Futures Due: Rally Faces Big Test;  4 Dow stocks in a nutshell

Futures Due: Rally Faces Big Test; 4 Dow stocks in a nutshell

Dow Jones futures will open Sunday night, along with S&P 500 and Nasdaq futures. The stock market rally held support levels last week. Can the S&P 500 now break above its 200-day moving average in the days and weeks ahead? Apple (AAPL) could be the key.


Apple stock held key levels and edged higher even as the overall market generally retreated. Like the S&P 500, the iPhone tech titan is heading back toward its 200-day line. A decisive move above this level could provide a buying opportunity. But another rejection could offer another chance to short AAPL shares.

Meanwhile, other components of the Dow Jones Boeing (BA), JPMorgan Chase (JPM) and GS stocks have quietly seen significant gains in recent weeks, contributing to the Dow’s outperformance in the current market rally. BA stock is technically hovering around a traditional buy point. Goldman Sachs (GS) is building a deep base while JPM stock still has work to do.

Dow Jones Futures Today

Dow Jones futures open Sunday at 6 p.m. ET, along with S&P 500 and Nasdaq 100 futures.

Remember that overnight action on futures contracts on Dow and elsewhere does not necessarily translate into actual trading in the next regular trading session.

Join the experts at IBD as they analyze actionable stocks in the stock market rally on IBD Live

Stock market rally analysis

Last week, the Dow Jones Industrial Average rose less than 0.1% in stock trading last week. The S&P 500 index fell 0.7% and the Nasdaq composite fell 1.5%. Small cap Russell 2000 fell 1.75%.

On Tuesday, November 15, the S&P 500 briefly rose above 4,000, approaching the 200-day moving average. This level is particularly important as the benchmark fell just one point from the 200-day line on August 16, triggering another leg of the bear market.

A decisive move above the 200-day line, which would also roughly coincide with a falling trendline from the all-time high on January 4, would be a powerful signal that the uptrend is more than a bearish rally.

The S&P 500 crossing the 200-day line would also provide a positive backdrop for major stocks, which are struggling to approach buy points in a choppy market.

Meanwhile, the Russell 2000 fell back below its 200-day line last week, but is likely to recover that level ahead of the S&P 500. The Dow Jones, backed by Boeing, Goldman and JPM stocks, is comfortably above the 200 days. But erasing last week’s high would bring the Dow back to 34,000 and just below its August peak.

The Nasdaq, weighed down by aggressive growth, is 8.3% below the 200-day line. Exceeding last week’s highs would be a good first step. Another bright spot: the 21-day moving average just crossed the 50-day line on Friday.

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Thanksgiving week is not necessarily a good time for a big market move. The markets will be closed on Thanksgiving Day with a half-day session on Friday. Volume will likely be light throughout the week. The following week ends with a bang. On December 1, investors will receive PCE inflation data for October, as well as the ISM manufacturing index for November. On December 2, the November jobs report is due. This news could have a big impact on Fed rate hike expectations, bond yields and stock prices.

So it wouldn’t be surprising to see the major indices trading in a range over the next week. There’s nothing wrong with a little consolidation of major indices and stocks.

Apple broth

Apple stock rose 1.1% last week to 151.29, after peaking 8.2% the previous week. Stocks maintained their 50-day moving average, with the 21-day line expected to cross above the 50-day line. The AAPL stock is only slightly below its 200-day line. The Dow Jones giant flirted with its 200 days on October 28 after its results. But it turned out to be a great opportunity to short, with the shares falling within days to their worst close since mid-June.

A decisive move above the 200-day line, possibly clearing the October 28th high at 157.50, would offer an early entry into a base from August 17th. short circuit opportunity.

Apple’s success or failure at the 200-day line could be key to the S&P 500’s own attempt, and vice versa.

Boeing stock

BA stock fell 2% to 173.89, after a five-week run of 47%. As aerospace giant Dow Jones reversed its Oct. 26 earnings decline, stocks rebounded, especially on a bullish cash flow trend a few days later.

Technically, Boeing’s stock is just below the buy point of 173.95 cups. But stocks are 9.5% above their 200-day line and 19.5% above their 50-day line. A pause around current levels could create a safer buying opportunity.

Boeing is expected to make a profit in 2023, ending four years of losses.

Goldman stock

GS stock slipped 1.55% to 379.20 last week. On a daily chart, shares are extended from a buy point of 358.72 cups into much larger consolidation. On a weekly chart, Goldman stock has a buy point of 389.68 from a one-year cup-handle basis, according to MarketSmith analysis. But after a 28% gain on a four-week winning streak, that’s an awfully small handful. A longer, deeper grip would help and let the 50 day line fill the gap.

The relative strength line is at its highest level in four years, reflecting Goldman’s outperformance against the S&P 500. The RS line is the blue line in the charts provided.

JPM Stock

JPMorgan shares fell 1.1% to 133.84 last week. That’s after a 29.5% six-week lead. Stocks are above their 50 and 200 day lines, but have work to do. JPM stock could be the up side of a long, deep consolidation, or it could forge a bottom base.

Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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