Dow Jones reverses as stock market hits critical support level

The Dow Jones Industrial Average reversed lower on Tuesday morning, threatening to add to recent losses ahead of the last two August sessions. The stock market faces a significant test, as major equity indices retreat to key levels.


The main drivers of earnings on Tuesday included the Chinese search engine giant Baidu (BEGINNING) and best buy (BBY). Defense and aerospace leader Hi (HERE) also reported.

Shares of BIDU rose 1% after better-than-expected results, while Best Buy Stocks climbed 4%. Heico shares rose nearly 1% in early morning trading.

Tesla stock, the leader in electric vehicles, rebounded 1% on Tuesday. From Dow Jones Industrialiststech titans Apple (AAPL) and Microsoft (MSFT) increased by 0.5% each, after today’s stock market open.

In the current stock market volatility, Arista Networks (sides), Costco (COST), GlobalFoundries (SFP) and Ultimate beauty (ULTA) — as well as Dow Jones stocks Chevron (CLC) and McDonald’s (MCD) – are among the best stocks to buy and watch. Keep in mind that increased market volatility is a good reason for investors to be more defensive.

Costco is a IBD classification stock following a recent breakout, while Chevron and Ulta Beauty were featured in this week’s Stocks Near A Buy Zone column. Arista was the IBD stock of the day Friday.

Dow Jones Today: Treasury Yields, Oil Prices

Early Tuesday, the Dow Jones Industrial Average fell less than 0.1%, while the S&P 500 traded down 0.1%. The tech-heavy Nasdaq composite erased early gains in morning trade.

Among exchange traded fundsthe Nasdaq 100 Invesco QQQ Trust tracker (QQQ) rose 0.1% and the SPDR S&P 500 ETF (TO SPY) was down 0.1% in early trade.

The 10-year Treasury yield fell to 3.1% early Tuesday. On Monday, the 10-year Treasury yield closed at its highest level since June 28.

U.S. oil prices retreated after surging to their August high above $97 a barrel on Monday. West Texas Intermediate futures fell nearly 3% to trade just above $94 a barrel.

Key level of stock market tests

On Monday, the Nasdaq closed down 1%, ending just at the 50-day moving average. This gives the index a chance to either rebound or head further south. The Dow Jones Industrial Average is also testing 50-day support.

Monday’s The Big Picture column commented: “A 6% cushion above (the 50-day line) has disappeared over the past two Nasdaq sessions. A break below the line would bring another – possibly worse – bearish sign. So how the indices behave around the 50-day line this week matters a lot.”

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Five Dow Jones stocks to watch now

Dow Jones stocks to watch: Chevron, McDonald’s

Dow Jones Chevron stock is up more than 24% from a low in mid-July. It is methodically building a cup base with a buy point of 182.50, amid strong performance by energy stocks so far this year. An early entry at 164.76 is also in play. The stock fell 1.4% as oil prices fell early on Tuesday.

CLC action shows a solid 97 over a perfect 99 IBD Composite Assessment, speak IBD inventory check. Investors can use the IBD Composite Rating to easily assess the quality of a stock’s fundamental and technical metrics.

McDonald’s shares are now about 3% lower at an entry of 265.56 cups with handle after Monday’s 2.1% decline, according to IBD MarketSmith graphical analysis. Shares of MCD traded up 0.2% on Tuesday morning, hinting at a possible rebound from 50-day support.

4 most important growth stocks to buy and watch in the currentrStock market rally

Top stocks to watch: Arista, Costco, GlobalFoundries, Ulta

Arista Networks added a handle to a double-bottom base, placing the correct entry at 132.97, according to IBD MarketSmith graphical analysis. Arista’s relative strength line holds near recent highs despite recent market weakness, a bullish sign. ANET shares rose 1.2% early Tuesday.

IBD classification Costco stock fell even lower than its buy point of 552.81 from a cup with handle, as shares fell 3.4% on Monday. Wait for a bullish resumption of the entry before buying stocks. Shares traded up 0.6% early Tuesday.

GlobalFoundries reverted to a double bottom Buy point of 61.98 on Monday, slippage of 6%. An alternative entry, from a handful, is in play at 66.06. GFS shares gained 1.2% on Tuesday.

Cosmetics leader Ulta Beauty is just above a double bottom Buy point of 417.08 after Monday’s 1.5% gain. Stocks are in a buy zone, but the current market weakness should give pause. ULTA shares rose 0.4% on Tuesday morning.

Join IBD experts as they analyze the top stocks of the current stock market rally on IBD Live

Tesla Stock

Tesla Stock fell 1.1% on Monday, extending a losing streak to three sessions. Shares of the electric vehicle giant rebounded 1% on Tuesday morning.

Tesla stock continues to struggle against resistance around its 200-day line. Tesla is about 31% off its 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones Stocks, Apple shares fell another 1.4% on Monday as they trade around 10% of a cup with a handle with a buy point at 176.25. On the upside, the stock’s relative strength line holds near new highs, indicating continued stock market outperformance. Shares rose 0.5% on Tuesday morning.

Microsoft was down 1.1% on Monday, still closing below its 50-day line. Stocks remain well below their long-term 200-day line and about 24% off their 52-week high. The stock gained 0.5% early Tuesday.

Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen to learn more about growth stocks and the Dow Jones Industrial Average.


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