Dow Jones futures rallied 125 points late after the stock market sell-off worsened Monday, as the Dow Jones Industrial Average dived 433 points. Tesla stock skidded further from its all-time highs, while stock market leaders Advanced Micro Devices and Nvidia are at key support levels. Dow Jones retail leader Nike (NKE) and Micron Technology (MU) reported earnings after the close.
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On Monday, the Dow Jones Industrial Average declined 1.2%. The S&P 500 dropped 1.1%, while the Nasdaq sold off 1.2%. The small-cap Russell 2000 tumbled 1.6%.
Among the Dow Jones leaders, Apple (AAPL) dropped 0.8% Monday, while Microsoft (MSFT) was down 1.2% in today’s stock market. Home Depot (HD) is trying to find support at a key level, while Nike reported earnings after the close Monday.
Electric-vehicle leader Tesla (TSLA) traded down 3.5% Monday. Its rival, Rivian (RIVN), dived nearly 8%. Lucid Group (LCID) declined over 5%. And Chinese EV leaders Li Auto (LI) and Xpeng Motors (XPEV) also posted sharp losses Monday. Nio (NIO) traded down over 6% after introducing a new model at its Nio Day event on Saturday.
Among Monday’s top stocks to buy and watch, Arista Networks (ANET), Ryan Specialty (RYAN), Advanced Micro Devices (AMD) and Nvidia (NVDA) are in or near new buy zones. Keep in mind that investors should be cautious with new purchases amid the recent stock market volatility.
Microsoft and Tesla are IBD Leaderboard stocks. Arista was featured in this week’s Stocks Near A Buy Zone column, while Ryan Specialty was last week’s featured IPO Leader.
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Dow Jones Futures Today
After the stock market close Monday, Dow Jones futures rose 0.35% vs. fair value, while S&P 500 futures also gained 0.35%. Nasdaq 100 futures rallied 0.6%. Remember that trading in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Among exchange traded funds, Innovator IBD 50 (FFTY) moved down 1.4% Monday, closing at its lowest level since July 19. Nasdaq 100 tracker Invesco QQQ Trust (QQQ) dropped 1.1%. And the SPDR S&P 500 ETF (SPY) also descended 1.1%.
Stock Market ETF Strategy And How To Invest
Is Stock Market Rally Over? What To Do Now
The stock market posted heavy losses Monday, as the major stock indexes added to Friday’s weakness. The Nasdaq took out the Dec. 3 lows, while the S&P 500 cut through its 50-day moving average. The Dow 30 gave up the 35,000 level and is just above its long-term 200-day moving average.
During extended periods of volatility and weakness, it’s best to avoid most breakouts, unless it’s a perfect set up and breakout. The increased selling pressure in the general market should give you pause. If you do decide to buy, be extra demanding and focus only on stocks showing exceptional fundamental and technical strength.
The risk level is very elevated at this point and there’s no need to rush back into the market. It’s perfectly acceptable to watch from the sidelines and wait for the market to prove itself amid the recent losses. It’s extremely challenging to navigate a whipsaw market and typically just leads to more losses in your portfolio.
But don’t tune out. Keep track of the leading growth stocks, which can be done by using the relative strength line. The RS line measures a stock’s price performance vs. the S&P 500. If the stock is outperforming the broader market, then the RS line angles upward. If a stock is performing worse than the broad market, then the line will point lower.
After Monday’s session, the Big Picture commented: “The Nasdaq endured a brutal opening Monday and stepped off its session lows to avoid another steep sell-off. But the index also waved a big red flag about the chances that the latest confirmed uptrend will hold.”
Amid the recent weakness, it’s an important day to read IBD’s The Big Picture.
Five Best Dow Jones Stocks To Watch Now
Dow Jones Earnings: Nike
Dow Jones retail leader Nike is tracing a new flat base that has a buy point at 179.20, according to IBD MarketSmith chart analysis. Shares are below their 50-day line following last week’s losses. Nike shares dropped 2.7% Monday.
Late Monday, Nike reported its quarterly results, beating Wall Street’s estimates. The company earned 83 cents a share and sales of $11.4 billion. Shares moved up around 4% in extended trade.
