The Dow Jones Industrial Average dropped 250 points Monday, as Apple stock hit more record highs after a price-target hike. Tesla skidded over 4% in morning trade, while Rivian stock rallied after MotorTrend named the Rivian R1T its Truck of the Year.
Among the Dow Jones leaders, Apple (AAPL) was up 0.8% early Monday, while Microsoft (MSFT) edged lower in today’s stock market. Home Depot (HD) and Nike (NKE) both gained, but are still below new buy points.
Electric vehicle leader Tesla (TSLA) traded down over 4% Monday. Its rival, Rivian (RIVN), climbed more than 4%. Lucid Group (LCID) gained more than 3%. And Chinese EV leaders Li Auto (LI) and Xpeng Motors (XPEV) posted losses after Monday’s open.
Cybersecurity plays Fortinet (FTNT) and Palo Alto Networks (PANW) traded higher after Nasdaq announced Friday the two would be among the stocks added to the Nasdaq 100 starting Dec. 20.
Among Monday’s top stocks to buy and watch, Arista Networks (ANET), Driven Brands (DRVN) and Louisiana-Pacific (LPX) are in or near new buy zones. Amid the recent stock market volatility, investors should still be developing watchlists, and avoid making new purchases until the market’s current rally attempt stages a follow-through day.
Microsoft and Tesla are IBD Leaderboard stocks. Louisiana-Pacific was last Tuesday’s IBD 50 Stocks To Watch pick. Driven Brands is featured in last week’s IPO Leaders story.
Dow Jones Today
After the stock market open Monday, the Dow Jones Industrial Average dropped 0.7%, while the S&P 500 moved down 0.5%. The tech-heavy Nasdaq composite lost 0.3% in morning trade.
Among exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) fell 0.2% Monday, while the SPDR S&P 500 ETF (SPY) descended 0.1%.
Elsewhere, the 10-year Treasury yield traded down to around 1.45% Monday morning, following its close at just below 1.49% Friday. Crude oil prices were lower, with West Texas Intermediate down nearly 1%, on pace to give back a part of last week’s sharp gains.
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Stock Market Rally Attempt
The major stock indexes posted solid performances Friday, as the Nasdaq continues to hold just above its 50-day moving average. Still, Friday marked Day 5 of new rally attempts on the Nasdaq and S&P 500, and Day 7 for the Dow Jones industrials.
Although indexes are still attempting to initiate a rally, the market correction isn’t over yet; several days don’t make a trend. Starting on Day 4, you are looking for a major index to rise sharply in higher volume than the prior day. That would indicate a follow-through day, and signal the start of a potential uptrend.
Until such a signal appears, the market outlook remains a market in correction. Investors should be avoiding new purchases and maintaining watchlists of top growth stocks. Be sure to keep a close eye on your portfolio to make sure you’re protecting your gains and cutting losses quickly.
Now, while the market is still correcting, it’s a good time to search for stocks that could become the next uptrend’s leaders. One tool helpful in such a search is the relative strength line. The RS line measures a stock’s price performance vs. the S&P 500. If the stock is outperforming the broader market, then the RS line angles upward. If a stock is performing worse than the broad market, then the line will point lower.
After Friday’s session, The Big Picture commented: “The Nasdaq managed to close just above its 50-day moving average. Investors will want to see it carry the momentum forward in the coming week as the stock market tries to get back into a confirmed uptrend after a volatile period.”
For more daily stock market commentary, check out IBD’s The Big Picture.
Five Best Dow Jones Stocks To Watch Now
Stocks On The Move: Nvidia, Qualcomm
Nvidia (NVDA) dropped 1% Monday morning, on pace to extend a three-day losing streak. Shares remain above their 50-day line.
Qualcomm (QCOM) jumped nearly 3% Monday after JPMorgan called it a top pick for 2022 with an overweight rating. The stock is extended past a double-bottom base’s 152.38 buy point.
News of the annual Nasdaq 100 reconstitution sent Fortinet up 1% in early action. Palo Alto gained 0.4%. Palo Alto is rebounding from support at its 10-week moving average. Fortinet is building a possible base. For more detail on the cybersecurity companies and their markets, read Why Cybersecurity Stocks Could See More Upside From Ransomware Attacks.
