As we all know, the major stock indexes have surged higher since October 4, 2011. On that date the S&P 500 Index e-mini futures (ES Z1) undercut the August 9, 2011 low before staging a massive rally in the final 45 minutes of the trading day. That chart pattern will usually create a low for several days to several weeks before showing signs of weakness again. In any case, the snapback rally has been nothing short of incredible as the Dow Jones Industrial Average has surged higher by nearly 1100.0 points in six trading sessions.
There are always leading stocks that must be followed closely to tell when the major stock market indexes could face trouble again. When these stocks begin to show signs of weakness it will be a sign that the stock market is vulnerable to another sell off. The three leading stocks that every trader must follow closely are Apple Inc (NASDAQ:APPL), J.P. Morgan Chase & Co (NASDAQ:JPM), and Freeport McMoRan Copper & Gold Inc (NYSE:FCX). Each of these stocks are a leader in their respected sector.
APPL stock is the most important technology stock in the world. This stock has the highest weighting in the Nasdaq 100 Index. At this time, the stock also has the largest market capitalization in the world at $380 billion surpassing Exxon Mobil Corp (NYSE:XOM). This stock will be coming into important resistance on the daily chart very soon, however, the stock has been a powerhouse since October 4, 2011. Since the October 4, 2011 pivot low the stock has rallied higher by $53.00. Every trader must watch APPL stock very closely.
JPM stock is the most important bank stock that anyone in the world can follow. This stock has lead the stock market higher and lower since the financial crisis began in October 2007. When JPM trades higher the major stock indexes will usually follow. The opposite is also true when the stock declines the markets will often be right behind it.
Freeport McMoRan Copper & Gold Inc (NYSE:FCX) is the leading copper producer in the world. Copper is the leading industrial metal in the world and that is probably why FCX is so important. Copper has recently fallen off a cliff since late July 2011. At that time, FCX stock was trading around the $55.00 level. On October 4, 2011 FCX stock traded as low as $28.85 a share. Since that low the stock has rallied sharply higher and is trading around the $36.72 area this morning. The stock will have some decent resistance around the $40.50 level which is the daily chart 50 moving average. This stock is a must watch for every serious trader.
These three leading stocks must be watched very closely each and everyday. When these market leaders begin to show weakness that is when the major stock indexes are likely to come under selling pressure again. These market leading stocks seem to forecast every stock market move.