Futures Bounce After Market Sell-Off

Dow Jones futures, along with S&P 500 futures and Nasdaq 100 futures, were higher early Tuesday following Monday’s stock market sell-off. Tech giants Advanced Micro Devices, Apple, Nvidia and Tesla stock bounced premarket Tuesday, but upside was limited.


Among the Dow Jones leaders, Apple (AAPL) rallied 1% premarket Tuesday, while Microsoft (MSFT) moved up 0.8% in today’s stock market. Nike (NKE) is forming a new base ahead of Thursday’s earnings results.

Tesla (TSLA) rallied nearly 1% premarket Tuesday, looking to recover a small part of Monday’s nearly 4% skid. The stock is just above its latest buy point. Chip giants Advanced Micro Devices (AMD) and Nvidia (NVDA) ascended 0.7% and 1.3%, respectively.

Among the top stocks to buy and watch, Chipotle Mexican Grill (CMG) and Deckers Outdoor (DECK) held relatively well during Monday’s stock market weakness.

Deckers, Microsoft and Tesla are IBD Leaderboard stocks. Chipotle was featured in this week’s Stocks Near A Buy Zone column.

Dow Jones Today: Fed Meeting To Start

Ahead of the stock market open Tuesday, Dow Jones futures rallied 0.7% vs. fair value, while S&P 500 futures gained 0.7%. Nasdaq 100 futures rose 0.8% vs. fair value. Remember that trading in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

The Federal Reserve’s two-day meeting will begin Tuesday. Investors will look for insight into the Fed’s plans regarding its bond purchases and interest rates.

Monday’s sell-off was spurred by fears over property developer China Evergrande Group. Investors increasingly believe that Beijing will let Evergrande fail and inflict losses on its shareholders and bondholders, according to the Wall Street Journal The company’s debt burden is the biggest for any publicly traded real estate management or development company in the world.

Among exchange traded funds, Innovator IBD 50 (FFTY) was not yet trading in the premarket Tuesday. Nasdaq 100 tracker Invesco QQQ Trust (QQQ) rallied 0.6%. And the SPDR S&P 500 ETF (SPY) moved up 0.6%.

Stock Market Breaks Key Support

The Nasdaq broke down sharply below its 50-day line Monday, adding more selling pressure to the major stock indexes. The S&P 500 broke support at that level Friday, while the Dow Jones Industrial Average hit its lowest level since June 21.

Monday’s The Big Picture commented, “Spurred by a 3% thrashing of stocks in the Hang Seng benchmark in Hong Kong, U.S. stocks took the cue that the potential collapse of China’s real estate giant Evergrande served as a reason to take profits. The S&P 500 gapped lower at the open. After a brief spell of buying, the index resumed its sell-off. It sank as much as 2.9%. Yet the late-hour drive of buyers cut the day’s loss to 1.7%.”

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Dow Jones Stocks To Buy And Watch: Nike

Dow Jones leader Nike is tracing a flat base with a 174.48 buy point, according to IBD MarketSmith chart analysis. But shares are below their key 50-day moving average line and on a six-day losing streak following Monday’s 1.4% loss. Shares were up 0.7% premarket Tuesday.

Nike earnings are due Thursday.

Through Sept. 10, Nike was the No. 8 performer on the Dow Jones Industrial Average, advancing more than 15%. Goldman Sachs (GS) was the top Dow Jones stock, with a year-to-date gain of 52% through Sept. 15.

Stocks On The Move: AMD, Nvidia

Chip giants Advanced Micro Devices and Nvidia looked to rebound from Monday’s sharp losses.

AMD stock moved up 0.4% premarket Tuesday, recovering a small part of Monday’s 2.2% decline. Shares are forming a consolidation with a 122.59 buy point, according to IBD MarketSmith chart analysis. AMD stock is now below its 50-day line, a sign of weakness for the stock’s base-building process.

Nvidia rallied about 1% premarket Tuesday. The stock triggered the round-trip sell signal from a 207.43 buy point in a cup with handle. Investors should sell when a stock gives up the entirety of a double-digit gain to avoid taking a loss.

Stocks To Buy And Watch: Chipotle, Deckers

Friday’s IBD Stock Of The Day, Chipotle Mexican Grill, is rebounding from its key 50-day moving average, though it is a two-day losing streak. Shares were unchanged premarket Tuesday. The burrito chain has been trading tightly following a post-earnings jump. Look for continued support around its 10-week line, which would be bullish for the stock’s prospects during the current market weakness. Positively, the stock’s RS line is at new highs.

According to IBD Stock Checkup, CMG stock boasts a perfect 99 IBD Composite Rating. The IBD Composite Rating identifies stocks with a blend of strong fundamental and technical characteristics.

IBD Leaderboard stock Deckers Outdoor is trying to break out past a 444.58 entry in a flat base, according to IBD MarketSmith, but is about 4% below the entry following two straight days of losses. Shares were unchanged premarket Tuesday. Per Leaderboard commentary, the top retail stock is below a mini-trendline entry near 433 that provided an early buy point. Its relative strength line is also near new highs.

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Tesla Stock

Tesla stock rallied 0.6% premarket Tuesday, bouncing after Monday’s 3.9% tumble. Shares are holding just above the stock’s latest buy point at 730. Shares also remain above their 700.10 aggressive buy point deep inside a correction. Meanwhile, a deep, large base continues to take shape.

On Jan. 25, Tesla stock hit a record-high 900.40, after climbing as much as 93% from a 466 buy point in a cup-with-handle.

Dow Jones Leaders: Apple, Microsoft

Among the top Dow Jones stocks, Apple moved up about 1% premarket Tuesday, looking to end a three-day losing streak. The stock is sharply below key support at the 50-day line. On Monday, Apple stock hit its lowest level since early July.

Software giant Microsoft rose 0.6% premarket Tuesday, on pace to recover a small part of a sharp two-day slide. Shares Monday briefly traded below their 50-day line for the first time since a June 21 breakout above a 263.29 buy point before closing just above it.

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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