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Dow Jones Futures: One Stock Market Correction, 3 Stock Market Rally Attempts

Dow Jones futures rose Thursday night, along with S&P 500 futures and Nasdaq futures. But that’s after the Dow Jones plunged 2.8% in Thursday’s stock market, the S&P 500 index dropped 2.5% and the Nasdaq composite fell 3%. New warnings from Apple (AAPL) and Delta Air Lines (DAL) and a stunning drop in a key manufacturing gauge triggered the selling. Apple stock tumbled 10% and Delta stock dived 9%, while iPhone suppliers and other airline stocks sold off. The major indexes are all some distance from their late-December lows, so the 2019 stock market rally attempt is still on. But for now it’s still a stock market correction, which has been marked by short-lived rallies and longer, sharper legs down.




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Dow Jones Futures Today

Dow Jones futures were 0.4% above fair value. S&P 500 futures climbed 0.4%. Nasdaq 100 futures rose 0.6%. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session. However, Dow Jones futures did signal the sharp Apple-led sell-off Thursday.

Fed Chairman Jerome Powell speaks Friday morning, following the December employment report.

Stock Market Correction: Short Market Rally Attempts

Stock market corrections and bear markets often have big swings, and that’s certainly been true in the latest downturn.

Aside from a three-day uptrend in mid-October, the Nasdaq has had three stock market rally attempts.

Stock Market Rally Attempt No. 1: In late October to early November, the Nasdaq trended higher over seven sessions, capped by a follow-through day on Nov. 6, confirming the new market rally. Confirmed market rallies don’t always work, and when they don’t it’s usually soon clearly evident. The Nasdaq immediately turned south, undercutting its October lows and ending the new rally.

Stock Market Rally Attempt No. 2: After bottoming on Nov. 20, the Nasdaq advanced over eight sessions, triggering another follow-through day on Dec. 3. Once again, the major averages sold off right away, with a punishing December sell-off into a bear market for the Nasdaq and S&P 500 index. Those two indexes and the Dow Jones all hit their lowest levels in more than a year.

Stock Market Rally Attempt No. 3: After the meltdown into Christmas Eve, the Nasdaq composite shot up 5.8% on Dec. 26, with the Dow Jones and S&P 500 index up 5%. The Nasdaq extended its win streak to five sessions. Then came Thursday’s sharp stock market sell-off, led by Apple stock, Delta stock and many others. Apple is a member of the Dow Jones, S&P 500 index and Nasdaq composite.

If this is a near-term peak, it would be a shorter rally than the prior two rally attempts, but not out of character either. But the simple fact is that the stock market is searching for direction. Until the market confirms a clear, positive direction, investors should stay on the sidelines. When there is a confirmed stock market rally — which could happen any day — be ready to act, but don’t act rashly.

Stock Market Catalysts Friday

Friday’s jobs report and comments from Fed Chairman Powell could be catalysts for a reinvigorated stock market rally attempt or a move toward late-December stock market correction lows. Bulls would like to see strong job growth as a sign of a healthy economy, followed by Fed Chairman Powell taking a more dovish tone on the economy, stock market and Fed policy. But the opposite could happen, or some muddled mix.

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