Dow Jones futures were lower ahead of Tuesday’s open. A new stock market rally attempt started Monday, as the Dow Jones Industrial Average surged 765 points.
Stock Market Today
On Monday, the Dow Jones Industrial Average surged 2.7%, leading the stock market higher. The S&P 500 climbed 2.6% and the tech-heavy Nasdaq composite rallied 2.3%. And the small-cap Russell 2000 advanced 2.65%.
General Motors (GM) reported its third-quarter auto sales Monday, outpacing expectations on strong consumer demand and better vehicle availability. GM shares rallied 2.4% Monday, but are still more than 50% off their 52-week high.
In the ongoing stock market weakness, Murphy USA (MUSA), Neurocrine Biosciences (NBIX), Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) — as well as Dow Jones stock UnitedHealth (UNH) — are among the top stocks to watch. Keep in mind that the ongoing stock market correction is a time for investors to sit on the sidelines and construct watchlists.
Dow Jones Futures Today: Treasury Yields, Oil Prices
Ahead of Tuesday’s opening bell, Dow Jones futures fell 0.1% below fair value, while S&P 500 futures lost less than 0.1%. Nasdaq 100 futures moved up less than 0.1% vs. fair value. Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
The 10-year Treasury yield fell significantly to 3.65% Monday. Last week, the 10-year Treasury yield briefly topped 4%, which hadn’t been done for more than decade.
Meanwhile, U.S. oil prices jumped more than 4% Tuesday, as West Texas Intermediate futures traded above $83 a barrel. Last week, they fell to their lowest level of the year. On Wednesday, OPEC+ will meet to consider a production cut in order to help prop up falling oil prices.
What To Do In The New Stock Market Rally Attempt
Despite Monday’s strong gains, IBD’s market trend remains in a “market in correction,” with the heavy selling in recent weeks. That means that investors should remain in cash.
However, Monday’s gains kicked off a new stock market rally attempt, which is your day 1. The action on Day 2 and Day 3 is irrelevant as long as the index doesn’t undercut its latest low. If that low is undercut, the rally try is done and the market needs to try again.
Next, investors should be waiting for a follow-through day, which occur on day 4 or later. Starting Thursday (day 4), you are looking for the Nasdaq or S&P 500 to rise sharply in higher volume than the previous session. That’s a follow-through day. It gives investors the green light to start buying leading stocks breaking out past correct buy points. It should put your portfolio and mindset in sync with the stock market action by gradually committing capital to leading stocks.
Now, ahead of a potential follow-through day, is the perfect time to build a strong watchlist of top-performing stocks. Many long-term leaders tend to break out at or near the follow-through, the market bottoming signal. Missing that early opportunity can be a costly mistake.
Friday’s The Big Picture column commented, “The market averages have now fallen for a third consecutive quarter for the first time since 2009. The crumb of comfort for investors is the fact IBD research finds bear markets form over three or four waves of intense selling. This looks to be the third leg.”
Dow Jones Stocks To Watch: UnitedHealth
Dow Jones stock UnitedHealth advanced 2.1% Monday, again finding support around the long-term 200-day line. Shares are building a flat base that has a 553.23 buy point, according to IBD MarketSmith chart analysis. Shares are about 7% from their latest buy point and face a test of resistance at the 50-day line.
UNH stock shows a strong 95 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. Investors can use the IBD Composite Rating to easily gauge the quality of a stock’s fundamental and technical metrics.
Top Stocks To Watch: Murphy USA, Neurocrine, Vertex, WWE
Gas station and mini-market leader Murphy USA is building a flat base with a 303.19 buy point. Shares rallied 3.1% Monday and are approaching potential resistance at their 50-day line. A decisive retake of this level would be bullish for the stock’s base-building prospects.
Wednesday’s IBD 50 Stocks To Watch pick, Neurocrine Biosciences, is building a flat base that has a 109.36 buy point, according to IBD MarketSmith chart analysis. Shares are just 2% away from buy point after Monday’s 0.5% gain. The RS line hit a new high Friday, a bullish signal.
IBD Leaderboard stock Vertex Pharmaceuticals decisively regained its 50-day line last week. Shares are building a flat base with a 306.05 buy point and an early entry at 296.24. The stock topped the early entry during Monday’s nearly 3% gain. While the weak market status may keep you on the sidelines, the stock’s resilience makes it a top idea to watch. Its RS line is at new highs, a potential sign of big stock market outperformance.
World Wrestling Entertainment continues to build a flat base that has a 75.33 entry. The stock is back above its 50-day line and just 4% away from the buy point. The RS line continues to notch new highs.
Tesla stock dived 8.6% Monday, closing at its lowest level since July 18, after the company missed estimates on vehicle deliveries over the weekend.
The electric-vehicle giant delivered 343,830 EVs in the third quarter, up 42% vs. a year earlier and topping Q1’s record 310,048. It was also 35% higher than Q2’s 254,695. The Shanghai plant faced a lengthy shutdown and slow recovery in Q2 due to Covid lockdowns.
But analysts had expected Tesla deliveries of 350,000-370,000, with the consensus slightly above 360,000. Tesla cited an increased number of vehicles in transit. But that may reflect weaker Chinese demand, spurring an earlier-than-usual export push from Shanghai.
Shares are more than 40% off their 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares climbed 3.1% Monday, snapping a three-day losing streak. Still, shares are more than 20% off their 52-week high and below their 50- and 200-day lines.
Microsoft rose 3.3% Monday, rebounding from Friday’s 52-week low price. The software giant remains more than 30% 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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