Dow Jones Futures: Stock Market Correction Lows Loom, But This Is The Scariest Part Of Today’s Sell-Off

Dow Jones futures fell modestly late Monday, along with S&P 500 futures and Nasdaq futures. The Nasdaq composite led another fierce sell-off Monday, tumbling toward the stock market correction bottom as Apple (AAPL), FANG stocks Facebook (FB), (AMZN), Netflix (NFLX) and Google parent Alphabet (GOOGL) bled red, along with huge losses for Nvidia (NVDA) and the entire software sector. The S&P 500 index and Dow Jones also were sharply lower in the stock market. But investor fear gauges didn’t move much, giving little indication of at least a short-term stock market bounce.


Dow Jones Futures Today

Dow Jones futures fell 0.25% vs. fair value. S&P 500 futures lost 0.2%. Nasdaq 100 futures were down about 0.2%, as Apple stock, Amazon stock and Nvidia stock extended losses slightly in extended trade. Remember that Dow futures and other overnight action don’t necessarily translate in actual trading in the next regular session.

Stock Market Rally Under Pressure

The Nasdaq composite fell 3% in Monday’s stock market trading. While not undercutting its stock market correction intraday low set Oct. 29, the tech-heavy index is at a new closing low. Meanwhile, Apple stock, Nvidia stock, Facebook stock and Amazon stock all undercut recent intraday lows. Netflix and Google parent Alphabet (GOOGL) set recent closing lows.

The Dow Jones retreated 1.6%, falling below its 200-day line and the S&P 500 1.7%. While techs were big losers, the sell-off was broad-based, with Boeing (BA) tumbling 4.5%.

Investor Fear Gauges Calm

The CBOE put/call ratio registered a tame reading of 0.94. The put/call ratio compares the total number of puts traded each day with the total number of calls Readings of 1.15 or more signify excessive fear and ofter occur at or near stock market bottoms.

Another psychological indicator, the CBOE Volatility Index, also was relatively calm, spiking 11% to 20.10. But that was well below recent peaks, with the VIX trading within the prior day’s range.  The Volatility Index estimates expected volatility based on S&P 500 index option prices. Commonly known by its ticker, the VIX highlights intense fear or complacency in the market. Low VIX readings are a sign that investors are especially bullish. Excessively bullish readings are often marked by at least short-term market tops.

The two readings suggest that investors are not panicking. That suggests it could take further losses, perhaps one or more of the major averages falling below their stock market correction lows.

Consider the psychology. When fear peaks and investors finally dump their shares in, who’s left to sell?

Remember that the put/call ratio, VIX and other psychological indicators are secondary gauges. They can be useful, but rely on the primary market indicators: the major market averages and leading stocks.


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Originally posted 2019-09-19 23:25:50.


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