Dow Jones futures, S&P 500 and Nasdaq will be open for trading Sunday evening. Apple (AAPL), Federal Reserve, and October jobs report are the highlights of another busy news week.
This past week the stock market correction intensified, as all major indexes fell to multi-month lows amid mixed results. Amazon.com's (AMZN) contribution to the Nasdaq's Friday gain was a major factor. It was a generally weak session.
Investors must be cautious and hold a large amount of cash.
Watch out for Amazon, Meta Platforms (META), Microsoft(MSFT) and ServiceNow(NOW). All are nearing buy points. All have already achieved their earnings and can boast of multiple quarters with accelerated growth.
On Semiconductor, a maker of EV chips, will announce its third-quarter results on Monday morning. Arista Networks, which fell Thursday due to Meta's reduced plans for capital expenditures, will report Monday night. Apple's earnings will be Thursday night but the company will reveal new Mac computers Monday night. Apple shares have fallen below their 200-day average amid concerns about iPhone 15 demand, particularly in China.
Federal Reserve will meet this week. Markets do not expect a rate increase on Wednesday. The recent surge in long-term Treasury rates has led to a number of policymakers signaling that they do not see the need for further action. Fed chief Jerome Powell is likely to reiterate this message after the announcement of the meeting on Wednesday.
Friday, October's jobs report will conclude the week.
IBD Leaderboard has NOW on its watchlist. IBD's Long-Term Leaders include MSFT. Microsoft and Meta stock are on IBD 50. IBD Big Cap 20 includes Microsoft and ServiceNow stocks.
UnitedHealth Group and Weatherford (WFRD).
Dow Jones Futures Today
Dow Jones futures will open at 6 pm ET on Sunday, along with S&P 500 and Nasdaq 100 futures. S&P 500 and Nasdaq futures will open at 6 p.m. ET on Sunday.
Keep in mind the overnight Dow Futures session.
Stock Market Correction
Stock market corrections continue to worsen. Indexes rose briefly early in the week but then plunged sharply.
Israel-Hamas concerns were likely to be a factor on Friday for the third time in a row as Israeli forces intensified their efforts in Gaza.
Last week, the Dow Jones Industrial Average dropped 2.1%. The S&P 500 index fell 2.5%. The Nasdaq Composite fell 2.6%.
The Nasdaq rose modestly on Friday, but it was still well below session highs at the 200-day mark. A new rally is now underway in the stock market. It will take more than just that to indicate a convincing upward trend.
The start of the week was not particularly impressive, with Amazon, Microsoft, Meta, and ServiceNow accounting for most of the gains.
The Dow Jones Industrial Average fell to a new low on Friday, and the Russell 2000 reached its lowest point since November 2020. The Russell 2000 small-cap index lost 2.5% in the past week.
Invesco's S&P Equal Weight ETF, (RSP), fell by 2.45% this week and set a new 52-week low.
First Trust Nasdaq 100 Equal Weighted Index ETF QQEW fell by 0.5% on the Friday, compared to a Nasdaq 100 gain of 0.5%, boosted by giants like Amazon and Microsoft. QQEW fell 3.15% in the past week.
Even though tech titans will remain the leaders, a better market spread is crucial.
Nasdaq must reclaim the 200-day and 21-day lines to end the short-term downward trend. A move decisively above the 50 day line could break the downward trend from late July.
After briefly reaching 5% on Monday, the 10-year Treasury yield dropped 8 basis points to 4,85%.
Even with the 2.8% increase on Friday, U.S. crude futures fell 2.9% to $85.54 per barrel.
Even though Microsoft and NOW stocks were major IGV holdings, the iShares Expanded Tech Software Sector ETF (IGV), lost 2.8%. VanEck Vectors Semiconductor ETF retreated by 2.7%.
ARK Innovation ETFs (ARKK) and ARK Genomics ETFs (ARKG), which are more speculative stocks, both fell last week by 5.4% and 6.4% respectively.
Energy Select SPDR ETF XLE plunged 6.2%, and Health Care Select Sector SPDR Fund XLV fell 3.8%. Both hit a 52-week high. The Industrial Select Sector SPDR Fund XLI and the Financial Select SPDR ETF XLF both declined by 2.3%.
Microsoft's stock price rose by 1% to 329.81 last week, but it has fallen considerably from its October 25 high of 346.20. This is the only Magnificent Seven Stock that's above its 50 day line. Microsoft's relative strength line has already reached a new record. The stock has a consolidation buy-point of 366.78, but the high on Oct. 25, could be used as an early entry.
Microsoft's earnings for the fiscal Q1 of 2024 grew 27% over a year ago, and revenue increased 13% to $56.5 Billion. The Dow tech giant also forecasted a rise in Q2 revenue. Microsoft, unlike Alphabet-parent Alphabet and Amazon (GOOGL), beat expectations for growth in cloud computing services.
Meta earnings soared 168% during Q3 thanks to cost reductions and a rebound in ad sales. Revenues grew 23%, to $34.1 billion. This was the third consecutive quarter of higher growth. Meta's shares dropped as it cited weaker advertising trends for Q4. Meta's stock dropped 3.9% this week to 296.73, though it recovered on Friday and is now slightly below its 50-day moving median.
Meta stock remains in a consolidation phase with either a buy point of 326.20, or 330.54. Investors may want to take advantage of a move decisively above the 50-day level as an entry point, but the market conditions are more volatile.
Amazon's earnings soared 236% to easily beat. The revenue grew 13%, to $143.1 billion. This is the second consecutive quarter of rapid growth. EPS has been increasing sequentially over the last three quarters. Amazon Web Services revenue was slightly below expectations, but the tech titan sees a positive outlook for Q4 and AI-driven gains.
Amazon's stock rose 6.8% on Friday to 127.74, bouncing back from its 40-week low. The shares rose just over 2% in the past week. AMZN has a small consolidation, which investors can view as a base at a double bottom with a buy point of 134.48. This would require a clear reclaim of the 50-day level.
ServiceNow's stock climbed 2.1% last week to 554.01, just below the 50 day line, after briefly reclaiming this level on Thursday. The NOW stock is at a 607.90 buying point, based on a double-bottomed base that's flattish. Investors can use the high of Thursday (507.90) as a starting point. The RS line of NOW stock has already reached a new peak, a bullish signal.
ServiceNow's earnings increased by 49%, while revenue grew by 25%. This is the second consecutive quarter that both have experienced faster growth. The software giant also provided guidance on subscription revenue.
What to Do Now
Stock market correction. All major indexes have fallen below their 200-day line. The market internals are worse.
This is a good time to hold a large amount of cash, if you can. You can keep long-term winners. Investors must have a limit for when to cut or exit a winning position.
Do not rush to buy back. It takes several days of solid performance for the market to indicate that a downturn may be ending. It is not enough to have a morning bounce like the narrow Amazon gains on Friday.
There are very few stocks in position. A relatively small number of names are on the verge of being in position. Focus on stocks with relative strength. Right now, this should include names like Microsoft stock, ServiceNow and some energy plays, such as WFRD stock. It's not clear which stocks or sectors will be leading the market during the next uptrend.
Keep your screen running and be engaged.
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