, the ARK Innovation ETF (ARKK) saw a substantial leap of 6.45%, while the ARK Genomics ETF (ARKG) jumped by 4.9%. It's worth noting that Tesla stock holds the top position across Ark Invest's ETFs, and Cathie Wood's Ark Invest also owns some BYD stock.

Other notable ETF performances include the SPDR S&P Metals & Mining ETF (XME) rebounding by 4.2%, the Global X U.S. Infrastructure Development ETF (PAVE) gaining just over 3%, and the U.S. Global Jets ETF (JETS) ascending by 3.1%. Additionally, the SPDR S&P Homebuilders ETF (XHB) jumped 3.5%, the Energy Select SPDR ETF (XLE) advanced 1.4%, and the Health Care Select Sector SPDR Fund (XLV) climbed 2.2%. DXCM stock is part of the XLV ETF.

The Financial Select SPDR ETF (XLF) observed a 2.15% rise during an optimistic week. JPM stock is a prominent component of XLF. The SPDR S&P Regional Banking ETF (KRE) also experienced a notable 4.8% jump.

All eyes are now on Apple as it prepares to showcase its latest hardware and software innovations at its annual Worldwide Developers Conference. The event will feature a keynote presentation on Monday at 10 a.m. PT, unveiling the latest operating systems for iPhone, iPad, Mac, Apple TV, and Apple Watch. Of particular interest is the potential introduction of a mixed-reality headset, potentially named Reality Pro. This new hardware product would be Apple's first since the debut of the Apple Watch in 2015. Meta Platforms recently revealed its latest Meta Quest headset, intensifying the competition in this space.

With Apple stock gaining 3.15% last week, reaching a price of 180.95, it is now hovering just below the peak recorded in January 2022, signaling potential growth towards a $3 trillion market cap.

Tesla stock witnessed a significant jump of 10.8% to 213.97 during the week, with a 3.1% surge on Friday. The stock cleared its 200-day moving average on Tuesday and surpassed a buy point of 207.89 on Friday from either a cup or double-bottom base. Tesla has shown consistent above-average volume gains over the past five sessions, which were scarce in the previous three months.

Meanwhile, BYD stock climbed 5.6% to 31.50 last week, with Friday's 2.3% gain pushing the China-based EV and battery giant above a 31.17 cup-with-handle buy point initially cleared on May 10. BYD reported record deliveries in May, surpassing its previous peak from late 2022.

Tesla now claims that all its Model 3 and Model Y vehicles, including the base Model 3, are eligible for the full $7,500 tax credit in the U.S., although the exact details remain unclear.

Other stocks that neared buy points include DXCM, which surged by 6.5% to 122.57 last week. DexCom reclaimed its 50-day line on Thursday and continued to gain momentum on Friday, offering an early entry opportunity. Other medical product and systems manufacturers worth monitoring include Shockwave Medical (SWAV) and Intuitive Surgical (ISRG).

LEN stock rallied by 3.6% to 112 on Friday, bouncing back above its 50-day line and presenting an aggressive entry point within an emerging consolidation. Numerous homebuilders witnessed bullish price gains on Friday, with LEN stock particularly active in heavy volume.

JPM stock rose by 3% to 140.47, closing in on a downtrend within a new flat base adjacent to a prior consolidation. It remains within a reasonable range from its 50-day line. While JPMorgan stands out among other banks, the overall sector also displayed bullish movements on Friday.

MAR stock increased by 3.55% to 177.22 on Friday after reclaiming its 50-day line the day before. It potentially offers an early entry point from an emerging flat base. Royal Caribbean (RCL) and Hilton Worldwide (HLT) are other stocks in the travel-related sector worth monitoring.

As market breadth continues to improve, investors may find additional buying opportunities beyond the aforementioned stocks. However, it is crucial to remain cautious and adapt to changing market conditions.

In summary, the stock market rally has witnessed significant gains, particularly in the AI, chip, and software sectors. Stocks like Tesla, DexCom, Lennar, JPMorgan Chase, and Marriott International have shown breakout potential and offer potential buying opportunities. The upcoming unveiling of Apple's mixed-reality headset adds to the market's anticipation. It's essential for investors to stay informed and make well-informed decisions based on current market dynamics.