Indexes generally showed bullish action ahead of another key report on consumer prices due early Wednesday. Gains accelerated a touch in the final hour of trading. But the stock market today continued to favor small and mid-cap stocks. Dynatrace posted a new breakout. The Leaderboard name is also gaining even more ground from a prior entry at 48.
Meanwhile, the yield on the U.S. Treasury 10-year bond yield cooled off after rising above 4% in recent weeks. With an hour left in the regular session for stocks, the 10-year yield sank nearly 2 basis points to 3.98%, according to CBOE data.
The Russell 2000 and the Dow Jones Industrial Average both rallied more than 0.9% by session's end. A common thread here? Banking stocks thrived. Goldman Sachs, a Dow industrials member, gained 4.41 points but continued to live underneath its 50-day line and the longer-term 200-day moving average.
A 43 Relative Strength Rating is weak as well, compared with American Express, which rose 3 points to 174.77 and shows a 79 RS Rating.
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AXP's 79 Relative Strength Rating means that over the past 12 months, AmEx has performed better than 79% of all companies in the IBD database.
AmEx stock is also approaching a 177.04 buy point in a five-month cup with handle.
JPMorgan Chase, also in the Dow industrials, has cleared stubborn resistance near 143-144 and is in buy range from a new entry point at 143.37. The stock rolled 2.31 points, or 1.6%, higher to 147.46.
Please keep in mind that Chase and several other major banks report second-quarter results on Friday.
Within the Dow Jones Industrial Average, at least five other companies in addition to JPM hold a Relative Strength Rating of 80 or higher. They include Salesforce, Boeing and Caterpillar. The strength seen in the latter two seems to suggest that capital expenditures are on the rise as the Federal Reserve perhaps is near the end of its monetary tightening cycle.
CRM, meanwhile, has formed a flat base over the past six weeks, yielding a 225 buy point. Shares have gotten bullish support at its 50-day moving average.
Nasdaq Today
Meanwhile, the Nasdaq composite continued in a fairly tight intraday range. Still, it saw a mild 0.4% early advance fade to less than 0.2%. At 13,700, the Nasdaq remains sharply up in 2023 with a gain of more than 30%.
The S&P 500, up 0.3% at around 3 p.m. ET, got assistance on the upside from rallies among leading stocks in the gaming software, department store chain, home furnishings, internet retail, and international oil and gas exploration industry groups.
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Other industries showing gains of 2% or more included clothing makers, apparel and shoe retail, internet content and automobile retail. Travel stocks also shined. A few got covered in Tuesday's IBD Live show, including online booking titan Expedia.
According to Yahoo Finance, analysts on consensus see Q2 earnings rising 17% to $2.30 a share on a 6% bump in sales to $3.38 billion. The company's earnings fell below expectations in each of the past three quarters. In the second quarter a year earlier, Expedia trounced the FactSet view of $1.56 by 40 cents, or nearly 26%.
Alaska Air has made further progress from its breakout point of 51.02 in its own four-month cup with handle. Shares gained another 1.4% for their third straight gain.
The stock has now jumped 10% past the latest buy point, so it's too extended to buy for now.
DT Breakout
Stock market leader Dynatrace, a specialist in automating IT operations for corporate clients, rallied 4.2% in volume that ran more than 40% above average. The stock cleared a 52.99 buy point within a narrow pattern that has virtually all the elements of a flat base.
The 5% buy zone from this new entry goes up to 55.64.
At 54.97, Dynatrace boosted its year-to-date gain to 43.5%. During the bear market of 2022, DT shares slumped nearly 37% to 38.30 by year's end.
The company reports fiscal Q1 results on Aug. 2. Wall Street sees earnings in the current fiscal year, which ends in March 2024, rising 3% to $1 a share, then climbing another 17% in fiscal 2025.
In the quarter ended June 2022, Dynatrace posted a 13% rise in earnings to 18 cents a share on a 27% jump in sales to $267.3 million. In the latest June-ended quarter, Wall Street sees earnings growing 22% to 22 cents a share on a 22.3% pick-up in sales to $326.9 million.
In the past three quarters, Dynatrace beat the consensus estimate by 24%, 21% and 19%, respectively.
TTWO: Stock Market Turnaround?
Meanwhile, Take Two Interactive led the stock market as it enjoyed a 4.7% boost to 150.75 and a new 52-week high. Volume sprinted 137% above the stock's average of the past 50 days.
The recent action arguably shows a new breakout past a downward sloping handle with a 149.04 buy point.
Analysts expect a big turnaround in the video game giant's bottom line, going from a net loss of $7.03 a share in fiscal 2023 (ended in March) to a profit of $3.35 in fiscal 2024 and $7.67 in fiscal 2025.
The rise comes on the heels of news that a U.S. federal judge has denied the Federal Trade Commission's request to block the sale of Take Two rival Activision Blizzard. Activision shares soared nearly 10% in heavy volume.
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