To The Moon

Dow Jones Reverses Lower Ahead Of Powell Speech; 7 Best Stocks To Buy And Watch

Dow Jones futures were slightly lower in extended trade ahead of Federal Reserve Chairman Jerome Powell's speech Tuesday. The Dow Jones Industrial Average rallied as many as 305 points Monday before reversing lower.

Powell Speech, Inflation Data, Earnings

Fed chief Powell will speak at the Sveriges Riksbank International Symposium on Central Bank Independence in Stockholm, Sweden. His speech is scheduled to start at 9 a.m. ET. Powell's speech comes on the heels of Friday's jobs report that saw wage growth cooling much more than expected and workers clocking fewer hours for a second straight month. The data should allow the Fed to further slow its pace of interest-rate hikes.

Consumer inflation data is due out Thursday morning. The CPI is expected to come in unchanged for the month of December and 6.6% higher year over year, per Econoday estimates. According to the CME's FedWatch tool, traders place a 77% chance of a 25-basis-point rate hike at the next Fed policy meeting in late January/early February.

The 10-year Treasury yield ticked lower to 3.51% Monday, falling for a second straight session.

Jefferies (JEF) reported earnings that met estimates, and sales that topped forecasts. Jefferies shares lost more than 3% in extended trade.

Other companies reporting later this week include KB Home (KBH), Taiwan Semiconductor Manufacturing (TSM), Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC). Dow Jones stocks JPMorgan Chase (JPM) and UnitedHealth Group (UNH) will also report this week.

Stock Market Today

On Monday, the Dow Jones Industrial Average fell 0.3%, and the S&P 500 lost 0.1%. The tech-heavy Nasdaq composite rallied 0.6%. Among exchange traded funds, the Nasdaq 100 tracker Invesco QQQ Trust (QQQ) moved up 0.65% and the SPDR S&P 500 (SPY) inched lower.

Electric-vehicle giant Tesla (TSLA) traded up 5.9% Monday. Among Dow Jones stocks, Apple (AAPL) gained 0.4% and Microsoft (MSFT) rose 1% in today's stock market.

Deere (DE), IBD Leaderboard stock ELF Beauty (ELF), Rio Tinto (RIO) and IBD SwingTrader stock Super Micro Computer (SMCI) — as well as Dow Jones names Caterpillar (CAT), Chevron (CVX) and Walmart (WMT) — are among the top stocks to buy and watch with the market back in rally mode.

ELF Beauty is an IBD Leaderboard stock. Super Micro is a new IBD SwingTrader idea. Caterpillar and Rio were featured in this week's recent Stocks Near A Buy Zone column.

Dow Jones Futures Today: Oil Prices

Ahead of Tuesday's opening bell, Dow Jones futures lost less than 0.1% below fair value, and S&P 500 futures moved down 0.1%. Tech-heavy Nasdaq 100 futures were down 0.15% 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.

U.S. oil prices rallied more than 1% Monday, rebounding a bit from last week's sharp losses. West Texas Intermediate futures traded just below $75 a barrel.

What To Do In The New Stock Market Rally

Now is an important time to read IBD's The Big Picture column with the stock market trend back in a "confirmed uptrend" following Friday's powerful gains in heavy volume, a stark divergence from recent action.

Friday's positive action in high volume caused the IBD market outlook to shift into a new stock market rally. Nevertheless, it is still an uncertain environment, and exposure should be increased in a measured fashion. Investors should stick to 20% to 40% exposure for now.

Dow Jones Stocks To Buy And Watch: Caterpillar, Chevron, Walmart

Dow Jones member Caterpillar remains squarely in buy range above a flat base's 239.95 buy point following Monday's 0.9% decline, according to IBD MarketSmith pattern recognition. The buy zone goes up to 251.95. Bullishly, the stock's relative strength line, a key technical indicator, is at new highs.

CAT stock shows a strong 98 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. The Composite Rating is designed to help investors easily find top growth stocks.

Energy giant Chevron again found stout resistance at its 50-day line, as it continues to build a cup base that has a 189.78 buy point.

Discount retailer Walmart reversed 1.25% lower Monday, falling back below its 50-day line. Shares are building a cup with handle that has a 154.74 buy point and are about 6% away from the latest entry.

Top Stocks To Buy And Watch: Deere, ELF Beauty, Rio, Super Micro

Recent IBD Stock Of The Day Deere is building a flat base with a 448.50 buy point. Shares are approaching their latest buy point, moving up 0.4% Monday.

IBD Leaderboard stock ELF Beauty gave up its 57.03 flat-base entry amid Monday's 3.9% decline. Shares broke out Friday in big volume, indicating strong institutional demand for the cosmetics leader. The 5% buy zone tops out at 59.88 if the stock is able to regain the entry.

Recent IBD Stock Of The Day Rio Tinto cut gains to just 0.1% Monday, rising still further above a cup with handle's 73.45 buy point. The buy area runs up to 77.13.

IBD SwingTrader stock Super Micro Computer is rapidly moving up the right side of a short consolidation that has a 95.32 buy point. Shares slashed gains to 0.45% Monday.

Stocks To Buy And Watch In New Stock Market Rally

Tesla Stock

Tesla stock surged nearly 6% Monday, adding to Friday's upside reversal. Shares remain sharply below their 50- and 200-day lines.

Last week, shares hit a 52-week low at 101.81. Tesla stock closed Monday about 68% off its 52-week high.

Dow Jones Leaders: Apple, Microsoft

Among Dow Jones stocks, Apple shares climbed 0.4% Monday. Last week, the stock hit a new 52-week low price of 124.17. The stock remains around 20% off its 52-week high.

Microsoft stock rallied 1% Monday, adding to Friday's gains. The software giant is about 30% off its 52-week high and is still just off its 52-week low of 213.43, reached on Nov. 4.