The Dow Jones Industrial Average forfeited an early rebound of 1.7% to end with a 0.5% drop in the stock market today. A key change in the current outlook for stocks took place Tuesday after major equity indexes sold off.
XThe Tuesday Big Picture column offers more details on the current outlook and how to prepare for the next inevitable uptrend.
Apple (AAPL) was among a small handful of blue chip stocks in the Dow industrials to gain 1 point or more. However, the iPhone, Macbook and digital services megacap firm still hangs beneath its 50-day moving average.
Strong stocks hold firmly at the 50-day line, or quickly rebound back above it during a general pullback in the stock market. Thus, the Dow Jones stock is not flashing a new buy point for now.
At the day's high of 297.88, Apple still showed a 34% increase after it broke out of a flat base at 221.47 on July 31, its most recent breakout.
Also in the Dow industrials, 3M (MMM) and cloud computing giant Microsoft (MSFT) outperformed the general market. The latter is fighting to hold at its 50-day moving average, a sign of strength. Late Wednesday, Microsoft warned that it will miss its forecast for its More Personal Computing business segment as the supply chain takes longer than expected to return to normal.
The Nasdaq composite saw a 2% intraday gain shrink to a disappointing 0.2% advance.
While the S&P 500 finished 0.4% lower, the small-cap S&P 600 and the Russell 2000 fell 1.2%. That sent the latter index down more than 7% for the week and further below its long-term 200-day moving average.
Innovator IBD 50 ETF (FFTY) saw early gains wither into a loss of less than 0.1%. The exchange traded fund is acting like it's pinned to the 200-day moving average. Such action reinforces the notion that the market is now in correction mode.
The Cost Of Money May Fall By April
The yield on the benchmark U.S. Treasury 10-year note rebounded 2 basis points to 1.35%. It had fallen by 13 basis points since Friday last week. While futures traders monitored by CME see only a 36.5% probability that the Federal Reserve will shave interest rates by at least a quarter point (from its current level of 1.5%-1.75% in the fed funds rate) at next month's meeting, chances spike to 74.6% by the FOMC meeting on April 29 and 88% by June 10.
In the retail space, TJX (TJX) ended a three-day slide with a solid gap-up at the open, en route to a gain of more than 6%. The stock hurdled back above its 50-day moving average in nearly triple usual turnover.
The discount retail chain, which operates Marshalls, HomeGoods and TJ Maxx, is today's IBD Stock Of The Day showcase.
But in the home improvement arena, Lowe's (LOW) got trampled by sellers. Shares slumped 4.4% in volume that gushed 265% above its 50-day average. Lowe's undercut its 50-day line in accelerating volume on Tuesday, marking a key defensive sell signal.
Lowe's reported a 17% rise in fiscal fourth-quarter profit to 94 cents a share, edging Wall Street's consensus forecast by 3 cents. Sales gained 2%, stretching a series of flat to low single-digit top-line growth to six straight quarters.
Beyond Dow Jones: Diabetes Stocks Cool Off
Diabetes care firms struggled after Insulet (PODD) posted adjusted earnings of 8 cents a share in the fourth quarter, missing the FactSet consensus view. Revenue rose 27% to $209.4 million, the highest for any quarter. But shares dived more than 8% and sharply undercut the 50-day moving average in the heaviest turnover for a down day since September.
The stock gave back all of a 17% profit from a recent breakout at 187.35 in a six-week flat base. That would justify selling shares for those who purchased the stock at the entry.
A further decline below both the 50-day moving average and the 10-week line would trigger a key defensive sell signal.
Notice how Insulet, a specialist in insulin pumps, has survived drops below the 50-day line at least four times since April 2019.
The stock and its industry peers were discussed during today's IBD Live show.
Please follow Chung on Twitter at @SaitoChung and @IBD_DChung for more on growth stocks, buy points, sell rules, breakouts, chart analysis and stock market insight.
YOU MIGHT ALSO LIKE:
After Hours: Tech Titan Warns On Coronavirus
Join IBD Live And Learn Top Chart-Reading And Trading Techniques From The Pros
How To Find The Next Apple, Amazon, Microsoft, Home Depot: Start With A Good Stock List
MarketSmith: Research, Charts, Data And Coaching All In One Place
