Fed meeting scheduled as market plunges on this reality

Futures contracts: what to do during another stock market correction

Dow Jones futures rose 120 points after Monday’s stock market rally ahead of the Federal Reserve’s two-day policy meeting. Despite Monday’s gains, the stock market trend is still in a correction after last week’s big stock market losses.




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stock market today

On Monday, the Dow Jones Industrial Average advanced 0.6%, while the S&P 500 rose 0.7%. The tech-heavy Nasdaq composite rose 0.8%. And the small cap Russell 2000 also gained 0.8%.

Among exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) rose 0.6% and the SPDR S&P 500 (SPY) climbed 0.8%.

Overview of the US stock market today

Index Symbol Price loss of profit % To change
Dow Jones (0USD) 31019.82 +197.40 +0.64
S&P500 (0S&P5) 3900.00 +26.67 +0.69
Nasdaq (0NDQC ) 11535.02 +86.62 +0.76
Russell 2000 (IWM) 180.52 +1.53 +0.85
INN 50 (FFTY) 27.06 +0.10 +0.37
Last Updated: 4:28 PM ET 9/19/2022

This week’s top earnings reports come from Costco (COST), Darden Restaurants (DRI), General Mills (GIS), Knowledge base home (KBH) and Lennar (LEN).

VE Giant You’re here (TSLA) rebounded 1.9% on Monday. Among the leaders of the Dow Jones, Apple (AAPL) rose 2.5%, while Microsoft (MSFT) lost 0.1% in the current stock market.

In the current weak market, Continental Resources (CLR), DoubleVerify (DV) 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 new stock market correction is a good reason for investors to be mostly, if not entirely, on the sidelines.

DoubleVerify is an IBD ranking stock, but its position size was reduced during last week’s losses. Tesla was featured in this week’s Stocks Near A Buy Zone column.

Dow Jones Futures Today: Treasury Yields, Oil Prices

Ahead of Tuesday’s open, Dow Jones futures were up 0.4% relative to fair value. S&P 500 futures gained 0.45% and Nasdaq 100 futures traded 0.55% above 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 3.49% on Monday, topping the 11-year high of 3.48% set on June 14. Meanwhile, U.S. oil prices reversed from steep losses to edge higher on Monday as West Texas Intermediate futures traded above $85. a barrel.

Fed meeting to kick off

The Federal Reserve’s two-day meeting begins on Tuesday, with an interest rate decision on Wednesday. Markets show an 82% chance of the central bank raising rates by 75 basis points and an 18% chance of a 100 basis point hike.

Investors will be looking for clues about the pace of future rate hikes and how high the central bank will eventually reach.

What to do during a stock market correction

After last week’s big losses, IBD downgraded its market trend from “uptrend under pressure” to “market in correction”. This means that investors should be mostly, if not entirely, in cash.

To prepare for another stock market rally, investors should wait for a tracking day. When the market is in a correction, look for at least one major clue to attempt a bottom. On the first day, the index closes higher as day 1 of its attempted rally. (Monday is Day 1 of the rally attempt). Day 2 and Day 3 action is irrelevant until the index breaks above its last low. If this low is undercut, the rally test is over and the market must try again.

On day 4 and later, you are looking for a strong rise in the Nasdaq or S&P 500 in higher volume than the previous session. It’s a follow-up day. This gives investors the green light to start buying top-tier stocks overtaking the correct buy points. It should synchronize your portfolio and mindset with the stock market action by gradually committing capital to leading stocks.

While you wait for a new uptrend, create a watchlist of potential market leaders using the relative strength line. The RS line measures a stock’s price performance relative to the S&P 500. If the stock is outperforming the broader market, the RS line slopes up. If a stock is lagging the general market, the line will point down.

Friday’s The Big Picture column commented: “Since being turned down near its 200-day moving average, the Nasdaq has plunged below all of its major moving averages. It is now down nearly 28% so far in 2022.”

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: Chevron, Merck

Dow Jones Chevron stock is building a cup with a handle that has a buy point of 166.93, according to IBD MarketSmith’s chart analysis, amid strong performance by energy stocks so far this year . The stock rose 0.3% on Monday, finding much-needed support at its 50-day line.

The CVX stock is posting a solid 97 out of a perfect IBD Composite Rating of 99, according to the IBD Stocks Balance Sheet. Investors can use the IBD Composite Rating to easily assess the quality of a stock’s fundamental and technical metrics.

Pharmaceutical giant Merck is also struggling against the stock market’s bearish trend. The stock is building a flat base which has a buy point of 95.82. But MRK stock is stuck below its 50-day line. Merck shares fell 1.2% on Monday.


4 growth stocks to watch in the currentrent Stock market correction


Top stocks to watch: Continental, DoubleVerify, Vertex

Oil explorer and producer Continental Resources is building a cup with a handle with a buy point of 72.80, according to IBD MarketSmith’s chart analysis. The relative strength line hit a recent high last week, but remains a bit off its 52-week high. CLR shares rose 0.6% on Monday.

IBD Leaderboard DoubleVerify stock is still below its buy point of 28.07 in a low basis despite rising 0.55% on Monday. As the title’s breakout attempt falters, it has found support around its 50-day line.

Vertex Pharmaceuticals is back below its 50-day line after Monday’s 1.6% loss. The stock has held up well during the current market weakness, as indicated by an RS line approaching new highs. There’s no new base yet, but the title’s resilience makes it a great one to watch.


Join IBD experts as they analyze the top stocks of the current market correction on IBD Live


Tesla Stock

Tesla stock rebounded 1.9% on Monday, rebounding from Friday’s slight loss. Stocks are approaching the buy point of 314.74 from the short base. Meanwhile, keep an eye out for additional buying points if the stock is able to climb further on the right side of its broader consolidation, which dates back to January.

On the upside, the stock’s RS line is at its highest level since early April. The shares are around 25% off their 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares climbed 2.5% on Monday, ending a two-day losing streak and recouping some of last week’s losses. Last week, the stock closed at its lowest level since July 18.

Microsoft lost 0.1% on Monday, paring its losses after hitting a new 52-week low. The software giant is around 30% off its 52-week high.

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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