Dow Jones futures fail: Market rally faces key test; Disney beats up as Bob Iger returns as CEO

Dow Jones futures fell modestly Monday morning, along with S&P 500 futures and Nasdaq futures, but Disney (DIS) increased when Bob Iger returned as CEO.


The stock market rally held support levels last week. Now can the S&P 500 break above its 200-day moving average in the coming days and weeks? Apple (AAPL) may be the key.

Apple shares held key levels and rose modestly even as the broad market generally pulled back. Like the S&P 500, the iPhone tech titan is heading back toward its 200-day line. A decisive move above that level could present a buying opportunity. But another rejection could offer another chance to short AAPL stock.

Meanwhile, fellow members of the Dow Jones boeing (BA), JPMorgan Chase (JPM) and GS shares have recorded significant falls in recent weeks, contributing to the Dow’s outperformance in the current market rally. BA stock technically sits right around a traditional buy point. Goldman Sachs (GS) is forging a deep foundation while JPM stock still has work to do.

Disney brings back Bob Iger as CEO

In other Dow stock news, Bob Iger is back as CEO of Walt Disney (DIS), with immediate effect. Iger stepped down after a long reign in February 2020 in favor of Bob Chapek, right at the height of the Covid crisis. Chapek has been criticized for a number of decisions. Disney’s earnings fell well short of views in the recent quarter, with Chapek set to announce layoffs and more cost cuts soon.

Iger has agreed to return for two years, Disney said Sunday, “to set the strategic direction for renewed growth” and to work with the board on a search for a new successor.

Disney shares jumped 9% in premarket trading. signaling the move to the 50-day line. But DIS stock is near bear market lows.

Dow Jones Futures today

Dow Jones futures fell 0.2% from fair value, with DIS stock helping to limit losses. S&P 500 futures fell 0.5%. Nasdaq 100 futures lost 0.8%.

The yield on the 10-year Treasury rose 1 basis point to 3.83%.

Crude oil futures are down. Copper is down 1%.

Hong Kong’s Hang Seng Index fell 1.9% with Beijing in effective lockdown as the city reported Covid deaths. Mixed signals from Chinese officials have added to the confusion regarding its strict “zero-Covid” policy.

Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session of the stock market.

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Analysis of the stock market rally

Last week, the Dow Jones Industrial Average rose less than 0.1% in the stock market last week. The S&P 500 index fell 0.7% and the Nasdaq composite fell 1.5%. The small-cap Russell 2000 was down 1.75%.

On Tuesday, Nov. 15, the S&P 500 briefly cleared the 4,000 mark, approaching the 200-day moving average. That level is especially important because the benchmark index pulled back just 1 point from the 200-day line on Aug. 16, triggering another leg in the bear market.

A decisive move above the 200-day line, which would also roughly coincide with a downtrend line from the January 4 all-time high, would be a powerful signal that the uptrend is more than a bear market rally.

The S&P 500 breaking above the 200-day line would also be a positive backdrop for major stocks, which are struggling near buying points in a choppy market.

Meanwhile, the Russell 2000 fell below the 200-day line last week, but will likely recover that level before the S&P 500. The Dow Jones, supported by Boeing, Goldman and JPM stocks, is comfortably above the 200-day mark . But taking out last week’s high would push the Dow back to 34,000, just below its August peak.

The Nasdaq, weighed down by aggressive growth, is 8.3% below its 200-day line. Breaking through last week’s highs would be a good first step. Also on the positive side: The 21 day moving average just broke above the 50 day line on Friday.

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The week of Thanksgiving isn’t necessarily a great time for a big market move. The markets will be closed on Thanksgiving with a half day session on Friday. Volume will likely be light throughout the week. The following week ends with a bang. On December 1, investors will receive October PCE inflation data, along with November’s ISM manufacturing index. The November work report is expected on 2 December. This news could have a big impact on Fed rate hike expectations, bond yields and stock prices.

So it wouldn’t be a surprise to see the major indexes trading in a range over the next week or so. There’s nothing wrong with a little consolidation for major indices and major stocks.

Stock of apples

Apple shares rose 1.1% last week to 151.29, after peaking 8.2% the previous week. The shares held the 50-day moving average, with the 21-day line set to rise above the 50-day line. AAPL stock is only modestly below its 200-day line. Giant Dow flirted with its 200 days on Oct. 28 after gains. But that proved to be a big opportunity to go short, with shares tumbling within days to their worst close since mid-June.

A decisive move above the 200-day line, perhaps clearing the Oct. 28 high of 157.50, would offer an early entry into a bottom floor starting on Aug. 17. short-circuit opportunity.

Apple’s success or failure at the 200-day line could be the key to trying the S&P 500 and vice versa.

Boeing stock exchange

BA stock fell 2% to 173.89, after a 47% run in five weeks. As aerospace giant Dow Jones reversed its decline on Oct. 26 in earnings, shares rebounded, especially on bullish cash flow guidance a few days later.

Technically, Boeing shares are just below the base buy point of 173.95 cups. But the shares are 9.5% above their 200-day line and 19.5% above their 50-day line. A break around current levels could create a safer buying opportunity.

Boeing is expected to turn a profit in 2023, ending four years of losses.

Goldman action

GS stock fell 1.55% to 379.20 last week. On a daily chart, the stock is extended from a basic buy point of 358.72 cups within a much larger consolidation. On a weekly chart, according to MarketSmith’s analysis, Goldman stock has a buy point of 389.68 from a year-long handled cup basis. But after a 28% gain on a four-week winning streak, that’s an awfully small handle. A longer and deeper handle would be helpful and allow the 50 day line to fill the gap.

The relative strength line is a four-year high, reflecting Goldman stock’s outperformance relative to the S&P 500. The RS line is the blue line in the charts provided.

JPM action

JPMorgan shares fell 1.1% to 133.84 last week. This is after an advance of 29.5% in six weeks. The shares are above their 50-day and 200-day lines, but they have some work to do. JPM stock could be building the right side of a long deep consolidation, or it could be creating a bottom foundation.

Read The Big Picture daily to stay abreast of market direction and major stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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