Dow Jones Futures Fall Sharply; Apple Stock, Boeing Stock, Visa Stock, Tesla Stock Analysis

Dow Jones futures fell sharply Sunday night, along with S&P 500 futures and Nasdaq futures, suggesting the major averages will move toward recent stock market correction lows on Monday. Last week, the Dow Jones, S&P 500 index and Nasdaq composite all lost at least 4.5%, putting the stock market rally under severe pressure. The relative strength line helps identify stock market leaders and laggards. It’s a useful investing t watch lists. Tesla stock has an RS line hitting highs as it tries to break out. But don’t buy just on the RS line, as Apple stock, Boeing stock and Visa stock have shown.

Apple (AAPL), Boeing (BA) and Visa (V) are all Dow Jones stocks.

Dow Jones Futures Today

Dow Jones futures fell 0.7% vs. fair value. S&P 500 futures declined 0.7%. Nasdaq 100 futures lost 0.7%.

Dow futures, Tesla stock and other overnight action don’t necessarily predict actual trading in the next regular session. Still, futures suggest that the Dow Jones and S&P 500 index are moving close to their October stock market correction lows, while the Nasdaq is approaching its November nadir.

Last week, the major averages started off with solid gains Monday. But then the stock market suffered wild, painful losses, with the Dow Jones losing 4.5% for the week and the Nasdaq 4.9%. The S&P 500 index skidded 4.6%, still above Oct. 29 intraday low but ending the week at a 7-month closing low.

U.S.-China trade talks hopes waned on news that Huawei CFO Meng Wanzhou was arrested on Dec. 1 by Canada at America’s request. China summoned the U.S. ambassador to Beijing on Sunday to protest the action and demand the release of the telecom gear giant’s exec. The Trump administration says the Huawei arrest is a criminal issue and separate from U.S.-China trade issues.

Weak economic data from China and Japan as well as Brexit chaos also aren’t helping to calm investors’ nerves.

It’s not a good time to be making new buys. Be quick to take profits and cut losses short. But stay engaged. Read the Stock Market Today columns and The Big Picture to stay in sync with the market. Build your watch list for when stock market conditions improve.

The Relative Strength Line

The relative strength line, the blue line in IBD and Marketsmith charts, tracks a stock’s performance vs. the S&P 500 index. It’s an easy way to spot which stocks are true leaders or laggards, in good markets or bad. An RS line hitting a new high before or with a stock breaking out is especially bullish.

In the current weak stock market, use the RS line as a way to spot which top stocks are holding up reasonably well. But don’t treat stocks with a strong RS line as a buying opportunity by itself. Apple stock, Boeing stock and Visa stock all showed bullish RS lines at various points in the past two months, only for share prices to fall.

Apple Stock

Apple stock was among the best-looking tech stocks in October. While the major averages were selling off sharply in October, Apple stock pulled back modestly from its Oct. 3 peak, holding near its 50-day moving average. The RS line hit several new highs during the month. On Nov. 1, Apple stock reclaimed its 50-day line in strong volume, with its RS line just belo highs, as the stock market was in the middle of a short-lived rally.

Savvy investors likely had Apple on the watch lists, but it wasn’t a buying opportunity. After the Nov. 1 close, Apple gave a weak holiday outlook, with a slew of Apple iPhone suppliers warning of weak demand in the next few weeks. Since Nov. 1, Apple stock has tumbled 24% to a seven-month low. Apple’s RS line also is at a seven-month low.


IBD’S TAKE: Don’t be tempted because Apple looks like a bargain. Several times in recent weeks Apple stock has looked like it might be bottoming out, along to resume selling.


Apple stock, as a member of the Dow Jones, S&P 500 index and Nasdaq composite, has been a big drag on the major averages over the past several weeks.

Boeing Stock

Like Apple, Boeing stock peaked on Oct. 3, a few days after the broader market. Shares pulled back modestly to the 50-day line and not-too-distant 200-day, but the RS line stayed at or near record levels. But in November, Boeing stock went on an 11-day losing streak. Shares then rebounded, reclaiming their 50-day and 200-day on Monday, Nov. 3. But the RS line rebounded more modestly. Boeing stock closed last week with three straight losses, falling faster than the S&P 500 index once again.

Visa Stock

Visa stock pulled back to its 200-day moving average a few times in the stock market correction, but the RS line didn’t give up much ground and hit new highs a few times. By the end of November, Visa stock moved back above its 50-day average. On Dec. 3, shares popped, briefly peeking past a 145.56 double-bottom base entry but closing just below that point. Visa stock then retreated again.

The RS line remains near highs. The stock is still worth keeping on your radar.

Tesla Stock

Tesla stock rose as high as 379.49 on Friday, above a 366.85 cup-with-handle buy point for much of the session before reversing to close down 1.4% to 357.96. The RS line, which has soared over the past two months, hit a fresh 14-month high because the S&P 500 index fell much more than Tesla stock did. That RS line is bullish for Tesla, but it’s hard for leading stocks to power ahead in a weak market.

Tesla stock rose late Friday on word that CEO Elon Musk signaled his “possible” interest in taking over a General Motors (GM) plant if GM does go ahead with shutting several factories. That’s from a “60 Minutes” interview that aired Sunday night. Tesla’s Fremont, Calif., plant was originally jointly owned by GM and Toyota Motor (TM) until it closed in 2010.

In the wake of Tesla’s SEC settlement that forced Musk to step down as chairman, he told “60 Minutes” that “I want to be clear. I do not respect the SEC.”

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Understand The Market: The Big Picture

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