August tends to frighten many stock market investors and historians. But the Dow Jones Industrial Average begged to differ, at least in a small way on Tuesday. The 30-stock blue chip index edged up 0.2% in the stock market today.
Stocks dipped during the opening day of August, following the trail of sellers in long-dated government bonds. The key U.S. Treasury bond yield rose 9 basis points to 4.05% amid a flurry of economic data that pointed to continued softness in the manufacturing sector and a touch of cooling within the white-hot labor market.
"Today's JOLTS data (referring to the monthly job openings and labor turnover survey) suggests that labor market tightness is easing on the margin with employers still struggling to fill open positions, but workers finding fewer opportunities that warrant quitting their existing jobs," Ronald Temple, chief market strategist at Lazard, wrote in a note emailed to IBD.
"Taken together, today's report might be yet another signal that the Fed is successfully avoiding recession while reducing inflation," Temple added.
Elsewhere, Norwegian Cruise Line got knocked for a 12% hammering following a strong Q2 report (earnings per share of 30 cents a share vs. a net loss of $1.14 a year earlier, sales up 86% to $2.21 billion). But the stock is finding buying support at its 10-week moving average. Several tech stocks also delivered the kind of negative volatility often expected during earnings season.
While the Dow Jones Industrial Average made its 16th gain in 17 sessions, at around 35,615 it now trades less than 4% below its all-time high of 36,952 marked on Jan. 5, 2022.
The Nasdaq composite kept losses tidy, down 0.4%. That's a touch more than the 0.2% drop by the Nasdaq 100. The S&P 500 eased almost 0.3%. Small caps underperformed. The Russell 2000 lost nearly 0.5%.
Volume on both main exchanges ran virtually unchanged vs. the same time on Monday.
Dow Jones Leader
Caterpillar spearheaded the rebel-like move by the Dow Jones. Its gain of 23 points, or 8.8%, to 288.65, lifted the global titan in earth-moving, construction and gas-related equipment to a gain exceeding 14% past a 250.89 buy point following the megacap stock's breakout from an excellent cup with handle.
That breakout took place on July 11 in dull turnover. Understandable, given that investors generally tend to trade cautiously ahead of earnings.
On Tuesday, CAT reported a 75% pole-vault in earnings to $5.55 a share on a 22% jump in sales to $17.3 billion. Please check out more details on the earnings news and the chart action in this IBD earnings news story.
Meanwhile, nearly a dozen of IBD's 197 industry groups waged a gain of 1% or more.
They included computer networking, up 9.8% on the back of a huge rise by industry group leader Arista Networks; construction and mining machinery, including CAT; heavy duty trucks and parts; auto and truck replacement parts, heavy construction; paints; and consulting commercial services firms.
Arista, which notched better-than-expected results for the second quarter (EPS up 46%, sales up 39% to $1.46 billion), got airplay on Tuesday's IBD Live show.
Stock Market Forecast For Next 6 Months: What Investing Pros Are Watching Today
Outside The Blue Chips
Outside the Dow Jones, some tech stocks fared badly after issuing quarterly results.
Rambus, formerly a quarter-size position in IBD Leaderboard, fell as much as 22.5% at the session low of 48.51 before trimming that huge loss to 12% by the close. Yet the stock remained sharply below its rising 50-day moving average. Volume zoomed almost six times its usual pace.
Such a big drop through the 50-day line in heavy turnover sparked a defensive sell signal.
Cheap Stocks To Buy And Watch Now
Notice on a daily chart how during its excellent run-up ahead of its Q2 results, RMBS had handled tests of the 50-day moving average very well during pullbacks in late December, late January, early March and even late April.
These past pullbacks in fact offered secondary buy points following its breakout past an early buy point near 28.79 within a long base that formed from March to October 2022.
Meanwhile, DoubleVerify also sold off hard in the manner of Rambus; shares dropped more than 14%. Volume jumped nearly six time its average level. That indicates a serious exit from the stock by some institutional investors.
The digital advertising platform also sharply undercut its 50-day moving average. More declines would force investors who bought at the May breakout past an early entry at 31.31 to sell and protect remaining gains.
Headed into Tuesday's trading, DoubleVerify showed a stout 96 Relative Strength Rating. Keep in mind, however, that this rating covers 12 months' worth of trading history. The RS Rating is best used as a stock selection tool.
Commvault Systems gapped down and sank nearly 6% following its mediocre quarterly results, in which earnings rose 13% to 72 cents a share.
That's definitely an improvement from quarterly profit declines in the prior two quarters. However, the database management software firm's top line was flat at $198.2 million vs. a year earlier.
CVLT shares showed strength at its own 50-day line.
Volume jumped 49% above average to the highest level in more than five weeks.
Investor's Corner: The Seven Most Important Words On Wall Street
Please follow Chung on Twitter: @saitochung and @IBD_DChung
