The Dow Jones Industrial Average traded sharply lower on Monday morning, extending losses from Friday’s stock market selloff.
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Potential profit makers this week include discount retailers Dollar General (DG) and Dollar tree (DLTR), together with Macy’s (M), Nvidia (NVDA), Salesforce (CRM) and Toll Brothers (TOL). Palo Alto Networks (PANW) and Video scaling (ZM) report after Monday’s close.
Cruise operators were heavy on early action with Norwegian Cruise Lines (NCLH) discount of 4%. Boeing (B.A) led decliners among the Dow industrials with a 2% loss. Netflix (NFLX) fell more than 3%, following a downgrade to sell and a modest cut in price target from CFRA.
Chinese stocks showed little response early Monday after China’s central bank again cut its prime lending rates in a bid to help revive economic growth. Ali Baba (GRANDMA) shares were unchanged while JD.com (JD) rose by 1%. Tencent (TCEHY) lost nearly 1%.
A leader in electric vehicles Tesla (TSLA) traded down nearly 2% on Monday morning. elsewhere Dow Jones Technology Leaders An apple (AAPL) and Microsoft (MSFT) both fell sharply thereafter today’s stock market open.
In the current healthy stock market environment, Albemarle (ALB), Arista Networks (NETWORK), Costco (PRICE) and Ollie’s Bargain Outlet (OLLY) — as well as Dow Jones stocks Coke (KO), Merck (MRK) and McDonald’s (MCD) — are among the best stocks to buy and watch.
Albemarle and Costco were presented in the stock column near a buy zone from last week. To Costco’s stock were added IBD ranking and SwingTrader as a result of last week’s breakout. Albemarle was recent IBD Stock of the Day.
Dow Jones today: Treasury yields, oil prices
Early Monday, the Dow Jones Industrial Average was down 1.2 percent, while the S&P 500 was down 1.4 percent. The tech Nasdaq composite traded down 1.7% in morning trade.
Between exchange traded fundsthe Nasdaq 100 tracker Invesco QQQ Trust (QQQ) fell 1.4%, and the SPDR S&P 500 ETF (A SPY) fell 1.2% in early trade.
The yield on the 10-year Treasury note was holding steady at 2.98 percent early Monday, after last week’s jump. The yield on 10-year government bonds is approaching the 3% level for the first time since July 21.
Meanwhile, U.S. oil prices fell after last week’s losses sent West Texas Intermediate futures to their lowest level since January. WTI futures fell 3% to trade below $88 a barrel.
Stock market rallies
On Friday, the Nasdaq and S&P 500 snapped four-week gains with their worst session of the week on Friday. The Dow Jones Industrial Average was down 0.9%.
The next few days are likely to be key for the stock market trend as the Nasdaq and Dow Jones industrials test support levels. Meanwhile, the S&P 500 fell after finding resistance at its long-term 200-day line, a key area to watch.
The Big Picture column on Friday commented: “The rally may take a breather, and stock market losses point to at least a rest period for the major indexes. That’s not necessarily a reason for investors to run to the cash entirely, but make sure your gains don’t evaporate.”
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Five Dow Jones Stocks to Watch Now
Dow Jones stocks to watch: Coca-Cola, McDonald’s, Merck
Dow Jones soft drink giant Coca-Cola is building a flat base that has a buy point at 67.30. A handle entry at 65.14 is also in play. The stock is pulling back from its 50-day line and trying to reach the top of the entry. Shares were down 0.5% early Monday.
Shares of McDonald’s are trading just above the 265.56 handle cup, following last week’s breakout. MCD shares lost 0.6% on Monday morning.
Merck is also building a flat base, a pattern that shows a 95.82 buy point. The stock is moving further away from its 50-day line, according to IBD MarketSmith graph analysis. Merck shares fell 0.3% on Monday.
MRK shares showing a solid 94 out of a perfect 99 IBD Composite Rating, according to IBD Stock Check. Investors can use the IBD Composite Rating to easily gauge the quality of a stock’s fundamental and technical indicators.
4 Biggest Growth Stocks to Buy and Watch in the Courserstock market rally
Top stocks to watch: Albemarle, Arista, Costco, Ollie’s
Lithium producer Albemarle gave up its 273.78 point of purchase in a large cup-handled base amid Friday’s 3.4% decline. Shares remain above a smaller cup handle with a buy point at 250.25. Shares were down more than 1% on Monday morning.
Arista Networks, one of last week’s IBD 50 Stocks to Watch picks, continues to move up the right side of a double bottom base that offers a 143.67 buy point. With the stock about 9% away from the current entry, look for a handle to offer a more risk-optimal buy point. Arista’s RS line is on the rise and approaching a new high. ANET shares were down 2% in early Monday trading.
IBD ranking Costco shares remain in buy range above a mug with a 552.81 buy point despite Friday’s 1.15% decline. Shares were down 0.6% early Monday.
Ollie’s Bargain Outlet is testing its again 10 week line — critical level of support. The stock previously found support there in late July, putting the top discount retailer in a new buy zone. Stocks also carve a handle after large cup base, placing the last buy point at 72.37. Current price action is about 11% away from this entry. Shares were lower on Monday morning.
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Tesla stock
Tesla shares lost 2.05% on Friday, extending its losing streak to four sessions. Shares of the EV giant fell another 1.5% on Monday morning.
Tesla shares are struggling to overcome resistance around its 200-day line. Tesla is about 28% off its 52-week high. Its 3-for-1 stock split is scheduled for Wednesday.
Dow Jones Leaders: Apple, Microsoft
Between Dow Jones StocksApple shares sold off 1.5% on Friday, as the stock continue to build the right side of the cup base which has 179.71 buy points. Another interpretation could be a major double bottom extending into January. Either way, the point of purchase is identical. The last two days of losses could be the start of a potential handle that would suggest a lower entry.
On the upside, the relative strength line of stocks is now at new highs, indicating major stock market outperformance. Shares were down 1.2% on Monday morning.
Microsoft fell 1.4 percent on Friday, extending its losing streak to four sessions and falling further from its long-term 200-day line. Shares lost 1.5% early Monday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more information on growth stocks and the Dow Jones Industrial Average.
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