Dow Jones Surges 765 Points To Start New Stock Market Rally Attempt, What To Do

Dow Jones futures were higher ahead of Tuesday’s open. A new stock market rally attempt started Monday, as the Dow Jones Industrial Average surged 765 points.

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Stock Market Today

On Monday, the Dow Jones Industrial Average surged 2.7%, leading the stock market higher. The S&P 500 climbed 2.6% and the tech-heavy Nasdaq composite rallied 2.3%. And the small-cap Russell 2000 advanced 2.65%.

Among exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) moved up 2.35%, and SPDR S&P 500 (SPY) rose 2.6%.

Key earnings reports this week are coming from Acuity Brands (AYI), ConAgra Brands (CAG), Constellation Brands (STZ) and McCormick (MKC).

General Motors (GM) reported its third-quarter auto sales Monday, outpacing expectations on strong consumer demand and better vehicle availability. GM shares rallied 2.4% Monday, but are still more than 50% off their 52-week high.

EV giant Tesla (TSLA) dived 8.6% after missing vehicle deliveries estimates. Among Dow Jones stocks, Apple (AAPL) traded up 3.1%, while Microsoft (MSFT) climbed 3.4% in today’s stock market.

In the ongoing stock market weakness, Murphy USA (MUSA), Neurocrine Biosciences (NBIX), Vertex Pharmaceuticals (VRTX) and World Wrestling Entertainment (WWE) — as well as Dow Jones stock UnitedHealth (UNH) — are among the top stocks to watch. Keep in mind that the ongoing stock market correction is a time for investors to sit on the sidelines and construct watchlists.

Vertex is a recent addition to IBD Leaderboard. Murphy USA was featured in this week’s Stock Near A Buy Zone column, along with three other top stock ideas.

Dow Jones Futures Today: Treasury Yields, Oil Prices

Ahead of Tuesday’s opening bell, Dow Jones futures rose 0.5% vs. fair value, while S&P 500 futures gained 0.6%. Nasdaq 100 futures moved up 0.9% vs. fair value. Remember that overnight action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

The 10-year Treasury yield fell significantly to 3.65% Monday. Last week, the 10-year Treasury yield briefly topped 4%, which hadn’t been done for more than decade.

Meanwhile, U.S. oil prices jumped more than 4% Tuesday, as West Texas Intermediate futures traded above $83 a barrel. Last week, they fell to their lowest level of the year. On Wednesday, OPEC+ will meet to consider a production cut in order to help prop up falling oil prices.

What To Do In The New Stock Market Rally Attempt

Despite Monday’s strong gains, IBD’s market trend remains in a “market in correction,” with the heavy selling in recent weeks. That means that investors should remain in cash.

However, Monday’s gains kicked off a new stock market rally attempt, which is your day 1. The action on Day 2 and Day 3 is irrelevant as long as the index doesn’t undercut its latest low. If that low is undercut, the rally try is done and the market needs to try again.

Next, investors should be waiting for a follow-through day, which occur on day 4 or later. Starting Thursday (day 4), you are looking for the Nasdaq or S&P 500 to rise sharply in higher volume than the previous session. That’s a follow-through day. It gives…