Dow Jones futures were little changed late Tuesday, along with S&P 500 futures and Nasdaq futures. The stock market correction took a new leg down Tuesday — the Dow Jones, S&P 500 and Nasdaq composite all undercut Oct. 11 lows — before roaring back to erase most of those losses. The morning stock market rout means the recent rally attempt is over. Investors should keep working on watch lists. Apple (AAPL), PayPal (PYPL), Ulta Beauty (ULTA), Microsoft (MSFT) and Dollar General (DG) are top stocks acting well right now.
Apple stock and Ulta Beauty stock boast best-possible 99 IBD Composite Ratings. Dollar General stock and PayPal stock are at 97. Microsoft stock has a very good, but not great, 95 Composite Rating.
Dow Jones Futures Today
Dow Jones futures climbed 0.1% vs. fair value. S&P 500 futures were flat. Nasdaq 100 futures fell 0.1%. Remember that overnight action doesn’t necessarily translate into actual trading in the next regular session. That can especially be true in a stock market correction, when volatility often is much higher.
It’s A Halloween Stock Market Correction
Halloween is a time of horror films in which terrorized teens defy all logic and open that scary door. Meanwhile, on Wall Street investors are tempted to jump in despite a stock market correction that is slashing portfolios without pity.
In both cases: Just. Don’t.
In a stock market correction, most stocks will decline. In a stock market rally, most stocks will rise. The goal isn’t too try to guess the market bottom, but to invest when Wall Street is handing out treats and not tricks.
Maybe stocks will shoot higher from here. Maybe the market will sell off for months or grind sideways before rebounding. The key is to be ready.
Keep Working On Your Stock Watch Lists
Look for top stocks that are holding up well in the stock market correction. These may be among the first to break out in a new rally, and often are the big winners.
Look for top stocks with relative strength lines that are rising and are at or near record highs. The relative strength line tracks a stock’s performance vs. the S&P 500 index. Stocks remaining near or above their 50-day moving averages are also a good sign.
Apple stock rose 0.9% in above-average volume on Tuesday, holding above its 50-day line after tumbling intraday with the market. The Dow Jones component’s RS line surged to a fresh high.
PayPal stock rallied 2.5% to close above its 50-day line for the first time since Sept. 27. The RS line is at consolidation highs and near all-time levels. PayPal stock has risen 13% over the last three sessions following the online payment firm’s strong results and guidance. But the recent PayPal stock outperformance began on Oct. 11.
Ulta Beauty Stock
Ulta Beauty stock fell 0.9% on Tuesday but closed near session highs and rebounded from an intraday slide below the 50-day line. The RS line is right at 52-week highs. The beauty products retailer is in a long cup-with-handle base that started in June 2017 or in a recent flat base. Either way, the Ulta Beauty stock buy point is 290.40.
Microsoft stock fell 1.4% on Tuesday but finished near session highs. Shares are modestly below their 50-day line, but the RS line is at record highs.
The Dow Jones tech giant reports quarterly results late Wednesday. Fellow Dow Jones giant Boeing (BA) reports early Wednesday, with the stock trying to hang on.
Dollar General Stock
Dollar General stock rose 0.3% Tuesday after testing, but not touching, its 50-day line. Shares are in a flat base within a base-on-base formation. The stock’s RS line is at record highs and rising.
Remember to keep adjusting your watch list. Apple stock has maintained its leadership role through the stock market correction. PayPal stock, however, was starting to look like a laggard in early October but is now looking stronger. Meanwhile, CSX (CSX) and Centene (CNC) are two top-rated stocks that were looking very strong, but then sold off on earnings.
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