The Trader Harbor
  • Business
  • Politics
  • World News
  • Stocks
  • Business
  • Politics
  • World News
  • Stocks

The Trader Harbor

Stocks

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

by admin 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

0
FacebookTwitterGoogle +Pinterest
previous post
Trump set to host rally in Biden’s home state ahead of hush money trial
next post
MEM TV: Time To SELL EVERYTHING?!

Related Posts

Stock Market Today: Real Estate and Tech Lead,...

September 11, 2024

Bearish Divergence Suggests Caution For S&P 500

June 14, 2025

Equities Look for “Energy” in “Go” Trend

November 19, 2024

Three Big Negatives Overshadow the Uptrends in SPY...

December 21, 2024

What’s The Outlook For December AND For 2025?

December 7, 2024

The Easiest Road to Supercharge Your Investing Reflexes...

May 3, 2025

The S&P 500 Snapped Back Hard: Now What?

May 17, 2025

Why the Market is Ready to Rally!

March 15, 2025

2023 Q4 Earnings Analysis and Projections Through 2024...

April 12, 2024

Week Ahead: Upsides For NIFTY May Stay Capped;...

April 29, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest

    • Amazon extends Prime Day discounts to 4 days as retailers weigh tariffs and price increases

      July 10, 2025
    • Breakout Watch: One Stock in Each Sector to Watch Now

      July 10, 2025
    • Small Caps Are Rotating In — Here’s Why It Matters

      July 10, 2025
    • Want Faster, Lower Risk Trades? Use This Setup

      July 10, 2025
    • The Seasonality Trend Driving XLK and XLI to New Highs

      July 10, 2025
    • Biden doctor dodges questions in speedy House closed-door interview

      July 10, 2025

    Categories

    • Business (1,287)
    • Politics (3,949)
    • Stocks (1,504)
    • Uncategorized (45)
    • World News (1,280)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: TheTraderHarbor, 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 © 2025 thetraderharbor.com | All Rights Reserved