Dow Jones Futures: Stock Market Sells Before Fed Meeting; Tesla Stock Breaks Main Support

Dow Jones futures were slightly higher after Monday’s stock market sell-off ahead of this week’s Fed meeting. Tesla shares broke through a key support level, while Apple fell sharply after hitting record highs. And stock leaders Advanced Micro Devices and Nvidia fell sharply.

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On Monday, the Dow Jones Industrial Average fell 0.9%. The S&P 500 also lost 0.9%, while the Nasdaq sold 1.4%. The small-cap Russell 2000 fell 1.4%.

Among the Dow Jones leaders, Apple (AAPL) fell 2.1% lower Monday after reaching all-time highs, while Microsoft (MSFT) fell 0.9% in today’s stock market. DIY store (HD) and Nike (BY) remain below the new points of sale.

Electric driving leader Tesla (TSLA) slipped 5% Monday. his rival, Rivian (RIVN), increased by 3.7%. Lucide Group (LCID) bounced 4%. And Chinese EV leaders Li Auto (AT THE) and Xpeng engines (XPEV) recorded significant losses.

Among Monday’s top stocks to watch, Arista Networks (A NET), Driven brands (DRVN) and Louisiana-Pacific (LPX) are located in or near new shopping areas. Amid recent stock market volatility, investors should still develop watch lists and avoid new purchases until the market’s current rally attempt has a follow-up day.

Microsoft and Tesla are IBD Leaderboard stocks. Arista was featured in the Stocks near a buy zone column this week and was the IBD share of the day on Monday. , while Driven Brands was featured in last week’s IPO Leaders story.

Dow Jones Futures Today: Fed Meeting

After the stock market closed Monday, Dow Jones futures, along with S&P 500 futures and Nasdaq 100 futures, were slightly ahead of fair value. Remember that premarket action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.

Of the exchange-traded funds, the Nasdaq 100-tracker Invesco QQQ Trust (QQQ) fell 1.4% Monday, as the SPDR S&P 500 ETF (SPY) fell 0.9%. The Innovator IBD 50 ETF (FFTY) fell 3.4% and approached correction lows.

Elsewhere, 10-year Treasury yields fell to about 1.42% on Monday.

The Federal Reserve’s two-day meeting begins on Tuesday and the Fed will announce its decision on Wednesday after the policy meeting. The Fed is expected to act quickly to wind down its bond-buying program and signal that it will raise interest rates next year in an effort to stem soaring inflation. The Federal Reserve’s new quarterly economic forecasts are expected to lead to two rate hikes before 2022.

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Attempted rally on the stock market

Major stock indices posted a weak performance Monday as the Nasdaq retested its critical 50-day benchmark. Despite the losses, Monday was day 6 of new rallying attempts on the Nasdaq and S&P 500, and day 8 for the Dow Jones index.

While indices are still trying to rally, the market correction is not over; several days do not make a trend. From day 4, you are looking for a major index that will rise sharply in volume higher than the previous day. That would indicate a follow day and the beginning of a possible uptrend.

Until such a signal appears, market outlook remains a market in correction. Investors should avoid new purchases and keep watchlists of top growth stocks. Be sure to keep a close eye on your portfolio to ensure you are protecting your gains and limiting losses quickly.

With the market still correcting itself, now is a good time to look for stocks that could become the leaders of the next uptrend. An aid in such a search is the relative strength line. The RS line measures a stock’s price performance against the S&P 500. When the stock outperforms the broader market, the RS line curves upward. If a stock underperforms the broad market, the line points downward.

After Friday’s session, The Big Picture noted, “The Nasdaq has managed to close just above its 50-day moving average. Investors will want momentum to continue into the week ahead as the stock market tries to bounce back into a confirmed uptrend after a volatile period.”

For more daily stock commentary, check out IBD’s The Big Picture.

Five best Dow Jones stocks to watch right now

Selling Stock Market Leaders: AMD, Nvidia

Chip giants Advanced micro-devices (AMD) and Nvidia (NVDA) sold 3.4% and 6.75% respectively on Monday.

