Dow Jones Futures: What To Do After Today’s Stock Market Fall As Powell Says Inflation Is ‘Much Too High’

Dow Jones futures were little changed after Monday’s stock market fall, as Fed Chief Powell said the central bank would seek to bring down “much too high” inflation. Treasury yields and U.S. oil prices surged Monday. And Dow Jones retailer Nike jumped on earnings after the close.

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Following last week’s correction-ending gains, investors have the green light to raise exposure by buying top stocks breaking out past proper buy points. Use the watchlist you curated during the recent stock market correction. Or you can also find stock ideas by monitoring IBD’s proprietary watchlists, like the IBD 50 and the IBD Big Cap 20.

Dow Jones health care giant UnitedHealth (UNH) — along with chip leaders Broadcom (AVGO), Alpha & Omega Semiconductor (AOSL) and GlobalFoundries (GFS) — are among those in or near new buy areas in the new stock market uptrend. Meanwhile, Tesla stock is trying to decisively retake a key resistance level, as a new base looks to take shape.

Late Monday, Nike reported better-than-expected fiscal-third quarter results. NKE shares jumped about 5% in extended trade.

Stock Market Today

On Monday, the Dow Jones Industrial Average slid 0.6% to snap a five-day win streak. The S&P 500 inched lower and the tech-heavy Nasdaq composite lost 0.4%. The S&P 500 and Nasdaq snapped four-day win streaks. Among exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) dropped 0.4%, and the SPDR S&P 500 ETF (SPY) declined less than 0.1% Monday.

Among the Dow Jones leaders, Apple (AAPL) rallied 0.85% and Microsoft (MSFT) traded down 0.4% in today’s stock market. UnitedHealth, a Dow Jones stock to watch, remains in buy range after a recent breakout.

Electric-vehicle leader Tesla (TSLA) raced nearly 2% higher Monday.

Amid the volatile, headline-driven market, IBD Leaderboard stock Arista Networks (ANET), Broadcom, Alpha & Omega Semiconductor, GlobalFoundries and CVS Health (CVS) are Monday’s top stocks to buy and watch.

Arista, Microsoft and Tesla are IBD Leaderboard stocks. And Broadcom was featured in this week’s Stocks Near A Buy Zone column.

Dow Jones Today: Oil Prices, Treasury Yields, Powell Comments

After Monday’s market close, Dow Jones futures, S&P 500 futures and Nasdaq 100 futures were little changed vs. fair value. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

The 10-year U.S. Treasury yield surged to 2.31% Monday, hitting its highest point since May 2019. U.S. oil prices jumped more than 7% Monday, as West Texas Intermediate crude traded above $110 a barrel. Dow Jones energy giant Chevron (CVX) advanced nearly 2%, and is sharply above the 20%-25% profit-taking area from a cup base’s 113.21 entry.

Midday Monday, Fed Chief Powell said in prepared remarks for the National Association for Business Economics that “inflation is much too high” and the Federal Reserve will take the “necessary steps to ensure a return to price stability.” Options on the table include more aggressive 50 basis point increases.

Stock Market Rally: What To Do Now

The stock market posted modest losses Monday in the wake of Fed Chief Powell’s comments. Despite Monday’s fall, the market trend remains in an uptrend following last week’s strong gains.

During market uptrends, you should gradually raise exposure in stocks, as you sync your portfolio and mindset with the stock market action. Sometimes, buying opportunities are scant on a follow-through day, especially after sustained downtrends.

As always, be mindful of potential sell rules and don’t let losses surpass more than 7%-8% on any individual trade.

Friday’s The Big Picture column commented, “But the Nasdaq’s outperformance wasn’t fueled by technology stocks breaking out of bases. Instead, it was mostly beaten-down software stocks and other former leaders from last year rallying off lows after sharp sell-offs. Nonetheless, the Nasdaq composite followed through on the fourth day of its rally attempt, rising 2% in higher volume.”

If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a broad range of growth stock lists, such as Leaderboard and SwingTrader.

Investors also can create watchlists, find companies nearing a buy point, or develop custom screens at IBD MarketSmith.

Four Dow Jones Stocks To Watch Now

Dow Jones Stocks To Buy And Watch: UnitedHealth

Managed care giant UnitedHealth shows a 500.10 buy point with a handle entry on a double-bottom base. Shares ended Monday in buy range above their latest entry after the session’s 0.4% rise.

Bullishly, the stock’s relative strength line is near new highs, indicating significant stock market outperformance.

Four Top Growth Stocks To Watch In The Current Stock Market Rally

Stocks To Buy And Watch: Arista, Broadcom, Alpha & Omega, GlobalFoundries, CVS

IBD Leaderboard stock Arista Networks is approaching a double bottom’s 133.97 buy point. ANET shares rallied 0.6% Monday, extending a win streak to five sessions. Per Leaderboard commentary, Arista Networks cleared an aggressive entry near 127 and joined the Leaders as a quarter-size position.

Chip giant Broadcom slipped 1.5% Monday, as it continued to build the right side of a new cup base. The cup base’s proper buy point is 677.86, but a more aggressive entry at 614.74 is in play.

Chip leader Alpha & Omega Semiconductor is approaching a cup-with-handle’s 59.48 buy point, according to IBD MarketSmith chart analysis. Shares are about 4% away from the entry after Monday’s 1.4% decline. But the handle is 25% deep, far more than normal. This is a problem for the base, although deep handles often form during market corrections.

Recent IBD Stock Of The Day CVS Health continues to build a flat base with a 111.35 buy point. CVS shares pared gains to 0.1% Monday.

Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live

Tesla Stock

Tesla stock rallied 1.7% Monday, rising for a fifth-straight session. Shares regained their long-term 200-day moving average on Thursday; however volume on the move was weak. Still, the retaking of support could mark the early stages of a possible climb up the right side of a new base. Now, the stock is attempting to decisively retake its 50-day line.

The stock traded as high as 1,243.49 on Nov. 4, but ended Monday about 26% off that all-time high.

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Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares rose 0.85% Monday, extending a win streak to five sessions. The stock moved further back above its long-term 200-day line, and is testing resistance at its 50-day moving average.

Software leader Microsoft lost 0.4% Monday, as shares try to convincingly retake their 50-day line. A new base is beginning to take shape.

Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.

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The post Dow Jones Futures: What To Do After Today’s Stock Market Fall As Powell Says Inflation Is ‘Much Too High’ appeared first on Investor’s Business Daily.