Insiders Advisor
  • Stocks
  • World News
  • Business
  • Politics
  • Stocks
  • World News
  • Business
  • Politics

Insiders Advisor

Stocks

Keeping Up With The Jones – How Weakness in This Index May Foretell a Broader Market Correction

by April 13, 2024
April 13, 2024
Keeping Up With The Jones – How Weakness in This Index May Foretell a Broader Market Correction

The Dow Jones Industrial Average fell 2.4% last week in a move that pushes this index further below its key 50-day simple moving average. While not the most widely followed index, the Dow has continued to evolve so that its 30 components more closely represent the current economy. Amazon’s (AMZN) inclusion at the end of February is the latest modification, where it joins Apple (AAPL), Microsoft (MSFT), and Salesforce (CRM) to name just a few of the heavier-weighted names.

Daily Chart of Dow Jones Industrial Average

Leading this index lower last week was a 7.4% decline in J.P. Morgan Chase (JPM), which fell following the release of their first quarter earnings on Friday. While the company’s results were strong, CEO Dimon’s tepid outlook for growth going forward pushed the stock lower. Among the risks cited by management were high inflation and the potential for the Federal Reserve to tighten monetary policy. Geopolitical risks were also mentioned.

Most notable on JPM’s chart, however, was the fact that it was trading at a new high in price prior to the release of their report.  In other words, the stock was priced for perfection, such that any hint of a possible slowing of growth pushed the stock sharply lower.

Currently, we are at the very beginning of earnings season and, should we see a similar reaction to well-known companies reporting results while their stock is priced at a near-term high, we could be in for some tough sledding. Netflix (NFLX) is the next well-known company due to report next week, followed by Microsoft (MSFT), Alphabet (GOOGL), and Meta Platforms (META) the following week. Each of these stocks are trading at near-term highs and are susceptible to weakness amid any talk of a rise in interest rates.

Comparative Chart of Dow, S&P 500 and NASDAQ – June 2023-Current

Above is a comparative chart of the Dow Jones Industrial Average versus the S&P 500 and the NASDAQ Composite. As highlighted, the Dow led the markets into a new uptrend, which began in early November. More recently, many of those winning stocks from the Dow are now in downtrends, after closing below their key 50-day simple moving average.

These winners were from a broad cross-section of sectors, such as Industrials, Financials, and Consumer Discretionary, and include Home Depot (HD) and J.P. Morgan (JPM), to name just two. My screening showed the weakness that had been spreading in these sectors, as I removed several Retailers from my MEM Edge Report Suggested Holdings List over the past several weeks and took off Bank stocks earlier this week. The deterioration among these Discretionary, Financial, and Healthcare stocks from the Nasdaq and the S&P 500 may be harder to spot, given the large number of names in their index; however, my MEM Edge Report has been detailing the weakness for weeks now.

Most important at this time is the fact that both the Nasdaq and S&P 500 are hovering above key support, and you’ll want to preserve profits should we see a downtrend develop. While interest rates are a key determinant of investor sentiment, earnings reports have been proven to be more impactful. If you’d like to be kept up to date on the condition of the broader markets, as well as how to handle stocks depending on your investment horizon, use this link here to access my twice weekly report for 4 weeks for a nominal fee.

Warmly,

Mary Ellen McGonagle

MEM Investment Research

previous post
S&P 500 Flashes Major Topping Signals
next post
Trump Media shares end week down nearly 20%, losing billions in market cap

Related Posts

Rules-Based Money Management – Part 5: Security Selection,...

May 16, 2024

MEM TV: Risk-Off Signals Possible Downside Ahead

March 16, 2024

Using Nasdaq 100 Specific Breadth to Measure Risk...

July 15, 2024

EQUITIES CLIMB OFF LOWS WITH A PUSH FROM...

April 29, 2024

Finding Leaders and Bullish Signals on the Price...

February 25, 2024

Traders are Eyeing These Metals After China’s Big...

October 1, 2024

Market Timing for a Rule-Based Strategy

September 9, 2024

Week Ahead: NIFTY May Stay Subdued Over the...

April 13, 2024

Biotechs Looking Up – Two Stocks To Take...

January 24, 2025

Bitcoin Halving Could Bring Massive Upside!

April 17, 2024

    Fill Out & Get More Relevant News


    Stay ahead of the market and unlock exclusive trading insights & timely news. We value your privacy - your information is secure, and you can unsubscribe anytime. Gain an edge with hand-picked trading opportunities, stay informed with market-moving updates, and learn from expert tips & strategies.

    Latest News

    • Kash Patel torches ‘conspiracy theories’ about Bondi feud amid MAGA furor over Epstein files

      July 13, 2025
    • Trump defends embattled AG Pam Bondi, says ‘nobody cares about’ Jeffrey Epstein

      July 12, 2025
    • Bondi says all charges against doctor who allegedly destroyed COVID vaccines have been dropped

      July 12, 2025
    • Meet ‘China’s man in Lima’ who jetted over to US to collect trains donated by Biden admin

      July 12, 2025
    • Inside Dan Bongino’s tense meeting with White House officials over Jeffrey Epstein fallout

      July 12, 2025
    • Could Butler happen again? Former Secret Service agents weigh in on political violence in 2025

      July 12, 2025

    Categories

    • Business (1,304)
    • Politics (6,359)
    • Stocks (904)
    • World News (460)
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: insidersadvisor.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 insidersadvisor.com | All Rights Reserved