Both stocks remain above their 50-day mark, but their cushions are disappearing. If their 50-day lines fail to provide substantial support, further weakness should be expected.

Dow Jones Stocks to Watch: Home Depot, Nike

Home Depot’s stock remains just below a buy point of 416.66 in a tight three-week formation. Home Depot is one of the top Dow Jones performers in 2021, up 52.6% through Monday through Monday. The stock was down 2.4% on Monday.

Retail leader Nike is tracking a new flat base with a buy point of 179.20, according to IBD MarketSmith chart analysis. Shares are trying to find support around their 50-day line after Monday’s 1.3% loss.

Four top growth stocks to watch in the current stock market correction

Stocks to Watch: Arista, Driven, Louisiana-Pacific

Monday’s IBD Stock Of The Day, Arista Networks, shows a flat base with a buy point of 134.24. ANET stock shows a strong 97 out of a perfect 99 IBD Composite Rating, according to the IBD stock control. Shares rose 1.2% on Monday.

On the upside, the stock’s RS line has just hit new highs, indicating significant stock market outperformance amid recent weakness in major stock indices.

IPO Leader Driven Brand shares tried to break out past a cup on Monday with a buy point of 33.47, according to IBD MarketSmith chart analysis. But shares turned lower, falling more than 1% to close below imports.

Louisiana-Pacific is in buying range past a buy point of 73.76 in a handle cup after Monday’s 2.6% loss. The 5% buy range comes out at 77.45.

Join IBD experts as they analyze leading stocks in the current stock correction on IBD Live

EV Stocks: Li Auto, Xpeng, Lucid Motors, Rivian

Li Auto activated the 7%-8% sell line to cut losses below the 34.93 buy point from a heads-and-handles basis after last week’s fall, but is trying to recover. Stocks are on their 50-day line after finding support around the long-term 200-day moving average. A new base could be formed. The stock fell 3.4% on Monday.

Xpeng Motors triggered the round-trip sell signal from a 48.08 buy point during the sharp sell-off in early December. But XPEV stocks are back at their 50-day support level. Wait for the stock to form a new base, which would provide a new entry. The stock lost 3.2% on Monday.

Lucid Motors shares joined Friday’s 3.1% gain and rose 4% on Monday. LCID stocks continue to stretch past a buy point of 28.49 on a head-on-hand basis, but huge gains have eased. Stocks are now trying to find support on their 50-day line.

Hot IPO Rivian rebounded from Friday’s 0.6% drop, rising 3.7% Monday after MotorTrend named the Rivian R1T Truck of the Year 2022, calling it “the most remarkable truck we’ve ever driven.”

RIVN shares closed about 34% of their post-IPO highs on Monday. The decline is a potential positive for investors who remain disciplined and wait for an IPO base to form before considering a purchase. The recent weakness is the beginning of Rivian’s first base formation and last week’s advance is a step in the right direction.

Tesla stock

Tesla shares slipped 5% on Monday, breaking their key 50-day support level, which is a critical benchmark to watch. The stock closed below the 50-day mark for the first time since June 22.

Shares traded at 1,243.49 on Nov. 4, but the stock ended Monday about 22% from its 52-week high.

TSLA shares remain well above a 764.55 buy point in a handle cup. The EV giant is working on a new base, although it will take another week to form, with a likely buy point of 1,202.05. Drawing a trendline from the record high could provide an early entry around 1,150.

Dow Jones Leaders: Apple, Microsoft

Of the Dow Jones stock, Apple stock bounced from record highs on Monday, closing lower after trading as high as 182.13. Shares fell 2.1% Monday, closing about 15% past a buy point of 153.27 off a head-on-hand basis, according to IBD MarketSmith chart analysis. The stock is approaching the 20%-25% profit-taking zone.

Software giant Microsoft lost 0.9% on Monday, foregoing a share of 2.8% gains on Friday. Stocks found much-needed support on their 50-day line last week and are again nearing new highs. On October 18, Microsoft stock broke past the buy point of 305.94 on a flat basis. The 5% buy zone peaked at 321.24, so the stock has extended.

Follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more information on growth stocks and the Dow Jones Industrial Average.

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