Dow Jones futures were higher ahead of Tuesday’s open. A new stock market rally attempt started Monday, as the Dow Jones Industrial Average surged 765 points.
Stock Market Today
On Monday, the Dow Jones Industrial Average surged 2.7%, leading the stock market higher. The S&P 500 climbed 2.6% and the tech-heavy Nasdaq composite rallied 2.3%. And the small-cap Russell 2000 advanced 2.65%.
General Motors (GM) reported its third-quarter auto sales Monday, outpacing expectations on strong consumer demand and better vehicle availability. GM shares rallied 2.4% Monday, but are still more than 50% off their 52-week high.
In the ongoing stock market weakness, Murphy USA (MUSA), Neurocrine Biosciences (NBIX), Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) — as well as Dow Jones stock UnitedHealth (UNH) — are among the top stocks to watch. Keep in mind that the ongoing stock market correction is a time for investors to sit on the sidelines and construct watchlists.
Dow Jones Futures Today: Treasury Yields, Oil Prices
Ahead of Tuesday’s opening bell, Dow Jones futures rose 0.5% vs. fair value, while S&P 500 futures gained 0.6%. Nasdaq 100 futures moved up 0.9% vs. fair value. Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
The 10-year Treasury yield fell significantly to 3.65% Monday. Last week, the 10-year Treasury yield briefly topped 4%, which hadn’t been done for more than decade.
Meanwhile, U.S. oil prices jumped more than 4% Tuesday, as West Texas Intermediate futures traded above $83 a barrel. Last week, they fell to their lowest level of the year. On Wednesday, OPEC+ will meet to consider a production cut in order to help prop up falling oil prices.
What To Do In The New Stock Market Rally Attempt
Despite Monday’s strong gains, IBD’s market trend remains in a “market in correction,” with the heavy selling in recent weeks. That means that investors should remain in cash.
However, Monday’s gains kicked off a new stock market rally attempt, which is your day 1. The action on Day 2 and Day 3 is irrelevant as long as the index doesn’t undercut its latest low. If that low is undercut, the rally try is done and the market needs to try again.
Next, investors should be waiting for a follow-through day, which occur on day 4 or later. Starting Thursday (day 4), you are looking for the Nasdaq or S&P 500 to rise sharply in higher volume than the previous session. That’s a follow-through day. It gives investors the green light to start buying leading stocks breaking out past correct buy points. It should put your portfolio and mindset in sync with the stock market action by gradually committing capital to leading stocks.
Now, ahead of a potential follow-through day, is the perfect time to build a strong watchlist of top-performing stocks. Many long-term leaders tend to break out at or near the follow-through, the market bottoming signal. Missing that early opportunity can be a costly mistake.
Friday’s The Big Picture column commented, “The market averages have now fallen for a third consecutive quarter for the first time since 2009. The crumb of comfort for investors is the fact IBD research finds bear markets form over three or four waves of intense selling. This looks to be the third leg.”
Dow Jones Stocks To Watch: UnitedHealth
Dow Jones stock UnitedHealth advanced 2.1% Monday, again finding support around the long-term 200-day line. Shares are building a flat base that has a 553.23 buy point, according to IBD MarketSmith chart analysis. Shares are about 7% from their latest buy point and face a test of resistance at the 50-day line.
UNH stock shows a strong 95 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. Investors can use the IBD Composite Rating to easily gauge the quality of a stock’s fundamental and technical metrics.
Top Stocks To Watch: Murphy USA, Neurocrine, Vertex, WWE
Gas station and mini-market leader Murphy USA is building a flat base with a 303.19 buy point. Shares rallied 3.1% Monday and are approaching potential resistance at their 50-day line. A decisive retake of this level would be bullish for the…