by Dow Jones futures were little changed after hours, along with S&P 500 futures and Nasdaq futures. The June CPI inflation report is available for Wednesday morning.
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The stock market rally on Tuesday saw decent gains on the S&P 500 and Nasdaq. The rest of the market was even better, with some usable stocks.
Salesforce. com (CRM) is going to raise prices for the first time in seven years. That sent CRM stock into buying territory and likely boosted several other software names. Data dog (D.D.O.G.), Dynatrace (DT), Procore Technologies (PCOR) and HubSpot (HUBS) broke or flashed buy signals.
ROKU stock broke out powerfully as Roku (ROKU) unveiled an alliance with Shopify (STORE). Caterpillar (CAT) and United Rental (URI) also broke out while Boeing (BA) offered an early entry. Expedia.nl (EXPE) cleared a traditional buy point, while Book holdings (BKNG) is executable.
DT Shares and HubSpot are on IBD Leaderboard. CAT shares and Boeing were added to SwingTrader on Tuesday, joining Dynatrace. URI shares are on the IBD 50. HubSpot, Dynatrace, United Rentals and DDOG shares are on the IBD Big Cap 20.
Caterpillar was the IBD stock of the day on Tuesday.
The video embedded in the article looked at Tuesday’s market action and assessed CRM stocks, Caterpillar and Booking.
CPI inflation report
The Labor Department releases the June Consumer Price Index at 8:30 a.m. ET. Economists expect overall CPI to rise 0.3%, with CPI inflation falling to 3.1% from 4% in May. Core CPI should rise 0.3% from May, with core CPI inflation falling from 5.3% to 5%.
Dow Jones Futures Today
Dow Jones futures fell 0.1% from fair value. S&P 500 futures fell lower. Nasdaq 100 futures tipped higher.
The CPI inflation report is sure to rock Dow futures and Treasury yields shortly before the open.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally saw small gains on the Nasdaq and S&P 500 masking broad, strong gains elsewhere for a second straight session.
The S&P 500 index rose 0.7%. The Nasdaq composite rose 0.55%. Meanwhile, the Dow Jones Industrial Average climbed 0.9% during Tuesday’s stock trading, helped by shares of Caterpillar, Boeing and CRM. The small-cap Russell 2000 climbed 1% to hit a four-month high.
The Invesco S&P 500 Equal Weight ETF (RSP) climbed 1.1% to its best level since February.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) rose 0.8% after Monday’s 1.8% gain to hit a new 14-month high.
The frontrunners beat the laggards 3 to 1 on the NYSE and nearly 2 to 1 on the Nasdaq. New highs dominated new lows.
US crude oil prices rose 2.5% to $74.83 a barrel, the highest closing price since May 1.
The 10-year Treasury yield fell 3 basis points to 3.98%, further pushing back the highs of 2023. The US dollar fell for a fourth consecutive session, reaching its lowest level since mid-May.
ETFs
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) lost a fraction, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 0.7%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1.5%. CRM stock is a large IGV holding company, with Datadog, Dynatrace, HubSpot, and Procore also in the ETF. The VanEck Vectors Semiconductor ETF (SMH) rose 0.1%.
As a result of stocks with more speculative narratives, the ARK Innovation ETF (ARKK) rose 1.3% and ARK Genomics (ARKG) rose 3.7%. ROKU is a top-10 position in Ark Invest’s funds.
SPDR S&P Metals & Mining ETF (XME) rose 0.6%. The Global X US Infrastructure Development ETF (PAVE) climbed 1%, with URI stocks the main stock. US Global Jets (JETS) rose 0.6%. SPDR S&P Homebuilders (XHB) rose 1.3%. The Energy Select SPDR ETF (XLE) jumped 2.2% and the Health Care Select Sector SPDR Fund (XLV) moved higher.
The Industrial Select Sector SPDR Fund (XLI) climbed 1.2%. Boeing and CAT stocks are major XLI stocks, with United Rentals also in the ETF.
The Financial Select SPDR ETF (XLF) rose 1.2%. The SPDR S&P Regional Banking ETF (KRE) rose 1.3%.
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Shares in buying zones
CRM stock rose 3.9% to 221.17, breaking a downward trendline and erasing short-term levels while still staying within the range of the 50-day line. Salesforce shares have a buy point of 225 flat-base, according to MarketSmith’s analysis. Salesforce said it would raise its software prices by 9% in August, the Dow giant’s first list price hike in seven years.
DDOG was up 3.5% to 104.98, clearing a buy point of 103.80 after an early entry on Monday. The point of purchase is for a cup-with-handle base that is 11 months old. Investors might view the handle as its own flat base above a low that began in mid-February.
DT shares gained 4.2% to 54.97, clearing a flat-base buy point of 52.99 that is part of a base-on-base formation. Monday’s 3.2% pop offered early access.
HUBS shares rose 1.9% to 540.21, clearing a consolidation buy point of 535.12 after testing the 10-week line on July 16
PCOR share rose 5.7% to 68.99, clearing a buy point of 68.68, with an early morning entry.
ROKU shares rose 11% to 75.43 to close just below a buy point of 75.45 cup-with-handle in massive volume. Investors could have seen early entry on Monday or Tuesday. Currently, ROKU stock is 23.5% above the 50-day line. Roku’s new Shopify partnership allows users to buy from Shopify merchants directly through their TVs. SHOP shares were up 2% and continued to bounce off the 50-day line, but perhaps not quite usable.
CAT shares rose 1.6% to 252.85, clearing a 250.39 cup-with-handle buy point.
URI shares rose 2.8% to 457.32, surpassing the 450.65 cup-with-handle entry on a weekly chart.
BA shares rose 2.55% to 218.76 in above-average volume, recovering from near the 21-day and 10-week lines in above-average volume. An escape on June 12 failed, but Boeing is setting up again. Investors can use 223.91 as an official buy point.
EXPE share rose 2.3% to 116.96, surpassing a buy point of 114.37 cup-with-handle.
BKNG shares rose 2% to 2,783.40, building on Monday’s 3.5% gain from the 50-day mark. The shares hit short-term highs and offered an early entry. The shares briefly reached an intraday buy point of 2,786.85 on a flat basis. Booking stocks are seen as a winner of the upcoming Nasdaq 100 special rebalancing.
Analysis of the market rally
The Nasdaq and megacaps moving sideways, or at least lagging behind, as market breadth improves and leadership grows seems close to ideal.
The Nasdaq is still 5.7% above its 50-day line. That hasn’t been extended, but it doesn’t take much to get there. On the other hand, a 21-day line test could be constructive.
Software and industrial names were big winners on Tuesday. Travel also continues to thrive, along with home furnishings and a growing number of oil services, drilling and machine companies.
Chips had a tough session, especially semiconductor equipment manufacturers.
Time the market with IBD’s ETF market strategy
What to do now
After a few headline fakes last week, a number of leaders – such as Dynatrace, Datadog and CRM stocks – are making more compelling moves this week. This reflects the broad market strength, with software as the star.
This week’s action shows why investors should listen to market signals and take advantage of buying opportunities in a healthy uptrend. But last week’s headline forgeries are why investors shouldn’t ramp up exposure too quickly in a single day and be ready to step back if new buys don’t work.
Wednesday’s inflation report could boost recent gains for recent winners like Roku, Caterpillar and HubSpot.
Your watchlists should swell over the past few weeks, with names from a variety of industries.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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