Dow Jones futures traded sharply lower on Monday morning, threatening to extend losses from Friday’s stock market selloff.
Potential earnings drivers this week include discount retailers General dollar (DG) and dollar tree (DLTR), Macy’s (M), Nvidia (NVDA), Selling power (CRM) and Toll Brothers (TOL). Palo Alto Networks (PANW) and Enlarge video (ZM) report after the close Monday.
Cruise lines have been hit hard by pre-market actions with Norwegian cruise lines (NCLH) down 3.7%. Boeing (BA) led the declines among Dow Industrials with a 2% loss. netflix (NFLX) slipped 2.8% following a downgrade to sell and a modest reduction in CFRA’s price target.
Chinese stocks showed little response early on Monday, after China’s central bank cut interest rates again in a bid to revive economic growth. Ali Baba (BABA) stocks were flat, while JD.com (JD) increased by 1%. Tencent (TCEHY) traded mostly unchanged.
Leader in electric vehicles You’re here (TSLA) was trading up more than 2% on Monday morning. Elsewhere, technology leaders from Dow Jones Apple (AAPL) and Microsoft (MSFT) both fell sharply ahead of today’s stock market open.
In the current healthy market environment, Dow Jones stocks Coca Cola (KO) and Merck (MRK) — as well as Albemarle (ALB), Arista Networks (A NET), Costco (COST) and Ollie’s Bargain Outlet (OLLI) – are among the best stocks to buy and watch.
Albemarle and Costco were featured in last week’s Stocks Near A Buy Zone column. Costco stock has been added to the IBD rankings and SwingTrader following last week’s breakout movement. Albemarle was a recent IBD Stock of the Day.
Dow Jones Today: Treasury Yields, Oil Prices
Early Monday, Dow Jones futures fell 0.9% relative to fair value, while S&P 500 futures fell 1.1%. Nasdaq 100 futures traded down 1.4% in morning trading. Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) fell 1.6% and the SPDR S&P 500 ETF (SPY) fell 1.2% in early trading.
The 10-year Treasury yield held steady at 2.98% early Monday, following last week’s jump. The 10-year Treasury yield approaches the 3% level for the first time since July 21.
Meanwhile, U.S. oil prices were flat on Monday after last week’s losses saw West Texas Intermediate futures hit their lowest level since January. WTI futures fell slightly, holding above $90 a barrel.
Stock market rally
On Friday, the Nasdaq and S&P 500 snapped four-week winning streaks with the worst session of the week on Friday. The Dow Jones Industrial Average fell 0.9%.
The next few days will likely be key for the stock market trend as the Nasdaq and Dow Jones industrials test support levels. Meanwhile, the S&P 500 is falling after finding resistance at its long-term 200-day line, a key area to watch.
Friday’s The Big Picture column commented: “The rally may need a pause, and the stock market losses at least signal a period of rest for the major indices. This is not necessarily a reason for investors to are all about the money, but make sure your winnings don’t evaporate.”
If you are new to IBD, consider taking a look at its stock trading system and CAN SLIM basics. Recognizing chart patterns is one of the keys to investing guidelines. IBD offers a wide range of growth stock listings, such as Leaderboard and SwingTrader.
Investors can also create watchlists, find companies close to a buy point, or develop custom screens at IBD MarketSmith.
Five Dow Jones stocks to watch now
Dow Jones stocks to watch: Coca-Cola, Merck
Soda giant Dow Jones, Coca-Cola, builds a flat base that has a buy point of 67.30. A handle entry at 65.14 is also in play. Stocks rebound from their 50-day line and attempt to break above the handle entry. The stock fell 0.5% on Monday morning.
Merck is also building a flat base, a pattern that shows a buy point of 95.82. Stocks are moving away from their 50-day line, according to chart analysis from IBD MarketSmith. Merck shares were unchanged on Monday.
The MRK stock is posting a solid 94 out of a perfect IBD composite rating of 99, according to the IBD stock balance sheet. Investors can use the IBD Composite Rating to easily assess the quality of a stock’s fundamental and technical metrics.
4 most important growth stocks to buy and watch in the currentrStock market rally
Top stocks to watch: Albemarle, Arista, Costco, Ollie’s
Lithium producer Albemarle gave up its buy point of 273.78 in a big cup-with-handle base amid Friday’s 3.4% decline. Stocks remain above a smaller cup with the 250.25 buy point of the handle. The stock was down more than 2% on Monday morning.
Arista Networks, one of last week’s IBD 50 Stocks To Watch picks, continues to rise off the right side of a double-bottom base that offers a buy point of 143.67. With the stock around 9% from the current entry, look for a handle to offer a more risk-optimal buying point. Arista’s RS line has been trending higher and is approaching a new high. ANET shares fell 1.3% on Monday morning.
IBD Leaderboard Costco stock remains in the buy range above a cup with the 552.81 buy point of the handle despite Friday’s 1.15% decline. Shares fell 0.6% on Monday morning.
Ollie’s Bargain Outlet is retesting its 10-week line – a critical support level. Stocks previously found support there in late July, which put the leading discount retailer in a new buy zone. Stocks also carve out a handful after a large cup base, placing the latest buy point at 72.37. The current price action is around 11% of this entry. Stocks were inactive Monday morning.
Join IBD experts as they analyze the top stocks of the current stock market rally on IBD Live
Tesla stock fell 2.05% on Friday, extending a losing streak to four sessions. Shares of the electric vehicle giant fell another 2.1% on Monday morning.
Tesla stock struggled to overcome resistance around its 200-day line. Tesla is about 28% off its 52-week high. Its 3-for-1 stock split is scheduled for Wednesday.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares sold off 1.5% on Friday as the stock continues to build the right side of a cut base that has a buy point of 179.71. Another interpretation could be a large double bottom that dates back to January. Either way, the point of purchase is the same. The last two days of losses could be the start of a potential handle, which would offer a lower entry.
On the upside, the stock’s relative strength line is already reaching new highs, indicating strong stock market outperformance. Shares fell 1.6% on Monday morning.
Microsoft fell 1.4% on Friday, extending a four-session losing streak and moving further away from its long-term 200-day line. The stock lost 1.8% on Monday morning.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen to learn more about growth stocks and the Dow Jones Industrial Average.
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