What to do in a new stock market correction before the Fed meeting

Dow futures rose 120 points after the stock market rose on Monday ahead of the Federal Reserve’s two-day monetary policy meeting. Despite Monday’s gains, the stock market trend is still correcting after last week’s big market losses.




X



stock market today

On Monday, the Dow Jones Industrial Average advanced 0.6%, while the S&P 500 gained 0.7%. The technology-heavy Nasdaq Composite is up 0.8%. Small cap Russell 2000 also rose 0.8%.

Among the exchange-traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) rose 0.6%, and the SPDR S&P 500 (SPY) rose 0.8%.

US stock market overview today

index Code price win/loss % change
Dow Jones (0 DJIA) 31019.82 +197.40 +0.64
Standard & Poor’s 500 (0S&P5) 3900.00 +26.67 +0.69
Nasdaq (0NDQC) 11535.02 +86.62 +0.76
Contact 2000 (IWM) 180.52 +1.53 +0.85
defect 50 (fifty fifty) 27.06 +0.10 +0.37
Last update: 4:28 PM ET 9/19/2022

This week’s key earnings reports come from costco (cost), Darden Restaurants (DRI), general mills (GIS), KB Home (KBH) and linar (flexible).

Giant EV Tesla TSLA stock rose 1.9% on Monday. Among the leaders of Dow Jones, apple (AAPL) rose 2.5%, while Microsoft (MSFT) lost 0.1% in the stock market today.

In light of the current market weakness, continental resources (CLR), double check (DV) and Vertex Pharmaceuticals (VRTX) – as well as shares of Dow Jones chevron (CVX) and merck (MRK) – Among the top stocks to watch. Keep in mind that the new stock market correction is a good reason for investors to be often, if not entirely, on the sidelines.

DoubleVerify is the IBD Leaderboard stock, but its position has been scaled back during last week’s losses. Tesla appeared in the stock column near the buy zone for this week.

Dow futures today: Treasury yields, oil prices

Ahead of Tuesday’s open, Dow Jones futures are up 0.4% against fair value. S&P 500 futures are up 0.45% and Nasdaq 100 futures are trading 0.55% above fair value. Remember that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.

The 10-year Treasury yield rose to 3.49% on Monday, surpassing an 11-year high of 3.48% set on June 14. barrel.

Fed meeting kick-off

The Federal Reserve’s two-day meeting will begin on Tuesday, with a decision on the interest rate on Wednesday. Markets show an 82% chance that the central bank will raise interest rates by 75 basis points and an 18% chance of a 100 basis point hike.

Investors will be looking for hints about the pace of future rate hikes, and how far the central bank will eventually rise.

What to do in a stock market correction

After heavy losses incurred last week, the International Development Bank downgraded the market trend from “uptrend under pressure” to “market in correction”. This means that investors have to be mostly cash, if not entirely.

To prepare for a new stock market rally, investors should wait for a follow-up day. When the market is in a correction, look for at least one major indicator to try to reach the bottom. On the first day the indicator closes higher counts as the first day of its upward attempt. (Monday is the first day of trying the pool). The action on day 2 and day 3 is irrelevant as long as the indicator does not reduce its lowest level. If this low is trimmed, the rally will be attempted and the market will need to try again.

On the fourth day and beyond, you were looking forward to the NASDAQ or S&P 500 rising sharply with higher trading volumes than the previous session. This is a follow up day. It gives investors the green light to start buying blue-chip stocks that are above the right buy points. You must keep your portfolio and mindset in sync with the movement of the stock market by gradually committing your capital to leading stocks.

While waiting for a new uptrend, build a watch list of potential market leaders using the relative strength line. The RS line measures the stock’s price performance against the S&P 500 index. If the stock is outperforming the broader market, the RS line tends to the upside. If the stock lags behind the broad market, the line will be pointing down.

Friday’s big picture column commented, “Since moving away near its 200-day moving average, the Nasdaq has fallen below all of its major moving averages. It is now down nearly 28% so far in 2022.”

If you are new to IBD, consider taking a look at the CAN SLIM Stock Trading System and Basics. Recognizing chart patterns is one of the keys to investing guidance. IBD offers a wide range of developing stock listings, such as Leaderboard and SwingTrader.

Investors can also create watch lists, find companies close to a point of purchase, or develop custom displays at IBD MarketSmith.


Five Dow Jones stocks to watch right now


Dow Jones stocks to watch: Chevron, Merck

Chevron is building a cup with a handle of 166.93 buying points, according to IBD MarketSmith chart analysis, amid a solid performance of energy stocks this year so far. The stock rose 0.3% on Monday, finding much-needed support at the 50-day line.

A stock CVX 97 strong IBD 99 rating shows the perfect compound, according to an IBD stock inspection. Investors can use the IBD composite rating to easily gauge the quality of a stock’s fundamental and technical metrics.

Pharmaceutical giant Merck is also fighting a downward trend in the stock market. The stock is building a flat base that has 95.82 buy points. But MRK stock is stuck below the 50-day line. Merck shares lost 1.2% on Monday.


4 growth stocks to watch at Cursstock market correction


Top stocks to watch: Continental, DoubleVerify, Vertex

Oil exploration and production company Continental Resources is building a handle-cup with 72.80 buy points, according to IBD MarketSmith chart analysis. The Relative Strength Line reached its highest level recently last week but remained slightly off its 52-week high. CLR shares rose 0.6% on Monday.

IBD Leaderboard DoubleVerify stock is still below the buy point at 28.07 at a bottom base despite Monday’s 0.55% gain. As the stock’s breakout attempt falters, it has found support around the 50-day line.

Vertex Pharmaceuticals is back below the 50-day line after Monday’s 1.6% loss. The stock has held up well during the ongoing market weakness, as evidenced by the RS line approaching new highs. There’s no new rule just yet, but the stock’s flexibility makes it a great idea to keep an eye on.


Join IBD experts as they analyze the leading stocks in the current stock market correction on IBD Live


Tesla Stock

Tesla stock rose 1.9% on Monday, recovering from Friday’s slight loss. The stock is approaching the 314.74 buy point of the short base. In the meantime, keep an eye out for additional buying points if the stock is able to climb further to the right side of the larger consolidation process, which runs through January.

Up, the stock’s RS line is at its highest level since early April. Shares are down nearly 25% from their 52-week high.

Dow Jones Leaders: Apple and Microsoft

Among Dow Jones stocks, Apple shares rose 2.5% on Monday, ending a two-day losing streak and reclaiming part of last week’s losses. The stock closed last week at its lowest level since July 18.

Microsoft lost 0.1% on Monday, paring losses after hitting a new 52-week low. The software giant is about 30% from its 52-week high.

Make sure to follow Scott Lehtonen on Twitter at Tweet embed Learn more about developing stocks and the Dow Jones Industrial Average.

You may also like:

Top growth stocks to buy and watch

Learn how to time the market with IBD’s ETF Market Strategy

Find the best long-term investments with IBD long-term leaders

MarketSmith: Research, charts, data, and training in one place

How to Find Growth Stocks: Why IBD Simplifies Finding Top Stocks

Leave a Comment