The bears, who have been quieted over the last two months, are on the attack again. On Thursday, the Dow Jones Industrial Average fell below its 200-day moving average for the first time since the middle of October — pushed further away from the 18,000 level it just wasn’t strong enough to cross back over.
The main catalyst for the decline: Growing nervousness about the fallout from a likely Federal Reserve interest rate hike in December.
The fear: A surge in the U.S. dollar with weigh on commodity prices, reduce the value of foreign earnings, pinch vulnerable emerging market economies and cause turmoil in the bond market.
Commodity-related stocks are getting hit the hardest, along with popular technology stocks.
Investors looking to protect themselves from the pain — as well as traders looking for short opportunities — should pay close attention to these five Dow Jones stocks as they roll over.
Dow Jones Stocks on the Ropes: Apple Inc. (AAPL)
Ongoing disappointment with the iPhone 6s has pushed shares of Apple (AAPL) back toward their 50-day moving average. According to Credit Suisse, the company has cut orders for components that go into the phone by as much as 10%. Obviously, that’s a bad omen.
A tepid response to the new iPad Pro is weighing as well.
Analysts at FBR Capital try to be optimistic — looking ahead to what’s likely to be a blockbuster debut of the iPhone 7 next September — but that’s 10 months away.
Dow Jones Stocks on the Ropes: Intel Corporation (INTC)
Intel (INTC) is coming under from profit taking pressure after enjoying a nice lift off of its August lows ahead of a better-than-expected Q3 earnings announcement. The medium-term outlook is murky, however, with capital expenditure guidance being cut as the product innovation cycle slows.
And while demand for tablets is cooling, we’re not exactly seeing a surge of interest in new PCs either.
Another possible concern are signs of cooling in the data center business as well.
Dow Jones Stocks on the Ropes: Caterpillar Inc. (CAT)
Caterpillar (CAT) has been hurt this week by some weaker-than-expected economic data out of China, casting doubt on whether the Middle Kingdom’s economy is really revving back up.
The company’s Q3 earnings results and forward guidance were both disappointing, but investors bid CAT shares up in anticipation of a turnaround in global demand.
So far, that just hasn’t materialized.
Dow Jones Stocks on the Ropes: Chevron Corporation (CVX)
Chevron (CVX), and other stocks in the energy sector, are getting hit after a number of bigger-than-expected inventory reports. On Thursday, the Department of Energy reported that crude inventories increased by 4.2 million barrels versus the 1 million barrels that were expected. Stockpiles in key site Cushing, Oklahoma — the location of futures delivery — increased by 2.3 million barrels.
The breakdown violates a two-month uptrend pattern and puts the 50-day moving average back in play down at $85 a share.
Dow Jones Stocks on the Ropes: Exxon Mobil Corporation (XOM)
Exxon Mobil (XOM) is suffering from the same dynamics hitting CVX and has also lost its two-month uptrend. The 200-day moving average, which hadn’t been crossed since 2014, has been lost once more. Exxon has also been in the headlines recently after the New York Attorney General subpoenaed it for documents related to its stance on climate change.
The pressure on energy stocks looks set to continue: U.S. crude oil production just increased to 10-week highs as we enter the winter lull in driving demand.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
