The stock market surged ahead this week, propelled by strong earnings and guidance from Nvidia (NVDA), particularly benefiting AI-related companies. Record highs were reached by the S&P 500 and Dow Jones, with the Nasdaq composite also nearing a new peak. Nvidia itself experienced a significant increase, edging closer to another milestone.
Several stocks, including Advanced Micro Devices (AMD), Lennar (LEN), Manhattan Associates (MANH), Microsoft (MSFT), and MongoDB (MDB), are showing potential for setup or action, particularly in the AI sector.
However, investors should exercise caution, especially with AI stocks, as the market rally may be on the verge of extension, despite a slight pause on Friday. Many top-performing stocks, like Nvidia, are already highly valued, raising the possibility of a constructive market pause or pullback.
Nvidia, Microsoft, and MongoDB are featured in various influential stock lists, such as IBD Leaderboard, SwingTrader, IBD Long-Term Leaders, and the IBD 50. Berkshire Hathaway (BRKB) is also in the spotlight as it prepares to release its fourth-quarter earnings report and Warren Buffett’s annual letter to shareholders, providing insights into the economy and investment strategies.
While the market rally remains strong, there are signs of potential extension, with indexes like the Nasdaq and S&P 500 hovering near or above their 50-day moving averages. ETFs across various sectors, including technology, infrastructure, and healthcare, reflect the broad market leadership.
Despite the market’s resilience, investors should remain vigilant and cautious about new investments, particularly in high-beta AI stocks. Diversifying portfolios with non-tech names like Lennar and keeping an eye on actionable setups can help navigate the current market environment.
Regularly checking The Big Picture can provide valuable insights into market trends, leading stocks, and sectors, helping investors stay informed and aligned with market direction.
