Dow Jones futures open Sunday evening, along with S&P 500 futures and Nasdaq futures. Apple (AAPL), the Federal Reserve and the October jobs report will headline another busy week of news.
The stock market correction intensified last week, with all major indices falling to multi-month lows amid mixed returns. The Nasdaq posted a gain on Friday Amazon.com (AMZN) but it was generally another weak session.
Investors should be very careful and mostly keep cash.
amazon stock, Meta platforms (Meta), Microsoft (MSFT) and Service now (Now) are four large-cap technologies to watch. All are near points of purchase. Notably, not everyone has income and accelerating growth over several quarters.
Early Monday morning, EV Chipmaker In semiconductor (Ann) will report third quarter earnings. Arista Networks (Aneta), which fell Thursday due to Meta’s reduced capital spending plans, will come Monday night. Apple earnings Thursday night, but will release new Mac computers Monday night. Apple stock has dropped below its 200-day mark amid iPhone 15 demand concerns, particularly in China.
As the Federal Reserve meets this week, markets see no chance of a rate hike on Wednesday. Many policymakers do not need to take further action by increasing long-term Treasury yields. Federal Reserve Chairman Jerome Powell will reinforce that message on Wednesday after the meeting announcement.
The October jobs report wraps up the week through Friday.
Meta stock is in motion IBD Leaderboard, the stock is now on the leaderboard watchlist. MSFT stock is among IBD’s long-term leaders. There are Microsoft Stack and Meta IBD 50. Microsoft and ServiceNow have shares IBD Big Cap 20.
Dow Jones Futures Today
Dow Jones futures open Sunday at 6 PM ET, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
Stock market correction
The stock market correction continues to worsen. Indices tried to rally earlier in the week, but fell sharply once again.
Israel-Hamas fears may have been a factor in the third Friday of the weekend as Israeli forces stepped up their efforts in Gaza.
The Dow Jones Industrial Average fell 2.1% in last week’s stock market trading. The S&P 500 index fell 2.5%. The Nasdaq composite slipped 2.6%.
The Nasdaq rose modestly on Friday, despite session highs near the 200-day line. So the new stock market launch is underway. But it will take more than that to mark a definitive rise.
Friday didn’t get off to a particularly solid start, with big caps like Amazon and Microsoft, Meta and ServiceNow mostly accounting for gains.
Not only did the Dow fall to a seven-month low on Friday, but the Russell 2000 fell to its lowest level since November 2020. Small-cap Russell gave up 2.5% in the week of 2000.
Invesco S&P 500 Equal Weight ETF (RSP) fell 2.45% for the week, hitting a 52-week low.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEWIt fell 0.5% on Friday against a 0.5% gain for the Nasdaq 100, buoyed by giants such as Amazon and Microsoft. QQEW fell 3.15% for the week.
Even with tech titans as leaders, better market breadth is key.
The Nasdaq needs to recover its 200-day line and retake the 21-day to break the short-term decline. A decisive move above the 50-day line could break the decline since late July.
The 10-year Treasury yield fell 8 basis points to 4.85%, after briefly trading at 5% on Monday morning.
U.S. crude futures were down 2.9% at $85.54 a barrel, even with Friday’s 2.8% gain.
SPDR S&P Metals & Mining ETF (XME) rose 1% last week. SPDR S&P Homebuilders ETF (XHBfell 1.5%. Energy Select SPDR ETF (XLE) fell 6.2% and the Health Care Sector SPDR Fund (XLV) fell 3.8% to a 52-week low. Industrial Select Sector SPDR Fund (XLI) and Fund Selection SPDR ETF (45decreased by 2.3%.
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Microsoft shares rose 1% last week to 329.81, though it has retreated significantly from its Oct. 25 high of 346.20. It is currently the only Magnificent Seven stock above its 50-day line. The relative strength line for Microsoft stock is already at a new high. Shares have a 366.78 consolidation buy point, but Oct.
Microsoft’s revenue for the first quarter of fiscal 2024 rose 27% from a year earlier, with revenue up 13% to $56.5 billion. Dow Tech Titan guides Q2 earnings, marking the third quarter of accelerating growth for both. Unlike Amazon and Google-parent letters (Google), championed Microsoft’s vision for the development of cloud-computing services.
Meta revenue grew 168% in Q3, driven by cost cutting and a rebound in ad sales. Revenue rose 23% to $34.1 billion. This was the third consecutive quarter of fast growth. But shares fell as Meta cited some weak advertising trends in Q4. Meta shares fell 3.9% on the week to 296.73, although it rose slightly below its 50-day moving average on Friday.
Meta shares are still consolidating with a 326.20 or 330.54 buy point. Investors can use a decisive move above the 50-day line as an initial entry, but market conditions raise risks.
Amazon’s revenue jumped 236%, easily beating it. Revenue rose 13% to $143.1 billion in the second quarter, accelerating growth. EPS has grown significantly in the last three quarters. Amazon Web Services revenue misses slightly, but tech giant sees momentum in Q4, and AI-fueled opportunities for AWS
Amazon shares rose 6.8% to 127.74 on Friday, rebounding from a 40-week line. Shares rose just 2% on the week. AMZN stock has a short consolidation that investors can see as a double-bottom base with a buy point at 134.48. That would include a decisive retracement of the 50-day line.
ServiceNow stock rose 2.1% last week to 554.01, below the 50-day line after briefly recovering that level on Thursday. Now the stock has a buy point from 607.90 flatish double bottom base. Investors can use Thursday’s high of 507.90 as an initial entry. The RS line for NOW stock is already at a new high, which is a good sign.
ServiceNow’s revenue rose 49%, with revenue up 25%, the second quarter of rapid growth for both. The software company guided on subscription revenue.
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What to do now
The stock market is in decline. All major indices are below their 200-day lines. And market fundamentals are dire.
It’s time to be cash, if not entirely. If you have long-term winners, you can keep them. But at some point, investors must draw a line in the sand to cut or exit a winning position.
Don’t rush back in. Several days of strong performance are needed to signal that the market decline is over. A morning bounce like Friday’s short, Amazon-led gains wasn’t enough.
Very few stocks are in position, and a relatively small number of names are close to position. So focus on stocks that show relative strength. Now, that should include names like Microsoft Stock and ServiceNow, as well as some power plays like WFRD Stock. But it is unclear which stocks and sectors will lead the market in the next upswing.
So turn on your screens and get engaged.
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