Futures: Stocks surge, but key signal is missing

Futures: Stocks surge, but key signal is missing

Dow Jones futures were higher ahead of Tuesday’s open after the Dow Jones Industrial Average jumped more than 550 points on Monday. Netflix earnings are released late Tuesday and Tesla earnings are due Wednesday.


But, first, Dow Jones stocks Goldman Sachs (GS) and Johnson & Johnson (JNJ) will report early Tuesday.

Stock Market Today: Bank Of America, Charles Schwab Earnings

On Monday, the Dow Jones Industrial Average jumped 1.9% and the S&P 500 2.65%. The tech-heavy Nasdaq composite climbed 3.4%. And the small-cap Russell 2000 rose 3.2%.

Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) rose 3.3% and the SPDR S&P 500 (SPY) rose 2.5%.

Bank of America (BAC) and Charles Schwab (SCHW) announced their quarterly results on Monday morning. Shares of BAC jumped 6.1%, while shares of Charles Schwab sold 2.25%.

VE Giant You’re here (TSLA) ran 7% higher, rebounding from Friday’s big slip. Among Dow Jones stocks, Apple (AAPL) rose 2.9% and Microsoft (MSFT) climbed 3.9% in the current stock market.

Auto area (AVOID), Cardinal Health (ACH), Molina Health (MS) and Vertex Pharmaceuticals (VRTX) – as well as Dow Jones stocks Chevron (CLC) and Merck (MRK) – are among the best stocks to watch. Keep in mind that the current stock market correction is a time for investors to sit on the sidelines and build watchlists of top growth stocks.

Cardinal Health and Vertex are stocks in the IBD ranking. Merck and Molina Healthcare were featured in this week’s Stocks Near A Buy Zone column, along with two other stock ideas.

4 growth stocks to watch in the currentrent Stock market correction

Dow Jones Futures Today: Treasury Yields, Oil Prices

Before Tuesday’s opening bell, Dow Jones futures rose 1.6%, while S&P 500 futures gained 1.9%. Nasdaq 100 futures were up 2.1% from fair value. 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.

The 10-year Treasury yield rose to 4.01%, closing above 4% for the second consecutive session. Meanwhile, US oil prices extended losses from Friday’s plunge, falling slightly on Monday. West Texas Intermediate futures were trading below $86 a barrel.

Third quarter earnings Season

Third-quarter earnings season heats up this week, with key reports coming in from Lockheed Martin (LMT), netflix (NFLX), Procter & Gamble (PG), Travelers (TRV), Alcoa (AA), IBM (IBM), Tesla, American Express (AXP) and Verizon Communications (VZ), as well as a number of other leading companies.

Earnings reports drive many of the largest stock moves and require close attention. Strong earnings can fuel major stocks to never-before-seen levels — and above new buy points — while a less-than-impressive news can send stocks tumbling.

The stock market’s reaction to an earnings release can often tell you more than the earnings themselves. If results look strong but the stock still slips, investors may worry about the sustainability of growth, rising costs, or other potential negative effects.

With the market in rally attempt mode, investors should follow companies that easily beat earnings results and have strong upside reactions. They could be among the stock market leaders if the market is able to rebound.

What to do in today’s stock market: look for this key signal

Despite Monday’s big gains, the market trend remains in a correction amid heavy losses in recent sessions. Investors remain on the lookout for a trailing day, which is the key signal that can turn the market trend into a confirmed uptrend. The Nasdaq and S&P 500 may trigger this trend change day on Tuesday (Day 4 of the current rally attempt) at the earliest. With the IBD trend being “the market in correction”, investors are safer on the sidelines.

Now is a great time to build a strong watchlist of top performing stocks. Many long-term leaders tend to break out on or near the day after the market bottom signal. Missing that first opportunity can be a costly mistake.

Friday’s The Big Picture column commented: “Technically speaking, the rally attempt is intact but the reversal reduces the chances of a bullish follow-up. The 21-day exponential moving averages remain a tough resistance, so this is where that investors should watch the return of buyers.”

Five Dow Jones stocks to watch now

Dow Jones stocks to watch: Chevron, Merck

Energy giant Chevron continues to consolidate above its 50-day line, building a base that shows a buy point of 182.50. An early entry at 166.93 is also in play. Chevron stock rose 0.7% on Monday.

The CVX stock boasts a solid 98 out of a perfect IBD Composite Rating of 99, according to the IBD Stocks Scorecard. Investors can use the IBD Composite Rating to easily assess the quality of a stock’s fundamental and technical metrics.

Merck, member of the Dow Jones and IBD 50, breaks above the 93.12 double-bottom buy point, according to IBD MarketSmith pattern recognition. Stocks rebounded 2.1% on Monday, closing above the buy point. Keep in mind that the current market correction is a reason to stay away; however, the stock is showing abnormal signs of strength. The relative strength line reached a new high last week. Third quarter results are expected on October 27 before the opening bell.

Main stocks to watch: AutoZone, Cardinal, Molina, Vertex

Auto parts leader and recent IBD Stock Of The Day AutoZone is about 3% off the buying point of 2,362.34 a cup base. Keep an eye out for a potential grip to provide lower entry. AutoZone shares rose 1.5% on Monday.

IBD Leaderboard stock and medical leader Cardinal Health are shaping a flat base that has a buy point of 72.38, according to IBD MarketSmith’s chart analysis. Winnings are due November 4.

Molina Healthcare ended Monday just 2% below the buy point of 361.35 on a flat basis. The stock’s RS line hit a new high last week, confirming that the healthcare stock is a leader to watch.

Biotech leader Vertex Pharmaceuticals continues to build a flat base with a buy point of 306.05 and an early entry at 296.90. Its RS line has reached a new high in recent sessions, a sign of a major stock market outperformance.

Netflix Earnings

Netflix results are expected Tuesday after the close of trading. The streaming giant’s adjusted EPS is expected to fall 33% to $2.14 on revenue of $7.83 billion.

Netflix shares are building a double bottom basis with a buy point of 250.49. The stock is around 65% off its 52-week high.

Join the IBD experts as they analyze the top stocks in the current stock market rally attempt on IBD Live

Tesla Stock

Tesla stock jumped 7% on Monday, nearly erasing Friday’s 7.55% drop. On Friday, stocks closed at their lowest level since June 2021. Despite Monday’s rise, the stock is still around 47% off its 52-week high.

The electric vehicle giant’s third-quarter results are out late Wednesday. Tesla is expected to earn an adjusted $1.01 per share on sales of $22.1 billion.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares rebounded 2.9% on Monday, rebounding from Friday’s 3.2% selloff. Still, stocks are around 23% off their 52-week high and below their 50- and 200-day lines.

Microsoft advanced 3.9%, continuing its rebound from last week’s 52-week low. The software giant is around 32% off its 52-week high.

Apple’s earnings are expected on October 27, while Microsoft’s are expected on October 25.

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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