Dow Jones futures rallied 300 points Monday, as the stock market looks to rebound from last week’s sharp losses. VMware (VMW) surged 23% early Monday after Bloomberg said Broadcom (AVGO) is in talks to acquire the cloud service provider. Broadcom shares tumbled 5% in response.
Amid a young and struggling stock market rally, Dow Jones leaders Chevron (CVX) and Merck (MRK) — along with Northrop Grumman (NOC), Eli Lilly (LLY), Exxon Mobil (XOM) and World Wrestling Entertainment (WWE) — are among IBD’s top stocks to watch for Monday.
Dow Jones Today: Treasury Yields, Oil Prices
Ahead of Monday’s open, Dow Jones futures moved up 1% vs. fair value, and S&P 500 futures gained 0.95%. Nasdaq 100 futures rose 0.5% in morning trade.
The 10-year Treasury yield ticked higher to 2.82% Monday morning after ending Friday at 2.78%. Following a second straight week of losses, the 10-year Treasury yield closed at its lowest level since April 26. Meanwhile, U.S. oil prices climbed less than 1%, with West Texas Intermediate crude trading at $111 a barrel.
Struggling Stock Market Rally
The major stock indexes posted mixed action Friday, as the Dow Jones industrials and S&P 500 managed small gains, while the Nasdaq closed modestly lower.
Friday’s The Big Picture column commented, “The Dow Jones Industrial Average waged a bullish reversal in the final hour of trading Friday to eke out a tiny gain. The Nasdaq composite almost did the same but closed with a 0.3% loss. Regardless, heavy selling damage marketwide led to the early death of yet another confirmed uptrend.”
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Dow Jones Stocks To Watch: Chevron, Merck
Dow Jones leader and energy giant Chevron continues to build a flat base that has a 174.86 buy point, according to IBD MarketSmith chart analysis. Shares stemmed their slide Friday around their 50-day line. CVX shares traded up 0.8% Monday.
Merck, a Dow Jones and IBD SwingTrader stock, is trading towards the top of a buy range above a cup-with-handle’s 89.58 buy point, as shares rallied 1.6% Friday. The 5% buy area goes up to 94.06. MRK shares were up 0.6% Monday morning.
The stock’s relative strength line hit more new highs Friday, a strong indicator of stock market outperformance during the current stock market correction.
Stocks To Watch: Northrop Grumman, Exxon, Eli Lilly, WWE
Wednesday’s IBD Stock Of The Day, Northrop Grumman, is building a cup with handle with a 477.36 buy point, according to IBD MarketSmith chart analysis. The stock is falling further below its 50-day line amid a three-day losing streak. NOC stock was flat Monday morning.
Pharmaceutical giant Eli Lilly rose 0.7% Friday. Shares of the IBD Leaderboard stock are finding support around their 50-day moving average line and are approaching a flat base’s 314.10 buy point. An early buy trigger at 309.54 is also in play. Eli Lilly shares were up more than 1% Monday after SVB Securities started the stock with an outperform rating and a 341 price target.
World Wrestling Entertainment is one of the top stocks to watch after closing Friday on a four-day win streak. WWE shares are back above their 50-day line and approaching a flat base’s 63.81 buy point. Shares were unchanged early Monday.
Tesla stock tumbled more than 6% Friday, finishing down 13.7% for the week and hitting its lowest level since late July. Shares threatened to add to those losses Monday morning, trading down 1%. Shares remain sharply below their 50- and 200-day moving averages.
Tesla reportedly aims to resume full production of 2,600 vehicles per day at its Shanghai plant as of Tuesday, Reuters reported Monday, citing a company memo. That’s up from 1,000 as of Monday.
The stock traded as high as 1,243.49 on Nov. 4 and is about 47% away from that all-time high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple shares reversed 0.2% higher Friday. The stock is far below its long-term 200-day line and about 25% off its 52-week high. Apple shares moved up 0.3% Monday.
Software leader Microsoft declined 0.2% Friday, falling for a third straight day. MSFT shares are sharply below their 50- and 200-day lines. The stock closed around 28% off its 52-week high. Microsoft stock gained 0.4% Monday.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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