The Dow Jones drifted higher into the close on Monday and closed in the green after opening lower. The tech-heavy Nasdaq led the upside while concerns of a global slowdown amid the Covid-19 outbreak in China sent both interest rates and oil stocks lower.
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Dow Jones Reverses Early Losses
On Monday, the Dow Jones industrials traded up 0.7% and closed near session highs. The Nasdaq rose 1.3% while the S&P 500 gained 0.6%. The small-cap Russell 2000 was also up 0.7%. According to early data, volume was higher on the Nasdaq and on the NYSE vs. the close on Friday. This is an important signal that might indicate institutional accumulation after the indexes closed higher.
But, the major indexes remain below resistance at their 200-day, 50-day and 21-day moving averages following multiple down days last week.
Friday’s The Big Picture Column commented, “After getting turned away at its 200-day moving average Thursday, the S&P 500 plunged 2.8%. The index is still holding above the March 16 follow-through day’s low, but the weak action was enough to change IBD’s market outlook to a market correction.”
IBD downgraded its official market outlook to market in correction from uptrend under pressure. When indexes show persistent weakness, the market falls into a correction. At this time, it’s best to avoid buying stocks and instead focus on raising cash.
But keeping a watchlist of stocks holding up amid the down market will help you be prepared for the next stock market uptrend.
The Innovator IBD 50 ETF (FFTY), a benchmark for growth stocks, traded down 1% as growth stocks continue to get hammered.
China Covid Outbreak Pushes Oil, Yields Lower
Due to increasing lockdowns in Shanghai and other parts of China, the price of oil fell nearly 3% on Monday. The commodity traded below $100 a barrel for the lowest finish in two weeks. A spike in coronavirus cases is weighing on prospects for future energy demand. Meanwhile, the yield on the benchmark 10-year Treasury note slipped eight basis points to 2.82%.
A handful of leading oil and gas stocks pulled back, including Halliburton (HAL), which lost over 6% in heavy volume and closed below its 50-day line.
Leaderboard stock Cheniere Energy (LNG) fell over 3%. The position was trimmed to a quarter after shares of the natural gas stock already reached the 20% profit zone from a 113.50 flat-base breakout.
IBD 50 stocks Viper Energy Partners (VNOM) and Occidental Petroleum (OXY) fell 3.7% and 3%, respectively.
Follow Rachel Fox on Twitter at @IBD_RFox for more Dow Jones and stock market commentary.
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