Dow Jones Futures: More Leaders Break 50-Day Line In Stock Market Correction

Dow Jones futures fell modestly Sunday evening, along with S&P 500 futures and Nasdaq futures. It’s still a stock market correction. The major averages closed last week little changed — the Dow Jones rose, the S&P 500 index was virtually flat and the Nasdaq composite edged lower —  after promising gains early in the week. Worse, more growth stocks fell below key support areas. Apple (AAPL), Boeing (BA), Advanced Micro Devices (AMD), Activision Blizzard (ATVI), Match Group (MTCH), Ross Stores (ROST) and TJX Cos. (TJX) all fell below their 50-day lines by Friday’s close.


The 50-day moving average is a key technical level. Top stocks often find support here, as mutual funds and other big investors step in to buy shares. While it’s OK for a leading stock to dip below the 50-day line for a short span, you want to see it rebound soon. But in a stock market correction, most tickers will struggle, with growth names often falling further.

Stock Market Correction Is A Time To Watch

The lesson is clear. It is very hard to make money in a stock market correction, even during a rally attempt. During a stock market correction, build your watchlists. Wait until a follow-through day confirms a rally attempt. Watch for leading stocks, some of which should be on your watchlists, break out into buy zones.

IBD’S TAKE:To stay in sync with the market, pay attention to the major averages and leading stocks. Read IBD’s Stock Market Today columns throughout the market day, and the end-of-day The Big Picture (take a free trial) for timely market analysis and highlighted growth stocks.

Boeing stock and TJX stock had avoided closing below their 50-day lines until Friday. Boeing, TJX, Ross stock and Apple stock, which nudged higher Friday, aren’t far below that are. But AMD stock had held near its 50-day for several sessions, before crashing 11% Friday. Match stock skidded 6.4% Friday. Activision stock tumbled through its 50-day and 200-day lines on Thursday, then kept falling Friday.

Mind you, these are growth stocks that had been generally holding up better than most of their peers. Their relative strength lines, which track a stock’s performance vs. the S&P 500 index, are near record highs, aside from Activision.

Most 95+ Composite Rating Stocks Below 50-Day Line

All of those stocks, except for Activision, have IBD Composite Ratings of 95 or better. Apple stock and AMD stock boast best-possible 99 Composite Ratings. The Composite Rating combines several IBD proprietary ratings into a single score. All-time stock winners often have Composite Ratings of at least 95 near the start of their big runs.

Looking ahead to the coming week, there are 28 stocks with 95-plus Composite Ratings reporting earnings. They include Boeing stock and AMD stock, along with Amazon (AMZN), Centene (CNC), Visa (V), Vertex Pharmaceuticals (VRTX), WWE (WWE) and many more. But just four are currently above their 50-day moving averages: iQvia (IQV), O’Reilly Automotive (ORLY), Aon (AOC) and Alexion Pharmaceuticals (ALXN).

Dow Jones Futures Today

Dow Jones futures fell 0.3% vs. fair value. S&P 500 futures slid 0.3%. Nasdaq 100 futures fell 0.15%. Remember that Dow futures, Apple stock and other overnight action don’t necessarily translate in actual trading in the next regular session.

That’s been especially true during the stock market correction, with the major averages whipsawing during regular trading and sometimes overnight.


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Originally posted 2019-09-19 23:23:18.


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