Stock Update December 2018

Dow Jones futures were little changed late Wednesday, along with S&P 500 futures and Nasdaq futures. The Dow Jones, S&P 500 index and Nasdaq composite tumbled Wednesday to 2018 lows after the latest Fed rate hikes and policymakers' intention for two more Fed rate hikes in 2019. Obviously, the stock market did not like the Fed moves, and it's a fair bet that President Donald Trump will step up his criticism. But don't try to figure out why the Fed acted hawkishly or even why the stock market reacted so negatively. With the stock market correction at new lows, investors should stay in cash and keep their powder dry. But keep an eye on leading stocks acting well, such as PayPal (PYPL), Atlassian (TEAM) and Mellanox Technologies (MLNX).

Dow Jones Futures Today
Dow Jones futures were just above fair value. S&P 500 futures sank 0.1%. Nasdaq 100 futures were slightly below fair value. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular session.

Fed Rate Hike Outlook Spikes Stock Market Rally
Wednesday's Fed rate hike was expected, though there was some hope that the Fed would stand pat or ease up on asset sales. The real stunner was the central bank's signal for two more Fed rate hikes in 2019. That's down from prior projections for three more Fed rate hikes, but markets haven't priced in any increases for next year.

The Dow Jones, S&P 500 index and Nasdaq composite reversed from solid intraday gains to undercut their 2018 lows. The Dow Jones and S&P 500 index each fell 1.5%, while the Nasdaq retreated 2.2%.

What You Should Do In A Stock Market Correction
In a stock market correction, investors should keep to the sidelines, avoiding new purchases and perhaps move entirely to cash. But stay engaged. Continue to read The Big Picture and daily Stock Market Today columns. When a new healthy market uptrend returns, you want to be ready to jump on top stocks breaking out.

There actually are a number of leading stocks that are holding up reasonably well. IBD is focusing on possible stocks for watch lists. Here are three just from Wednesday.

Software maker Atlassian rose slightly on Wednesday, working on its healthy base. Atlassian stock is Wednesday's entry for IBD 50 Growth Stocks To Watch. It's one of many software stocks on the IBD 50 list.

PayPal stock fell 1.7% on Wednesday but found support at its 50-day and 200-day moving average. PayPal, another IBD 50 stock, is covered in the latest IBD Stock Analysis column. PayPal and Atlassian also are on the IBD Leaderboard watch list.

Fabless chipmaker Mellanox Technologies is the IBD Stock of the Day. Like Atlassian stock, Mellanox stock rose modestly within a bullish pattern, in this case, a base-on-base formation.

Atlassian stock, PayPal stock, and Mellanox stock all boast relative strength lines that are at or near record highs. The relative strength line tracks a stock's performance vs. the S&P 500 index

Keep in mind that just because these stocks look good now, that's no guarantee that they will continue to hold up or lead the next market rally.

Apple (AAPL) was the best-looking big-tech stock in October, reclaiming its 50-day line on Nov. 1. But after a weak Apple earnings outlook, Apple stock has crashed 31% to a 10-month low.
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