Futures: What To Do After Today’s Market Plunge
Dow Jones futures lost more than 100 points after today’s stock market plunge, as the major stock indexes sold off with heavy losses to hit new correction lows. Up next, President Joe Biden’s speech on inflation is scheduled for Tuesday.
Dow Jones Futures Today: Treasury Yields, Biden Speech
After Monday’s close, Dow Jones futures fell 0.35% vs. fair value, and S&P 500 futures moved down 0.4%. Nasdaq futures lost 0.3% vs. fair value. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
The 10-year Treasury yield traded as high as 3.13% Monday, before closing around 3.08%. The 10-year Treasury yield is at its highest level since November 2018. Meanwhile, U.S. oil prices slid nearly 7%, with Texas Intermediate crude trading just above $102 a barrel.
President Biden will give a speech Tuesday, highlighting his attempts to fight surging inflation. On Wednesday, April’s consumer price index will be released. Per Econoday, consumer prices are expected to rise 0.2% on the month in April versus March’s 1.2% increase which was the largest monthly advance in 42 years.
According to Bloomberg, the President plans to detail his legislative efforts ahead of November’s midterm elections. Meanwhile, President Biden’s approval rating is back near February’s low point.
Stock Market Today
On Monday, the Dow Jones Industrial Average sold off 2%, while the S&P 500 moved down 3.2%. The tech-heavy Nasdaq composite plunged 4.3%. Among exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) tumbled 3.9%, and the SPDR S&P 500 ETF (SPY) moved down 3.2% Monday.
What To Do After Today’s Stock Market Plunge
On Monday, the Dow Jones industrials, Nasdaq and S&P 500 hit new correction lows, as the stock market plunged. With the market at new correction lows, all rally attempts are finished, which means investors should be on the lookout for an up day to signify the start of a new rally attempt.
Amid the deepening stock market correction, investors should be mostly — if not entirely — on the sidelines. New purchases are off limits. Also, keeping a watchlist of stocks holding up well in a down market is a good way to be prepared for the next stock market uptrend.
Keep in mind that leading stocks of the past may not be the leaders of the future. To help pinpoint stock leaders that emerge in a new market uptrend, use the relative strength line to see which stocks are outperforming the general market.
During a stock market correction, investors should identify companies whose stock prices are fighting the stock market downtrend. A strong RS line will be pointing sharply higher, either during the basing period or soon after a breakout.
Monday’s The Big Picture column commented, “The Nasdaq’s 4.3% loss Monday cemented a three-day losing streak of more than 10%. That’s the largest three-day decline since March 2020 (during the pandemic bear market). Its three-day, 1,341-point loss is the largest on record, according to Dow Jones Market Data.”
If you’re new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one key to the investment guidelines. IBD offers a broad range of growth stock lists, such as Leaderboard and SwingTrader.
Dow Jones Stocks To Watch: Chevron, Merck
Dow Jones leader and energy giant Chevron continues to build a flat base that has a 174.86 buy point, according to IBD MarketSmith chart analysis. CVX shares traded down 6.7% Monday, placing them below their 50-day line.
Drug leader Merck is below a cup with handle’s 89.58 buy point following a brief breakout attempt last week. Shares dipped 0.85% Monday, ending about 2% below the latest entry.
Positively, the stock’s relative strength line is at new highs, indicating big stock market outperformance during the current stock market correction.
Stocks To Watch: Cheniere, Exxon
IBD Leaderboard stock Cheniere Energy is one of the top stocks to watch despite losing 8.6% Monday. Shares are etching a flat base that shows a 149.52 buy point, according to IBD MarketSmith chart analysis.
Energy giant Exxon Mobil broke out past a cup with handle’s 89.90 buy point last week. But shares gave up the entry and are about 6% below the buy point following Monday’s 7.9% dive. The faltering breakout illustrates the danger of owning any stocks in the current market environment.
Tesla stock skidded more than 9% Monday, extending a losing streak to three sessions and closing at its lowest level since March 14. Shares are sharply below their 50- and 200-day moving averages.
The stock traded as high as 1,243.49 on Nov. 4 and is about 37% away from that all-time high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares sold off 3.3% Monday. The stock is falling further below its long-term 200-day line.
Software leader Microsoft dropped 3.7% Monday, hitting its lowest level since June 2021. Shares are sharply below their 50- and 200-day lines. The stock closed around 24% off its 52-week high.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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