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From Apple Stock To Tesla, 5 Reasons To Be Out Of The Stock Market And In Cash Investor’s Business Daily

Dow Jones futures rose modestly late Tuesday, along with S&P 500 futures and Nasdaq futures. On Tuesday, the Nasdaq composite plunged below October stock market correction lows Tuesday, while the Dow Jones and S&P 500 index also suffered sharp losses again. Apple (AAPL) remained a big stock market drag, but selling was broad-based. All 30 Dow Jones components lost ground. So did most top growth stocks, while several recent breakouts have faltered this week, including Ciena (CIEN) and Tesla (TSLA).




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Dow Jones Futures Today

Dow Jones futures were 0.2% above fair value. S&P 500 futures rose 0.2%. 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.

Don’t try to guess where the stock market is headed. Follow the market via the action of the major market averages and leading stocks. (Hint: They are not acting well.) Read IBD’s Stock Market Today columns and the end-of-day The Big Picture to stay in sync with the market. This is a very good day to read today’s Big Picture.

Here are five reasons to get out of the stock market and into cash:

Stock Market Averages Reeling

In Tuesday’s stock market, the Nasdaq composite gapped below its Oct. 29 stock market correction low, finishing with a 1.7% loss. The Dow Jones fell 2.2% and the S&P 500 index 1.8%. While those two major indexes didn’t undercut their October lows, they’ve been weak ever since the Nov. 7 follow-through day.

Apple Stock Keeps Falling

Apple fell 4.8% to 176.98, now down 20% since its Nov. 1 earnings report and the cautious holiday guidance. Therelative strength line, which tracks a stock’s performance vs. the S&P 500 index, has erased its late summer gains and is back below its August 2012 peak. That means you would have been better off if you had bought and held the  S&P 500 since then over Apple stock.

Still the world’s most-valuable company, the Dow Jones, S&P 500 index and Nasdaq composite tech titan has a big influence on the major averages. Along with Apple stock, iPhone suppliers also have been selling off, expanding the Apple stock market effect.

Stock Market Sell-Off Broad-Based

But it’s not just Apple stock or even the broader iPhone ecosystem. Out of the 197 industries that IBD tracks, only seven advanced Tuesday. Retailers plunged on Target (TGT), Kohl’s (KSS), Ross Stores (ROST), TJX (TJX) and Lowe’s (LOW), adding to the sector’s recent rout. Energy stocks tumbled as crude futures fell nearly 7% to a 13-month low. Financials fell on lower Treasury yields and general stock market and economic fears.

As mentioned above, all 30 Dow Jones stocks fell Tuesday, including recent standouts such as Verizon (VZ), McDonald’s (MCD) and Pfizer (PFE).

Top Stocks Hard Hit

Forty six members of the IBD 50 stock list fell Tuesday. Growth stocks are not in favor right now. The highest-rated industry group to eke out a gain was the medical software group, rated a mediocre 78. Veeva Systems (VEEV), a top medical software firm, was one of the four IBD 50 winners, but only after undercutting its 200-day line intraday.

In a stock market correction or other downtrend, most stocks will fall. That includes growth stocks, whose high valuations make then vulnerable to much-deeper losses. Apple stock and the FANGs get a lot of attention, but chipmakers have been laggards for months, while software groups have come under fierce selling in recent days.

Breakouts Crumble

Tesla stock tried to break out on Monday, but closed below the buy point. Shares fell 1.7% on Tuesday, but finished near session highs. Meanwhile, Ciena stock tumbled 6% Tuesday, plunging below its entry point and its 50-day line. O’Reilly Auto Parts (ORLY) and Tractor Supply (TSCO) gapped down 5%, leaving behind recent buy points and their 50-day lines. Horizon Pharma (HZNP) lost 7.4%, driving below its buy zone.

Several other recent breakouts broke down well before this week.

Bottom line: The major stock market averages and leading stocks are reeling, and there are very few areas that are working. In times like this, cash is king.

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