In the face of a long-awaited pullback, the stock market rally experienced a retreat last week, leading to a decline in Dow Jones futures, S&P 500 futures, and Nasdaq futures. Tesla, in particular, suffered from yet another valuation downgrade.
While the selling was relatively orderly for the Nasdaq and S&P 500, the Dow Jones and other measures displayed more significant damage.
Amidst this market turmoil, several stocks managed to hold their ground, including MongoDB, HubSpot, Chipotle Mexican Grill, Shockwave Medical, and DexCom, all of which traded near buy points.
Last week, the Dow Jones Industrial Average saw a slump of 1.7%, while the S&P 500 index and Nasdaq composite fell 1.4% and the small-cap Russell 2000 tumbled 2.95%.
The market retreat was accompanied by a decrease in the 10-year Treasury yield, which fell to 3.68%. Additionally, crude oil futures experienced a slight rise, while concerns over global demand and a strengthening U.S. dollar impacted copper futures.
Despite the market pullback, several stocks continued to stand out and demonstrate resilience. Nvidia remained the true leader in the chip and AI sector, while Apple quietly achieved a fresh record high, and Meta Platforms reached its highest level in 16 months.
These stocks, along with Tesla, MongoDB, and HubSpot, were included in the IBD Leaderboard, with Chipotle Mexican Grill on the Leaderboard watchlist.
Tesla, Chipotle, HubSpot, and MongoDB were also part of the IBD Big Cap 20, and Tesla and HubSpot were featured in the IBD 50.
Investors were advised to closely monitor leading stocks during this market retreat and observe which names held up best.
Stocks might find temporary support or rebound from key levels, but could subsequently reverse lower. Notably, stocks like DexCom and HubSpot found support at their respective 21-day lines.
DexCom, in particular, raised its fiscal 2025 revenue guidance, highlighting its positive growth prospects.
Navigating the Market Retreat
Several stocks were highlighted for their technical patterns and performance. MongoDB stock displayed bullish technical action, trading within a three-week tight pattern or high-tight-flag.
HubSpot stock showed consistent support at the 21-day line and had a potential buy point from a four-weeks-tight pattern. Chipotle stock continued to trade around the 21-day and 10-week lines, with a flat base offering a potential buy point.
Shockwave stock exhibited tight closes on a weekly chart, finding support at the 21-day and 10-week lines. DexCom stock experienced a temporary decline but held its ground above the 21-day line and the 126.44 buy point.
Among market ETFs, the Innovator IBD 50 ETF, Innovator IBD Breakout Opportunities ETF, and iShares Expanded Tech-Software Sector ETF experienced declines, while the VanEck Vectors Semiconductor ETF and ARK Innovation ETF faced notable retreats.
Other ETFs that encountered declines included SPDR S&P Metals & Mining ETF, Global X U.S. Infrastructure Development ETF, U.S. Global Jets ETF, and SPDR S&P Homebuilders ETF.
Nvidia stock only experienced a minor setback, while Advanced Micro Devices and C3.ai faced significant declines, dropping below their 21-day lines.
In contrast, Apple and Meta stock remained resilient, finding support from their rising 10-day lines. Tesla stock, despite a recent record-breaking rally, encountered a decline following analyst downgrades, emphasizing concerns over its valuation.
In conclusion, last week witnessed a retreat in the stock market rally, with the Nasdaq and S&P 500 experiencing modest declines while small-cap stocks struggled.
Despite the pullback, several leading stocks managed to hold their ground or even make gains. Companies like Nvidia, Apple, Meta Platforms, HubSpot, and Chipotle Mexican Grill showcased resilience amidst market turbulence.
Notably, Tesla faced a valuation downgrade and experienced a modest retreat following significant recent gains. However, other measures such as the Dow Jones and Russell 2000 showed more damage.
While the selling remained orderly for the Nasdaq and S&P 500, it is crucial to closely monitor leading stocks during this period to determine which names hold up best. Stocks may find temporary support or rebound from key levels, only to reverse lower later.
