Dow Jones futures surged 370 points early Tuesday after the stock market snapped back with strong gains Monday. Apple is approaching new highs, while Tesla stock found support at a critical level.
On Monday, the Dow Jones Industrial Average moved up 1.9%. The S&P 500 rose 1.2%, while the Nasdaq rallied 0.9%. The small-cap Russell 2000 advanced 2.05%.
Electric-vehicle leader Tesla (TSLA) dropped 0.6% Monday after paring sharp losses. EV peer Rivian (RIVN) surged 11.6%, while Lucid Group (LCID) skidded 5.1%. Chinese EV leaders Li Auto (LI) and Xpeng Motors (XPEV) recovered a portion of Friday’s heavy losses.
Among the top stocks to buy and watch, Endeavor Group (EDR), NXP Semiconductors (NXPI) and Pfizer (PFE) are in or near new buy zones. Recent stock market weakness suggests investors should be developing watchlists, and for the time being avoid making new purchases.
Microsoft and Tesla are IBD Leaderboard stocks. NXP was spotlighted in this week’s Stocks Near A Buy Zone story. Endeavor is featured in last week’s IPO Leaders story.
Dow Jones Futures Today
Ahead of the stock market open Tuesday, Dow Jones futures rose 1% vs. fair value, while S&P 500 futures moved up 1.3%. And Nasdaq 100 futures gained 1.8%. Remember that trading in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
U.S. Stock Market Today Overview
Last Update: 4:36 PM ET 12/6/2021
Is Stock Market Correction Over? What To Do Now
The stock market posted strong gains Monday, as the major stock indexes rebounded from Friday’s weakness. Monday marked Day 1 of a new rally attempt on the Nasdaq. That is a positive sign, but means the market correction isn’t over yet — one day doesn’t make a trend. Starting at Day 4, you are looking for the 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.
Stock Market ETF Strategy And How To Invest
While no rally has ever begun without one, not every follow-through day succeeds. That’s why you don’t want to jump back in the market 100% on a follow-through day. You want to start buying in stages and let the rally prove itself. And don’t just buy any stock on a follow-through day. Make sure you’re buying top growth stocks that are breaking out past correct buy points in heavy volume.
For now, you can find many of the next uptrend’s leaders while the market is still correcting, which can be done by using 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.
On Monday, The Big Picture commented: “After last week’s shellacking, the stock market looked due for a bounce. The major indexes delivered broadly. Monday’s action also offered more paragraphs to the script on Wall Street’s 2021 history — a script that perhaps deserves this title: ‘Rotate, Sectors, Rotate!'”
The stock market outlook was downgraded on Friday, so it’s an important time to read IBD’s The Big Picture.
Five Best Dow Jones Stocks To Watch Now
Dow Jones Stocks To Watch: Apple, Nike
At the end of Monday’s session, Apple shares moved further past a 153.27 buy point out of a cup-with-handle base, according to IBD MarketSmith chart analysis, and are extended. The 5% buy zone topped out at 160.93. Apple shares moved up 2.15% Monday.
Retail leader Nike failed to rally in line with the major stock indexes Monday, moving down 0.8%. Nike shares are about 3% below their cup base’s 174.48 buy point.
Stocks To Buy And Watch: Endeavor, NXP, Pfizer
IPO Leader and Ultimate Fighting Championship owner Endeavor Group continues to build a cup-with-handle base with a 31.80 buy point, according to IBD MarketSmith chart analysis. Shares are about 5% away from the new entry. The stock was up 2.7% Monday.
The stock’s relative strength line is making solid upward progress and is at its highest level since early October. The RS line measures a stock’s price performance vs. the broad market. A strengthening RS line during periods of market weakness indicates leadership potential.
Chip leader NXP Semiconductors is trying to break out past a 227.60 buy point in a cup-with-handle base, but closed below the entry amid Monday’s 1.25% fall.
Drug giant Pfizer gave up a 51.96 buy point in a cup base following Monday’s 5.1% decline. The 5% buy zone tops out at 54.56.
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 Friday’s sharp loss. Shares bounced over 7%, finding support around the long-term 200-day moving average.
Xpeng Motors triggered the round-trip sell signal from a 48.08 buy point during last week’s decline. Investors should sell the growth stock if it falls back near the buy point after it has made a gain of more than 10%. Try to sell before all gains are wiped away. XPEV shares ended Monday back above their 50-day support level. Wait for the stock to form a new base, which would offer a new entry.
Lucid Motors shares slashed losses Monday, but still fell more than 5% after the company said the Securities and Exchange Commission has requested documents related to a probe of its blank-check deal with Churchill Capital. LCID stock remains extended past a 28.49 buy point in a cup-with-handle base, but huge gains have dwindled.
Hot initial public offering Rivian surged 11.6% Monday after a number of strong analyst ratings. Rivian was initiated with a outperform rating and 130 price target by Wedbush. And Morgan Stanley initiated Rivian with an overweight rating and a 147 price target.
RIVN shares closed Monday about 35% 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 Monday’s strong gain was a step in the right direction.
Tesla stock slashed heavy losses to 0.6% Monday after the SEC is reportedly looking into Tesla after a whistleblower disclosed solar panel defects, Reuters reported. Shares extended a three-day losing streak, but they found much-needed support at the critical 50-day moving average.
Shares traded as high as 1,243.49 on Nov. 4, but the stock ended Monday about 19% off its 52-week high.
TSLA shares remain sharply above a 764.55 buy point in a cup with handle, as well as earlier entries at 700.10 and 730. The chart also showed an alternate entry at 900.50. Tesla shares are likely forming a new base, but there is no new buy point yet.
Dow Jones Leaders: Microsoft
Among Dow Jones stocks, software giant Microsoft moved up 1% Monday, snapping a four-day losing streak. The stock found support around its 50-day line.
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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