Dow Jones Futures: Worst Part About Stock Market Rally? The Best Stocks

Dow Jones futures rose Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally is barely hanging on, with the S&P 500 index and Dow Jones ending Friday at multi-month closing lows. While tumbling Apple stock gets and deserves a lot of attention, the best stocks are the worst part of this stock market rally. Tesla stock, Johnson & Johnson stock, Ulta Beauty stock and Eli Lilly stock are recent breakouts that have faltered or crashed while Workday stock and Ciena stock haven’t made much headway.




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These stocks are all different. IBD Leaderboard stock Tesla (TSLA) is just below a still-valid buy point. Johnson & Johnson (JNJ) and Ulta Beauty (ULTA) crashed on bad news. Eli Lilly (LLY) has pulled back below key support. Workday (WDAY) and Ciena (CIEN), another IBD Leaderboard stock, are both modestly above buy points, but not offering big rewards for the elevated stock market risks.

Dow Jones Futures Today

Dow Jones futures were up 0.25% vs. fair value. S&P 500 futures rose 0.3%. Nasdaq 100 futures climbed 0.4%. Remember that Dow futures and other overnight action don’t necessarily translate in actual trading in the next regular session. That’s been especially true in recent months, as Dow Jones futures swing wildly, followed by even bigger volatile market moves during the day.

Keep an eye on hospitals and Medicaid-focused insurers in the wake of a federal judge’s ruling that ObamaCare is unconstitutional without its now-discarded individual mandate. The law continues unchanged for now. Many legal experts, including conservatives, believe the ruling will be reversed ultimately.

Stock Market Rally Update

The stock market rally is nearly dead. The Nasdaq composite has not undercut its Nov. 20 lows. But the major averages are trending lower in whipsaw fashion close to correction lows. Apple stock, a member of the Dow Jones, S&P 500 index and Nasdaq composite, is 29% below its all-time high. The retail sector, including many long-time leaders, have plunged. Health insurers have been no stock market insurance policy. Financials, transports, the list goes on.

If a number of top stocks were breaking out and many were successful, a choppy stock market rally would be OK. But this is not a good time for new buys.

Tesla Stock

On Thursday, Tesla stock closed above a 366.85 cup-with-handle buy point after topping that level intraday four times recently. But with the stock market reeling once again Friday, shares fell 2.9% to 365.71. Tesla stock certainly could rally back above the entry again, but how far will it go in the current environment? On the downside, shares could skid lower, on Tesla-specific news or a renewed stock market correction.

Johnson & Johnson Stock

The Dow Jones stock cleared a saucer-with-handle pattern on Nov. 7, which also marked a short-term market peak. Johnson & Johnson stock did pull back to its 50-day line briefly, but generally held in a buy zone. But it wasn’t really going anywhere. On Friday, Johnson & Johnson stock crashed 10% on a report that J&J knew asbestos was in its baby powder for nearly 50 years.

This is one of the big problems about buying or holding stocks in a bad market. A stock can’t advance far, then suddenly bad news turns slim gains into significant losses.

Ulta Beauty Stock

Ulta Beauty stock broke out powerfully on Nov. 8 and soon rose 11% from the buy point. Shares then rolled over and pulled back to the buy point. A double-digit roundtrip is a strong sell signal, though Ulta Beauty stock closed in buy range until its Dec. 7 earnings report. Shares crashed 13% the next day and have continued to fall slightly.

Eli Lilly Stock

Eli Lilly stock broke out in average volume on Nov. 29, spent a few days in buy range, then pulled back. Shares closed Friday just below their 50-day line. Eli Lilly stock is about 4% below the pivot, so the buy point is still valid.

Workday Stock And Ciena Stock

Workday stock and Ciena stock are doing very well in this market. But what does that mean?

Workday stock busted out on Nov. 30 following strong earnings and has largely held in its buy zone since.

Ciena stock gapped up on Thursday following earnings, moving back past a buy point. It’s now slightly extended. After the original Nov. 2 breakout, shares soon pulled back below their 50-day and nearly triggered the 7%-8% automatic sell rule. They then bounced between the buy zone and the 50-day line until Thursday’s blowout Ciena earnings report. Holding Ciena stock through all that would have been hard.

Healthy Stock Market Rally Offers Healthy Choices

There’s nothing wrong with Ciena stock and Workday stock, other than the market. Perhaps Ciena and Workday stock will hold strong until conditions improve, triggering bigger gains. By the time the stock market is in a healthy advance, Ciena and Workday stock may be well extended. So there’s a fear of missing out.

Johnson & Johnson stock and Ulta Beauty stock will need an extended recovery. But Eli Lilly stock and especially Tesla stock could move back into range. Meanwhile, several quality stocks are just below buy points, such as PayPal (PYPL) and Splunk (SPLK). A large number of growth stocks like Microsoft (MSFT) could quickly set up again with a better stock market rally.

So if you’re in cash now but staying engaged and building watch lists, you can jump on the next healthy uptrend.

YOU ALSO MIGHT LIKE:

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