The Dow Jones erased much of its earlier loss on Monday and turned positive while the Nasdaq led the downside with heavier losses. The tech-heavy Nasdaq and the S&P 500 also traded off their session lows.
On Monday, the market paused before drifting slightly higher after a two-day bounce off correction lows. Even with Friday's gain of 3.8% on the Nasdaq, all major indexes are down sharply this year. The indexes are also trading below key moving averages such as the 50-day and 200-day lines, which is a bearish sign.
On the positive side, now is an optimal time to create watchlists of compelling stocks to watch once the market does put in a follow-through day and the next uptrend begins.
In early afternoon trading, the Dow Jones industrials traded up 0.3% while the S&P 500 lost 0.1%. Meanwhile, the small-cap Russell 2000 held a 0.5% loss, as the Nasdaq fell 0.8%. According to IBD data, volume was running lower on the Nasdaq and on the NYSE vs. the same time on Friday.
The Innovator IBD 50 ETF a benchmark for growth stocks, rose 0.8%, beating the indexes. IBD industry groups leading the upside Monday included several oil and gas-related groups. A few chemical groups also led the upside, while computer software stocks led on the downside.
Dow Jones Movers
Several stocks in the Dow Jones made notable moves on Monday.
Energy giant Chevron led the upside and is quickly approaching the 174.86 buy point of a flat base, according to IBD MarketSmith chart analysis. CVX shares traded up nearly 2% Friday, and another 3.2% on Monday. The stock is on track for a five-session win streak. Shares bullishly regained their 50-day line last week and are less than 1% away from the entry.
The RS line is also hitting a new high ahead of the stock rising to a new high, which is constructive action, market risk notwithstanding. U.S. crude oil on Monday rose 2% to $112.66 a barrel.
Drug leader Merck also led the upside with a gain of 1.8%. Shares remains above a cup-with-handle 89.58 entry. The stock initially scored a breakout in April but pulled back to test support at the 21-day line. Late last week the stock regained the buy zone, which tops out at 94.06.
The stock's relative strength line hit another high last week, indicating it has solidly outperformed during the correction. The drugmaker raised its 2022 earnings and sales guidance a few weeks ago after reporting earnings. The firm also noted it expects its Pfizer-rivaling Covid pill to bring in $5 billion to $5.5 billion in full-year sales.
Blue Chips With Earnings On Deck
Both Home Depot Walmart are expected to report earnings Tuesday. Additionally, the Census Bureau's April retail sales data is expected Tuesday morning, which could have an impact on these stocks.
Walmart is set to report fiscal 2023 Q1 earnings before the market opens tomorrow. The stock is among the few blue chips trading higher year to date. But being a consumer staples stock, investors are likely to see it as a safer bet than other stocks in the current market environment.
Analysts expect earnings per share of $1.47 on revenue of $138.78 billion. Investors are looking at results from major retailers like Walmart to gauge how consumers have been handling inflation so far.
Home Depot is also slated to report earnings, and analysts are expecting EPS of $3.68 per share on sales of $36.65 billion. The home improvement store will also report before the opening bell Tuesday.
Follow Rachel Fox on Twitter at @IBD_RFox for more Nasdaq and stock market commentary.
