Stock Market Off Sharply As Apple, Facebook, Other Leaders Deteriorate| Investor’s Business Daily

The U.S. stock market remained sharply lower at midday Monday as landmark U.S. stocks such as Apple (AAPL) and Alphabet (GOOGL) saw the deepest losses in many months.

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Monday’s stock market saw the S&P 500 slide 1.7% and gapped down in a larger break of the 50-day moving average. Indexes traded at session lows.

The Dow Jones Industrial Average gapped down 1.6% and is trying to hold above the 34,000 level.  Cyclicals Caterpillar (CAT) and Dow Inc. (DOW) fell to February lows. Visa (V) dropped to an April low. Goldman Sachs (GS), JPMorgan Chase (JPM) and several other Dow components also gapped lower.

The Nasdaq composite dropped 2.2% and also gapped below the 50-day line. Tech heavyweights Apple and Alphabet gapped down in heavy trading, with Alphabet falling to its 50-day moving average. Apple is now 4% below its 50-day average.

Other stock market pillars also saw heavy declines as their charts weakened considerably. Amazon.com (AMZN) gapped 3% lower and is now below the 50-day line. Facebook (FB) also gapped below the 50-day average.

Volume was higher on the Nasdaq and lower on the NYSE than at the same time on Friday. But expect volume to drop off as the day goes by. Volume surged Friday on a quadruple witching session in which options and futures expired simultaneously.

Chinese Stock Market Rattled

Hong Kong’s Hang Seng plummeted 3.3% Monday, the largest one-day loss since July 27. The Hang Seng is now down 27.3% from its record close of 33,154.12 on Jan. 26, 2018, according to Dow Jones Market Data. The Shanghai and Nikkei stock markets were closed Monday.

The iShares China Large Cap ETF (FXI) plunged 3.6%, while Invesco China Technology (CQQQ) fell 3.8%. Chinese stocks already had been struggling before today’s sell-off.

Investors are increasingly concerned that Beijing will let property developer China Evergrande Group fail, resulting in losses for shareholders and bondholders. The real estate company’s debt burden is the biggest for any publicly traded real estate management or development company in the world, according to the Wall Street Journal.

In Europe, the London FTSE was off 0.9%, Germany’s DAX fell 2.4%, and the Paris CAC 40 was down 1.8%.

Many indicators pointed to widespread investor fear.

Indicators Show Stock Market Fear Rising

The Cboe Volatility Index surged. The Dow Jones FXCM Dollar Index rose 2.7% to its highest since Aug. 23.

After three days of gains, bond yields sank. The yield on the 10-year Treasury note fell 5 basis points to 1.32%. U.S. oil prices fell 1.2% to $71.09 a barrel.

On Friday, IBD lowered its stock market outlook to „uptrend under pressure“ after the S&P 500 closed below its 50-day moving average. A rebound off the line Wednesday struggled for momentum. Some new breakouts also have struggled to follow through from buy points.

With a tempered outlook, investors need to be more guarded. Any new stock purchase should be only for exceptional stocks. Taking some profits is smart right now. Be sure to cut losses short.

Leading Stocks Down Broadly

The Innovator IBD 50 ETF (FFTY) fell 2.5%. IPO stocks in the IBD 50 had some of the largest losses. Doximity (DOCS) gapped down more than 9%. DLocal (DLO) gapped to a loss of 5.5%. Global-e Online (GLBE) fell 7% at midday.

Bill.com (BILL), Monday.com (MNDY), Generac (GNRC) and Matson (MATX) fell more than 4%.

Nvidia (NVDA) is almost all the way back to its 207.43 buy point, which would trigger a round-trip sell rule if it falls to the entry. Matson’s (MATX) 4.5% slide caused a round-trip sell signal for the shipping stock.

Outside the IBD 50, KLA (KLAC) fell back below its 356.81 buy point.

Steel Dynamics (STLD) gapped down to a loss of nearly 6% in heavy trading. The stock is sinking deeper below the 50-day line. A once-promising rally in steel stocks is melting away, with Nucor (NUE), Ternium (TX) and other stocks in the industry extending losses.

Juan Carlos Arancibia is the Markets Editor of IBD and oversees our market coverage. Follow him at @IBD_jarancibia

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