Dow Jones futures edged higher late Monday, along with S&P 500 futures and Nasdaq futures. Ciena (CIEN), Dollar General (DG) and other top stocks cleared or reclaimed buy points Monday, signaling underlying strength as a new rally attempts to end the stock market correction. Apple stock was a notable market drag once again. Tuesday’s midterm elections and Thursday’s Federal Reserve policy announcement are among the possible catalysts to bulls or bears.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures were up 0.1%. Nasdaq 100 futures climbed a fraction. Remember that Dow futures and other overnight action don’t necessarily translate into actual trading in the next regular session.
Stock Market Correction Update
The stock market was mixed Monday, with the Dow Jones and S&P 500 index up modestly while the Nasdaq composite fell, dragged down by Apple (AAPL) and Amazon.com (AMZN). The stock market rally attempt continues, but until there’s a follow-through day the stock market correction isn’t over.
Top Stocks Moving Into, Near Buy Zones
Fiber optic gear maker Ciena jumped 5.1% to 33.64 in double normal volume. Ciena stock cleared a 32.43 base-on-base pattern. Meanwhile, Dollar General stock, off-price apparel retailers Burlington Stores (BURL) and Ross Stores (ROST), and medical benefits firm HMS Holdings (HMSY) moved back into buy zones. Walmart (WMT) moved higher in its buy zone. Several other top stocks neared buy zones, while some Big Pharma and health insurer stocks continued to do well.
Remember, as long as it’s a stock market correction, making any purchases is highly risky.
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1: Stock Market Rally Catalysts: Midterm Elections
Tuesday’s midterm elections likely will be a market driver later this week, which could make for a relatively subdued Tuesday session.
Some stock market pundits argue that GOP control might be best for Wall Street. Historical data suggest a divided Congress spurs the best stock market returns.
Let the market’s collective wisdom sift through the election returns. Dow Jones futures could be volatile Tuesday night, but that’s not necessarily indicative of how stocks will trade Wednesday. Keep in mind that Dow Jones futures crashed 800 points on election night when Donald Trump pulled off the upset, but rallied for a 1.4% gain Wednesday.
2. Apple Stock Could Get Out Of The Way
Apple stock fell 2.8% on Monday after skidding 6.6% Friday. Shares did find support above their 200-day line but are clearly damaged. But if Apple stock can simply consolidate, that would remove a big drag on the Dow Jones, S&P 500 index and Nasdaq composite. Apple stock reduced the Dow’s Monday gain by 44 points and was a key factor for the Nasdaq’s slide.
Keep in mind that Apple as well as Amazon stock and the other FANGs are a huge weight in the S&P 500 index and especially the Nasdaq composite. They don’t need to lead a new uptrend, but it’s hard for the major averages to rally as long as these tech titans are losing significant ground.
3. Fed Rate Hike Hints
The Federal Reserve meets on Wednesday-Thursday, with a policy announcement due at 2 p.m. ET Thursday. No Fed rate hike is expected, but the central bank likely will continue to signal a December move. Look for any hints that policymakers are looking to maintain, speed up or slow down the gradual Fed rate hike path in 2019.
4. Nothing Will Help The Stock Market Rally
Perhaps the stock market rally will pick up steam on no specific news, just improving investor sentiment. There’s nothing wrong with a “nothing” rally.
5. Stock Market Rally Wild Cards
A surprise event could trigger a big stock market swing.
China Trade War: Every news report and Trump tweet on the China trade war seems to spur big up-and-down moves. However, after last Friday’s flurry of headlines, investors may be awaiting the Trump-Xi meeting in late November.
Italy Budget Blowup: The Italy-European Union budget standoff could worsen, roiling European and global markets. Both sides have a strong incentive to avoid a full-blown rupture.
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