IBD Leaderboard watchlist stock Airbnb (ABNB) will also be added to the Nasdaq 100 on Dec. 20, along with Zscaler (ZS) and Datadog (DDOG).
Dow Jones Stocks To Watch: Home Depot, Nike
Home Depot stock remains just below a 416.66 buy point in a three-weeks-tight formation. Home Depot is the top Dow Jones performer in 2021, up 56.4% year to date through Friday’s close. Shares traded up 0.1% Monday.
Retail leader Nike remains below a cup base’s 174.48 buy point after Friday’s 0.6% gain. Meanwhile, a new flat base shows a buy point at 179.20, according to IBD MarketSmith chart analysis. Shares were up a fraction Monday.
Stocks To Buy And Watch: Arista, Driven, Louisiana-Pacific
IBD 50 stock Arista Networks shows a flat base with a 134.24 buy point. ANET stock shows a strong 97 out of a perfect 99 IBD Composite Rating, according to the IBD Stock Checkup. Shares were up 0.5% Monday.
Positively, the stock’s RS line is just off new highs, indicating significant stock market outperformance during the recent weakness in the major stock indexes.
IPO Leader Driven Brand shares are building a cup with handle with a 33.47 buy point, or 10 cents above the stock’s high on Nov. 1, according to IBD MarketSmith chart analysis. Shares are about 2% away from the entry following last week’s nearly 6% advance. DRVN shares were flat Monday.
Louisiana-Pacific — Tuesday’s IBD Stocks To Watch pick — is at the top of the buy range past a 73.76 buy point in a cup with handle after Friday’s 3.7% gain. The 5% buy range tops out at 77.45. LPX stock was unchanged Monday.
Join IBD experts as they analyze leading stocks in the current stock market correction on IBD Live
EV Stocks: Li Auto, Xpeng, Lucid Motors, Rivian
Li Auto triggered the 7%-8% loss-cutting sell rule below a cup-with-handle base’s 34.93 buy point after last week’s tumble, but is trying to rebound. Shares are above their 50-day line after finding support around the long-term 200-day moving average. A new base could be forming. Shares moved down 2.5% Monday.
Xpeng Motors triggered the round-trip sell signal from a 48.08 buy point during early December’s sharp sell-off. But XPEV shares are back above their 50-day support level. Wait for the stock to form a new base, which would offer a new entry. The stock was down 2% Monday.
Lucid Motors shares looked to add to Friday’s 3.1% bounce, jumping more than 3% Monday morning. LCID stock remains extended past a 28.49 buy point in a cup-with-handle base, but huge gains have dwindled. Shares are now trying to find support at their 50-day line.
Hot initial public offering Rivian looked to rebound from Friday’s 0.6% decline, moving up over 4% after Monday’s open. Early Monday, MotorTrend named the Rivian R1T its 2022 Truck of the Year, calling it “the most remarkable truck we’ve ever driven.”
RIVN shares closed Friday about 36% off their post-IPO highs. The decline is a potential positive for investors remaining disciplined and waiting for an IPO base to form before considering a purchase. The recent weakness is the start of Rivian’s first base formation, and last week’s advance is a step in the right direction.
Tesla stock skidded 4% Monday, giving back the entirety of Friday’s 1.3% gain. For now, shares are finding support at their key 50-day support level, which is a critical benchmark to watch. A sharp break below that level could spell further weakness.
Shares traded as high as 1,243.49 on Nov. 4, but the stock ended Thursday about 18% off its 52-week high.
TSLA shares remain sharply above a 764.55 buy point in a cup with handle. The EV giant is working on a new base, though that needs another week to form, with a likely 1,202.05 buy point. Drawing a trend line from the record high could offer an early entry around 1,150.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple stock notched more all-time highs Friday, rallying 2.8%. The stock is about 17% past a 153.27 buy point out of a cup-with-handle base, according to IBD MarketSmith chart analysis, and approaching the 20%-25% profit-taking zone. Apple shares moved up 0.7% Monday after JPMorgan raised its price target to 210 due to improved expectations of iPhone 13 demand and strong expected earnings in early 2022.
Software giant Microsoft inched lower Monday, on pace to add to Friday’s 2.8% gain. Shares found much-needed support at their 50-day line last week and are once again approaching new highs. On Oct. 18, Microsoft stock broke out past a flat base’s 305.94 buy point. The 5% buy zone topped out at 321.24, so the stock is extended.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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