The Dow Jones futures fell sharply on Wednesday night along with the S & P 500 futures and Nasdaq futures following the arrest of Chinese telecoms giant Huawei's chief financial officer. Investors find parallels to the recent choppy stock market rally from last spring and summer. However, there are significant differences that are not encouraging. Long-term support lines act as resistance. The stock market rally is short-lived as the stock market seeks to reach higher heights. Apple (AAPL) and FANG shares Facebook (FB), Amazon.com (AMZN), Netflix (NFLX) and Google parent Alphabet (, 99) is in worse shape than earlier this year. After all, economic and earnings growth looks weaker in the future.
Dow Jones Futures Today
Dow Jones futures fell 1.5% from fair value, S & P 500 futures lost 1.4% and Nasdaq 100 futures fell 1.85 % back. Stock futures are volatile so far in this extended session. Keep in mind that Dow Jones futures, Apple stocks and other overnight actions are not always translated into actual trading in the next regular trading session. On Wednesday, Canada arrested Huawei CFO Wanzhou Meng and faces potential extradition to the US investigation by the Chinese telecommunications giant of potential violations of Iran's sanctions.
The arrest may affect trade talks between the US and China. China could take revenge by imprisoning American executives, some speculate.
The Chinese Embassy in Canada called on the US to correct "misconduct" and free Meng.
But there have been several reasons to worry about the current stock market rally.  US Stock markets were on Wednesday for President George H.W. closed. Bush's funeral.
Crude futures returned down Wednesday, amid doubts as to whether the OPEC meeting on Thursday will deliver a major production cutback effect.
Stock Exchange Sale
The Dow Jones industry average fell 3.1% in stock market trading on Tuesday. The S & P 500 Index fell 3.2% and the Nasdaq Index 3.8%. Confusion and concern about the ceasefire in China, along with a partially reversed Treasury yield curve, were the main sell-off catalysts.
These are similar headwinds this year, as Trump tariff risks and a flattening Treasury yield curve occurred – though interest rates rose generally – were the main culprits.
Finally, the stock market rebounded over several months, but in jarring measures that made the investment difficult.
So let's go to a similar slope of the stock market heights? Keep in mind that you should lend legality to every investment vehicle so past performance does not guarantee future results. Besides the same headwind and volatile market movements, there are four notable differences between then and now.
Key Support Levels Act As Resistance
At the beginning of 2018, the 200-day moving average served as support. The big averages hit lows in the stock market correction on 9 February, as the S & P 500 index was just beating out long-term support over the course of the day. The S & P 500 index tested its 200-day session in April and closed just below this line on one occasion. The Dow Jones tested this level several times, but did not close below this rising line until July 30. The Nasdaq composite never touched its 200-day mark. The line therefore generally served as a support area.
Since the stock market correction started in October, the 200-day line has resisted above all for the Nasdaq and S & P 500 Index. On Tuesday, the Dow Jones and the S & P 500 crashed through their 50 and 200-day lines. The Nasdaq continued to lose ground.
The 200-day line also rose during the correction and recovery in the spring of 2018. Now it drops off flat.
Weaker, shorter stock market rallies
During the spring recovery on the stock markets, the major averages reached a series of higher highs and higher lows. The lows tended to undercut the previous highs, but the uptrend was somehow felt.
The recent stock market rallies were short-lived, and they barely had a breath before it came back to heavy sales. The Nasdaq composite dropped lower in November, but the S & P 500 and Dow did not. But if Tuesday's sell-off is the start of some short-term sales, Monday would be a lower value for the three major indices.
Apple Stock, FANG shares worse
Apple shares and the FANGs are so big The share of the stock market has a big impact on the large averages, especially on Apple's.
When the stock markets corrected at the end of January to the beginning of February, the Apple stock initially sold more than the S & P 500 index. On February 2, a week before the S & P 500 hit a low, relative strength began to rise. Netflix shares did not pause during this correction, while the Amazon share also performed well. The Facebook stock and Google stock were weak in February and March, but rebounded from the end of March to the end of July.
FANG shares were weak at the current sell-off. The shares of Facebook, Google and Netflix have been delayed somewhat in July. The Amazon share had difficulties.
Apple stock performed well in October, but fell 20% in November and fell slightly this month. Apple's suffering is a major reason that the Nasdaq group has hit new lows last month. Equities are trading near seven-month lows, with the RS line just above the recent lows.
On Tuesday, the decline in Facebook shares fell 2.2%. Apple shares lost 4.4%, Amazon shares 5.7%, Netflix shares 5.2% and Google shares 4.8%.
Economic result looks weaker
Perhaps the most important difference is the economic and business profit. At the beginning of 2018, the economic outlook for the US was good, with GDP growth over 4% in the second quarter. Earnings growth increased as Trump's tax cuts accelerated demand and profit margins.
Tick on today, and tax and spending incentives will ease in 2019 as the Fed's rate hikes and the Trump Trade War take its toll. Economists see US GDP growth slow to 2%. Europe, China and emerging markets slumping in 2018 may slow further next year. Profits on corporate earnings are expected to be much lower as S & P 500 sales are already flat in the third quarter.
Apple's earnings growth and revenue growth has accelerated for several quarters. However, stock prices fluctuate due to weaker holiday forecasts and other signs of slowing demand for iPhone. The Facebook stock currently has a lot of headwinds, but warnings of much slower growth and a flattening of user numbers in North America are the key to this.
IBD 50 Earnings Reports
Late on Wednesday, IBD 50 Discount Dealers Five Below (19459004) FIVE) and Cybersecurity Companies Okta (OKTA) posted revenues and revenue were above expectations. The holiday recommendation from Five Below was mixed.
On Thursday, IBD Leaderboard shares Ulta Beauty (ULTA) and Lululemon Athletica (LULU) feature quarterly results. Ulta and Lululemon also belong to the IBD 50. The revenues also come from Kroger (KR), a chipmaker Broadcom (AVGO) and the Chinese Internet company Momo (MOMO )
You might also like:
The big picture: The stock market gets downgrade
Yield curve reverses; Why You Should Care
You Want More IBD Videos? Subscribe to our YouTube channel!
The national debt spiral has begun: how will it end?