The stock market rallied with the S&P 500 hitting a new record high and the Nasdaq nearing the 5000 level. While there were big winners such as Nvidia and Arm Holdings, new buying opportunities were limited, leading to a “lockout” market rally. Many investors found it difficult to add exposure, especially in the true leaders. Additionally, with the market starting to look extended, investors were advised to exercise patience. Companies such as Walt Disney, Qualys, Arm Holdings, Monolithic Power Systems, McKesson, and O’Reilly Auto reported strong earnings after the close.
Dow Jones futures edged higher, led by Walt Disney stock. However, the S&P 500 futures lost a fraction, and Nasdaq 100 futures rose 0.1%. Despite the positive movement, overnight action doesn’t necessarily translate into actual trading in the next regular stock market session. The stock market continued to advance, with the S&P 500 hitting a new record high and the Nasdaq reaching its best levels since January 2022.
While the market showed strength, it was noted that the Nasdaq was 5.7% above its 50-day line and the S&P 500 was 5.1% above its 50-day line, indicating an extended market. Nvidia, a leading stock, was already up nearly 42% in 2024 and 31% above its 50-day line. In such a “lockout” market rally, patience was identified as the key, advising investors to avoid chasing the market and instead to carefully add stocks that show buy signals. Ultimately, the market rally was expected to experience a pause or pullback, indicating the need for investors to stay engaged and ready to act.