The major indexes closed mixed Monday, with the Dow eking out a gain, as investors await key inflation reports this week. Leading growth stocks flashed buy signals or remain in buy zones amid the ongoing rally.
The Dow Jones Industrial Average rose 0.2%, while the S&P 500 dipped 0.1%. The tech-heavy Nasdaq slipped 0.2%.
Nvidia, Microsoft, Amazon and other top-performing stocks are setting up again. Their technical strength shows resilience even as the market treads water before potentially volatile inflation data.
Earnings growth and institutional buying have supported leading stocks as the rally persists. Growth names in and around buy zones remain attractive amid light volume.
Inflation Reports Loom
The Consumer Price Index for October arrives early Tuesday, providing an update on price trends. The Producer Price Index follows Wednesday.
Investors are looking for signs inflation continued to ease in October. This could strengthen the case for smaller Fed rate hikes going forward.
Markets see an 85% chance the Fed will raise rates by 0.5 percentage points in December, not the 0.75 point move at the past four meetings. But expectations could shift quickly depending on inflation readings.
Ahead of Tuesday’s open, Dow Jones futures, S&P 500 futures and Nasdaq 100 futures were little changed vs. fair value. Remember that overnight action doesn’t always translate into actual trading.
With the stock market still in a confirmed uptrend, investors should be mostly invested but ready for volatility around inflation data. The ideal exposure now stands between 60%-80%.
Breakouts In Growth Stocks
Growth stocks breaking out past proper buy points remain a key focus. IBD’s MarketSmith Growth 250 list highlights leading stocks surging past new entries.
Checking for stocks nearing potential buy points is also important. The MarketSmith Near Pivot Point list identifies names forming sound bases ahead of breakouts.
IBD stock lists like the IBD 50, Big Cap 20 and Stocks Near A Buy Zone should be reviewed daily for actionable ideas. Focusing on highly-rated stocks in strong uptrends is critical in this environment.
Amazon, Nvidia Flash Buy Signals
Amazon (AMZN) reclaimed its 50-day moving average last month and is back above an early entry of 134.48. It’s now within range of a 145.86 buy point in a cup base, while a handle entry could emerge. Shares dipped 0.7% Monday.
Amazon has rebounded 24% from its bear market low, reflecting renewed institutional interest. Its cloud computing leadership should continue driving growth.
Nvidia (NVDA) is now in buy range above a 476.09 entry in a double bottom base. It surged Friday and added 0.6% Monday on increased volume. The graphics chip leader reports earnings November 21.
Nvidia has skyrocketed 230% in 2023 as it dominates key tech trends like AI, gaming and the metaverse. A strong quarterly report could provide its next catalyst.
MercadoLibre (MELI) is tightening up after last week’s pause, working on a cup base with a 1,398.59 buy point. The Latin American e-commerce giant ticked up 0.3% Monday. Its strong revenue growth has accelerated the past two quarters.
UnitedHealth In Buy Zone
UnitedHealth (UNH) is trading nicely above a handle buy point of 546.78. Shares edged up 0.2% Monday.
The Dow Jones health insurance giant has grown revenue and earnings at a strong double-digit pace in recent quarters. Its RS line hit a new high with Friday’s gain, reflecting its leading performance.
On the downside, Dow tech titans Apple (AAPL) and Microsoft (MSFT) edged lower Monday. But both remain in position to break out.
Apple is tracing a base with a 198.23 entry. Microsoft is working on a new flat base with a 366.78 buy point. It briefly traded above an earlier entry before pulling back.
What To Do In The Current Market
This is a time to be mostly invested in leading stocks, but ready to get defensive quickly if necessary. Have your watchlists ready with names setting up or breaking out with sound technicals.
Be prepared to take some profits or cut losses short if the market turns volatile on inflation data. Remember that protecting gains is just as important as capturing upside in unstable conditions.
While growth stocks have shown impressive resilience, new breakouts should be approached cautiously until more certainty returns. Even leading stocks can see swift sell-offs on negative surprises.
By staying flexible and focusing on market direction and actionable setups, investors can navigate risks in the coming weeks. The uptrend remains intact for now, but inflation could upend the positive momentum.
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Stocks To Watch
Here are four stocks to watch in today’s market, including a leading Dow Jones stock.
Company Symbol Buy Point Type of Base Intel INTC 37.22 Double bottom
Walmart WMT 165.85 Flat base UnitedHealth UNH 546.78 Handle Nvidia NVDA 476.09 Double bottom
Software leader ServiceNow and discount retailer Dollar Tree are setting up in bases. Chip stock NXP Semiconductors is back above its 50-day line as it works on a new flat base. Keep an eye on stocks forming bases or retaking key support levels.
Tesla Reclaims Key Level
Tesla stock popped over 4% Monday, retaking its 200-day moving average for the first time since April. Shares have repeatedly run into resistance around that level in recent weeks.
The sharp rebound reflects ongoing interest in Tesla stock despite its shortcomings. But TSLA still faces major hurdles before definitively breaking its downtrend.
The coming days will show whether stocks can keep making progress amid inflation uncertainty. By focusing on leading stocks in strong uptrends with sound entries, investors can position themselves for gains while limiting risk.