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Dow Jones rises 765 points to start another stock market rally attempt, what to do now

Dow Jones futures were lower before Tuesday’s open. Another attempt at a stock market rally began on Monday, when the Dow Jones Industrial Average rose 765 points.


The stock market today

On Monday, the Dow Jones Industrial Average rose 2.7 percent, leading stock markets higher. The S&P 500 climbed 2.6% and the tech-heavy Nasdaq composite gained 2.3%. And the small-cap Russell 2000 advanced 2.65%.

Among exchange-traded funds, Nasdaq 100 tracker Invesco QQQ Trust (QQQ) rose 2.35%, and the SPDR S&P 500 (SPY) rose 2.6%.

Key earnings reports this week come from Acuity Brands (DO), ConAgra brands (CAG), Constellation Brands (STZ) and McCormick (MKC).

General Motors (GM) reported its third-quarter auto sales Monday, beating expectations on strong consumer demand and better vehicle availability. GM shares rose 2.4% on Monday, but are still more than 50% off their 52-week high.

EV giant Tesla ( TSLA ) plunged 8.6% after missing estimates for vehicle deliveries. Among Dow Jones stocks, apple ( AAPL ) traded up 3.1%, while Microsoft (MSFT) climbed 3.4% in today’s stock market.

In the ongoing weakness of the stock market, Murphy USA (MUSA), Neurocrine Life Sciences (NBIX), Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) – as well as the Dow Jones stock UnitedHealth (UNH) — is among the best stocks to watch. Remember that the ongoing stock market correction is a time for investors to sit on the sidelines and construct watch lists.

Vertex is a recent addition to the IBD Leaderboard. Murphy USA was featured in this week’s Stock Near A Buy Zone column, along with three other top stock ideas.

Dow Jones Futures Today: Treasury Yields, Oil Prices

Ahead of Tuesday’s opening bell, Dow Jones futures fell 0.1% below fair value, while S&P 500 futures lost less than 0.1%. Nasdaq 100 futures rose less than 0.1% relative to fair value. Keep in mind that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular session.

The 10-year Treasury yield fell significantly to 3.65% on Monday. Last week, the 10-year government yield briefly topped 4%, which had not been done for more than ten years.

Meanwhile, US oil prices rose more than 4% on Tuesday, as West Texas Intermediate futures traded above $83 a barrel. Last week they fell to the lowest level of the year. On Wednesday, OPEC+ will meet to consider a production cut to support falling oil prices.

What you should do in the new stock market rally attempt

Despite Monday’s strong gains, IBD’s market trend remains a “market in correction,” with the big selloff in recent weeks. That means investors should stay in cash.

However, Monday’s rally set in motion another attempt at a stock market rally, which is your Day 1. The action on Day 2 and Day 3 is irrelevant as long as the index does not undercut its most recent low. If the low is breached, the rally attempt has been made and the market must try again.

After that, investors should wait for a follow-up day, which occurs on day 4 or later. From Thursday (day 4), look for the Nasdaq or S&P 500 to rise sharply in higher volume than the previous session. It is a follow-up day. It gives investors the green light to start buying leading stocks that break out previous correct buy points. It should put your portfolio and mindset in sync with the stock market by gradually committing capital to leading stocks.

Now, ahead of a potential follow-through day, is the perfect time to build a strong watchlist of top-performing stocks. Many long-term leaders tend to break out at or near the follow-through, the market’s bottom signal. Missing that early opportunity can be a costly mistake.

Friday’s The Big Picture column commented: “The market averages have now fallen for the third straight quarter for the first time since 2009. The comfort for investors is the fact that IBD research finds that bear markets form over three or four waves of intense selling. This looks to be the third stage.”

Five Dow Jones stocks to watch now

Dow Jones stocks to watch: UnitedHealth

Dow Jones stock UnitedHealth rose 2.1% on Monday, finding support again around the long-term 200-day line. Shares are building a flat base that has a buy point at 553.23, according to IBD MarketSmith chart analysis. Shares are about 7% off their last buy point and are meeting a resistance test at the 50-day line.

UNH stock scores a strong 95 out of a perfect 99 IBD Composite Rating, according to IBD Stock Checkup. Investors can use the IBD Composite Rating to easily measure the quality of a stock’s fundamental and technical metrics.

4 top growth stocks to watch right nowrent stock market correction

Top stocks to watch: Murphy USA, Neurocrine, Vertex, WWE

Gas station and mini market leader Murphy USA is building a flat base with a buy point at 303.19. Shares rose 3.1% on Monday and are nearing potential resistance at their 50-day line. A decisive retracement of this level would be bullish for the stock’s base-building prospects.

Wednesday’s IBD 50 Stocks To Watch pick, Neurocrine Biosciences, is building a flat base that has a buy point at 109.36, according to IBD MarketSmith chart analysis. The shares are just 2% away from the buy point after Monday’s 0.5% gain. The RS line hit a new high Friday, a bullish signal.

IBD Leaderboard stock Vertex Pharmaceuticals decisively regained its 50-day line last week. Shares are building a flat base with a buy point at 306.05 and an early entry at 296.24. The stock topped the early entry during Monday’s nearly 3% gain. While the weak market status may keep you on the sidelines, the stock’s resilience makes it a good idea to watch. Its RS line is at new highs, a potential sign of big stock market results.

World Wrestling Entertainment continues to build a flat base that has an entry of 75.33. The stock is back above its 50-day line and just 4% away from the buy point. The RS line continues to reach new heights.

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

Tesla shares

Tesla shares plunged 8.6% on Monday, closing at their lowest level since July 18, after the company missed estimates for weekend vehicle deliveries.

The electric car giant delivered 343,830 electric cars in the third quarter, up 42% compared to a year earlier and topping Q1’s record of 310,048. It was also 35% higher than Q2’s 254,695. The Shanghai factory faced a prolonged shutdown and slow recovery in Q2 due to Covid shutdowns.

But analysts had expected Tesla deliveries of 350,000-370,000, with the consensus slightly above 360,000. Tesla cited an increased number of vehicles in transit. But it could reflect weaker Chinese demand, spurring an earlier-than-usual export push from Shanghai.

Shares are more than 40% off their 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among the Dow Jones stocks, Apple shares rose 3.1% on Monday, snapping a three-day losing streak. Still, shares are more than 20% off their 52-week highs and below the 50- and 200-day lines.

Microsoft rose 3.3% on Monday, rebounding from Friday’s 52-week low. The software giant is still more than 30% off its 52-week high.

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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