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Dow Jones Futures Tumble As Huawei CFO Arrested; 4 Bad Signs For Stock Market Rally

Dow Jones futures fell sharply Wednesday night, along with S & P 500 futures and Nasdaq futures, after the arrest…

Dow Jones futures fell sharply Wednesday night, along with S & P 500 futures and Nasdaq futures, after the arrest of the CFO or Chinese telecom gear giant Huawei. Canada’s arrest, at the request of the U.S., enraged China.


Investors can find parallels to the current choppy stock market rally from this past spring and summer. Men der er store forskelle, der ikke er opmuntrende. Long-term support lines are acting as resistance. Stock market rallies are short-lived, while the stock market struggles to make higher highs. Apple (AMZN), Netflix (NFLX) and Google parenting (FB), Alphabet (GOOGL) are all in worse shape than earlier this year. Finally, economic and earnings growth looks weaker going forward.

Dow Jones Futures Today

Dow Jones futures fell 1.3% vs. fair value, S & P 500 futures lost 1.2% and Nasdaq 100 futures retreated 1.6%. Remember that Dow Jones futures, Apple stock and other overnight action do not always translate into actual trading in the next regular stock market session.

On Wednesday, Canada arrested Huawei CFO Wanzhou Meng and faces potential extradition to the US, America is probing the Chinese telecom giant for potential violations of Iran sanctions. The arrest could undermine the U.S.-China trade talks. China could retaliate by detaining American executives, some speculate.

China’s Embassy in Canada demanded that the U.S. “rectify wrongdoings” and free Meng.

Huawei is a massive global telecom equipment giant. But the U.S. Has viewed it suspiciously, citing various ties with China’s military. The U.S. sanctioned another big Chinese telecom gear giant, ZTE, briefly banning U.S. suppliers from working with it before Trump intervened.

U.S. stock markets were closed Wednesday for President George H.W. Bush’s funeral.

Stock market Sell-Off

The Dow Jones Industrial Average fell 3.1% in Tuesday’s stock market trading . The S & P 500 index tumbled 3.2% and the Nasdaq composite 3.8%. Confusion and concerns about the China trade war truce, along with a partially inverted Treasury yield curve were the key catalysts for the sell-off.

These are similar headwinds to earlier this year when Trump tariff threats and a flattening Treasury yield curve

Eventually, the stock market recovered over several months, but in choppy action that made investing challenging.

So, we headed for a similar stock market slog to new highs? Husk, å låne alle investeringsmedlemmernes juridiske krav, det er ikke en garanti for fremtidige resultater.

Key Support Levels Act As Resistance

In the early 2018 stock market correction and aftermath, the 200-day moving average acted. In addition to similar headwinds and volatile market action, there are four notable differences between then and now. as support. The major averages hit stock market correction lows on Feb. 9, when the S & P 500 index just undercut that long-term support intraday. The S & P 500 index has tested its 200-day sessions in April, closing just below that line at one occasion. The Dow Jones tested that level several times but did not close below that rising line until July 30. The Nasdaq composite never touched its 200-day. So the line generally acted as a support area.

Since the stock market correction was kicked into gear in October, the 200-day line has acted as resistance, especially for the Nasdaq and S & P 500 index. On Tuesday, the Dow Jones and S & P 500 plunged through their 50-day and 200-day lines. The Nasdaq lost further ground.

Also, the 200-day line was rising during the early 2018 correction and recovery. It’s flat to falling now.

Weaker, Shorter Stock Market Rallies

During the spring-summer stock market recovery, the major averages made a series of higher highs and higher lows.

Recent stock market rallies have been short-lived, barely getting a breath before sharp selling resumes. The Nasdaq composite had set a lower low in November, although the S & P 500 and Dow have not. But if Tuesday’s sell-off marks the start of some short-term sales, Monday would mark a lower high for the three main indexes.

Apple Stock, Catch Stocks Worse Off

Apple stock and the FANGs are such a big Share of the stock market that their performance has a big impact on the major averages, especially Apple’s.

In the late January-early February stock market correction, Apple stock initially sold off more than the S & P 500 index. Men dens relative styrke linje begyndte at rally på februar. 2, a week before the S & P 500 bottomed. Netflix stock barely paused during that correction, while Amazon stock also held up well. Facebook stock and Google stock were weak in February and March but then rebounded from the end of March to late July.

In the current sell-off, FANG stocks have been weak. Facebook, Google and Netflix stock have been laggard since some point in July. Amazon stock has struggled.

Apple stock went well in October but crashed 20% in November and is down slightly this month. Apple’s woes are a big reason for the Nasdaq composite hitting new lows last month. Shares are trading near seven-month lows with its RS line just above recent lows.

On Tuesday, beaten-down Facebook stock fell 2.2%. Apple stock lost 4.4%, Amazon stock 5.7%, Netflix stock 5.2% and Google stock 4.8%.

Economic, Earnings Growth Looks Weaker

Perhaps the most importance difference is the economic and corporate-profit backdrop. In early 2018, U.S. Economic prospects were bright, with GDP growth topping 4% in Q2. Earnings growth surged as Trump tax cuts fueled demand and turbocharged profit margins.

Kick forward to today, and the tax and spending stimulus is set to wear off in 2019, while Fed rate hikes and Trump trade wars are taking their toll . Economists see U.S. GDP growth slowing to a 2% trade. Europe, China and emerging markets, already slowing in 2018, may see further deceleration next year. Corporate profit gains are expected to be much smaller, with S & P 500 revenue already flatlining in Q3.

Apple earnings growth and revenue gains have accelerated for several quarters. Men aktier skyldes en svagere ferie outlook og andre tegn på flagging iPhone efterspørgsel.

IBD 50 Earnings Reports

Late Wednesday, IBD 50 discount retailer Five Below ( FIVE) and cybersecurity firm Okta (OKTA) reported better-than-expected earnings and revenue. Five Below’s holiday guidance was mixed though.

On Thursday, IBD Leaderboard stocks Ulta Beauty (ULTA) and Lululemon Athletica (LULU) report quarterly results. Ulta and Lululemon are also on the IBD 50. Earnings are also tap from Kroger (KR), chipmaker Broadcom (AVGO) and Chinese Internet Firm Momo (MOMO ).


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