Stock Market Earnings: Micron
Micron Technology (MU) also reported earnings results after the close Monday, earning $2.16 a share on sales of about $7.6 billion. MU stock jumped nearly 7% in extended trade. If the after-hours gains carry over into Tuesday trade, the stock will be on the cusp of a breakout.
Micron stock is tracing a cup with handle that shows a 89.15 buy point. Shares fell 1.2% Monday.
Dow Jones Stocks To Buy And Watch: Home Depot
Home Depot stock is trying to find support at its 50-day moving average following Friday’s 2.9% slide. Despite recent losses, Home Depot remains the top Dow Jones performer in 2021, up 46.5% year-to-date through Monday’s close. Shares reversed from early losses to rise 0.4% Monday.
Four Top Growth Stocks To Watch In The Current Stock Market Rally
Stocks To Buy And Watch: Arista, Ryan, AMD, Nvidia
Arista Networks is trying to break out past a flat base’s 134.24 buy point, closing just above the entry after Monday’s 0.5% loss. ANET stock shows a strong 97 out of a perfect 99 IBD Composite Rating, according to the IBD Stock Checkup.
Positively, the stock’s RS line is just off new highs Monday, indicating significant stock market outperformance during the recent weakness in the major stock indexes.
IPO Leader Ryan Specialty is trying to find support at its 50-day moving average — according to IBD MarketSmith chart analysis — a key crossroads. Strong volume so far in its two-day bounce placed shares in a new buy area, but shares closed down 3.3% Monday. The stock could also form a new base. On the downside, if the stock turns and breaches the 50-day support level, it would trigger a defensive sell signal and would likely signal a longer correction.
Chip giants Advanced Micro Devices and Nvidia closed below their respective 50-day moving averages following Monday’s losses. Strong rebounds from this support level would place the stock market leaders in new buy areas.
AMD stock moved down 1.4% Monday, adding to Friday’s 0.6% decline. Meanwhile, graphics-chip maker Nvidia was down 0.3%, after Friday’s 2.1% loss.
Join IBD experts as they analyze leading stocks in the current stock market rally on IBD Live
EV Stocks: Li Auto, Xpeng, Lucid Motors, Rivian
Li Auto continues to work on a new base following the 7%-8% loss-cutting sell rule below a cup-with-handle base’s 34.93 buy point. Shares are below their 50-day line after finding support around the long-term 200-day moving average. Shares moved down 5.6% Monday.
Xpeng Motors triggered the round-trip sell signal from a 48.08 buy point during early December’s sharp sell-off. XPEV shares fell further below their 50-day line during Monday’s 5.6% sell-off and are right at their 200-day line. Wait for the stock to form a new base, which would offer a new entry.
Lucid Motors shares extended a losing streak to four sessions Monday, falling more than 5%. LCID stock remains extended past a 28.49 buy point in a cup-with-handle base, but huge gains have dwindled. Shares are trying to find support at their 50-day line, but are now below that level.
Initial public offering Rivian dived nearly 8% Monday, adding to Friday’s 10.3% plunge. RIVN shares closed Monday about 50% off their post-IPO highs, hitting a new low Monday. Continue to wait for an IPO base to form before considering a purchase. Recent sharp losses are a significant setback in the stock’s basing process.
Tesla Stock
Tesla stock declined 3.5% Monday, closing at its lowest level since Oct. 21. Last week, the stock broke down through its key 50-day support level.
Shares traded as high as 1,243.49 on Nov. 4, but the stock ended Monday about 28% off its 52-week high.
TSLA shares remain sharply above a 764.55 buy point in a cup with handle. The EV giant is working on a new base, but with the stock at recent lows, the current formation needs more time develop before a correct buy point emerges.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple stock extended a losing streak to three sessions Monday, falling 0.8%. The stock remained about 11% above a 153.27 buy point out of a cup-with-handle base, according to IBD MarketSmith chart analysis.
Software giant Microsoft moved down 1.2% Monday, extending a losing streak to three sessions. Shares are battling for support around their 50-day line but fell further below that key level Monday.
On Oct. 18, Microsoft stock broke out past a flat base’s 305.94 buy point and remains about 5% past the entry amid recent losses.
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: Is The Stock Market Rally Over? What To Do Now appeared first on Investor’s Business Daily.
