Dow Jones Futures: CPI Inflation Report Due Amid Broad Market Strength

After hours, Dow Jones futures, S&P 500 and Nasdaq were all little changed. Wednesday will bring the June CPI report.

S&P 500 and Nasdaq saw good gains in the stock market on Tuesday. The rest of market was better with many actionable stocks.

For the first time since seven years, Salesforce.com will increase its prices. This put CRM in a buying area, and probably gave a boost to other software names. Datadog (DDOG), Dynatrace DT, Procore Technologies PCOR and HubSpot HUBS flashed or broke out as buy signals.

ROKU stocks surged after Shopify (SHOP) announced an alliance with Roku (ROKU). Caterpillar and United Rentals both broke out, while Boeing (BA), offered an early entry. Expedia (EXPE), a classic buy point, cleared the market. Booking Holdings is also actionable.

IBD Leaderboard includes HubSpot and DT stock. SwingTrader added Boeing and CAT stocks on Tuesday to join Dynatrace. URI is listed on the IBD 50. HubSpot stock, Dynatrace stock, United Rentals stock, and DDOG are all on the IBD Big Cap 20.

Caterpillar is Tuesday's IBD stock of the day.

The article includes a video that reviews the Tuesday market and looks at CRM, Caterpillar, and Booking.

CPI Inflation report

The CPI is expected to increase by 0.3%. However, the inflation rate will fall to 3.1%, down from 4% in May. Core CPI is expected to rise 0.3% in comparison to May. The core CPI inflation rate will also fall from 5.3% to 5%.

Dow Jones Futures Today

S&P futures dipped. Nasdaq 100 futures tilted higher.

Dow futures, Treasury yields and Dow futures will be affected by the CPI inflation report shortly before opening.

Keep in mind the overnight Dow Futures session.

Stock Market Rally

For the second consecutive session, small gains in the Nasdaq or S&P 500 masked large gains elsewhere.

The S&P 500 index increased by 0.7%. The Nasdaq composite rose 0.55%. The Dow Jones Industrial Average rose 0.9% on Tuesday, thanks to Caterpillar, Boeing, and CRM. The Russell 2000 small-cap index rose 1% to a new four-month-high.

The Invesco Equal Weight S&P 500 ETF (RSP), which tracks the performance of the S&P 500 index, has risen by 1.1% and reached its highest levels since February.

First Trust Nasdaq 100 Equal Weighted Index ETF QQEW has advanced by 0.8% following Monday's 1.8% increase, reaching a new 14-month high.

On the NYSE, the advancers outnumbered the decliners nearly 2-to-1. New lows were outnumbered by new highs.

The U.S. crude prices rose 2.5% to $74.83 per barrel, their highest close since May 1.

The yield on the 10-year Treasury fell by 3 basis points, to 3.98%. This is a further retreat from 2023's highs. The U.S. Dollar fell for the fourth consecutive session, reaching its lowest levels since May.

ETFs

The Innovator IBD50 ETF lost a small amount, while Innovator IBD's Breakout Opportunities ETF (BOUT), climbed by 0.7%. The iShares Expanded Tech Software Sector ETF (IGV), a growth ETF, gained 1.5%. IGV holds CRM, Datadog, Dynatrace and HubSpot, as well as Procore. VanEck Vectors Semiconductor ETF SMH gained 0.1%.

ARK Genomics ETF (ARKG) and ARK Innovation ETF(ARKK) both grew by 3.7%, reflecting stocks with more speculative news. ROKU is a Top-10 holding in Ark Invest funds.

Energy Select SPDR ETF XLE (XLE) jumped by 2.2%, and Health Care Select Sector SPDR Fund XLV (XLV) eked out a small gain.

The Industrial Select Sector SPDR Fund XLI grew by 1.2%. Boeing, CAT and United Rentals are all major holdings in the ETF.

The Financial Select SPDR (XLF KRE), a financial select ETF, was up by 1.3%.

Stocks In Buy Zones

The stock of CRM rose by 3.9%, to 221.17. It broke a downtrend and cleared short-term levels while remaining within range of the 50-day line. According to MarketSmith's analysis, Salesforce stock has an 225 flat base buy point. Salesforce announced that it would increase its software prices in August by 9%, marking the first price hike in seven years for the Dow giant.

DDOG jumped 3.5 % to 104.98 after flashing a early entry on Monday. The buy point is a cup with handle base dating back 11 months. Investors may view the handle of a cup as its own flat basis above a bottoming-out base that began in mid-February.

DT stock rose 4.2% to 54.97. It cleared a 52.99 buy-point flat-base that is part of a formation base-on-base. Monday's jump of 3.2% offered a good entry point.

HUBS stock climbed by 1.9% to 540.21. It cleared a consolidation buy point of 535.12 after testing the 10-week level on July 16.

PCOR stock jumped 5.7% to 68.99. It cleared a 68.68 purchase point. An early entry was available in the morning.

ROKU's stock soared 11%, to 75.43. It closed just below the 75.45 cup with handle buy point. Investors may have spotted an early entry Monday or Tuesday. ROKU's stock price is currently 23.5% higher than its 50-day line. Roku's Shopify partnership allows users to buy directly from Shopify merchants via their TVs. SHOP stock rose 2%. It continues to rise from the 50-day level, but is not yet actionable.

The CAT stock increased 1.6% to reach 252.85, surpassing the 250.39 cup with handle buy point.

URI stock jumped 2.8% to 457.32, topping a 450.65 entry in the weekly chart.

BA's stock rose 2.55% in volume above average to 218.76, rebounding near the 21-day line and 10-week lines. Boeing's breakout failed on June 12, but it is now re-setting up. Investors can buy at 223.91.

EXPE stock rose 2.3% to 116.96. This is above a cup-with handle buy point of 114.37.

BKNG shares rose 2%, to 2,783.40. This is a continuation of Monday's rise of 3.5% from the 50-day level. The shares cleared their short-term highs and offered an early entry. The shares briefly reached a flat-base intraday buy point of 2,786.85. The upcoming Nasdaq 100 Special Rebalance is expected to be a big winner for Booking.

Market Rally Analysis

It would be ideal if the Nasdaq or megacaps moved sideways, at least lagged, while market breadth improved and leadership expanded.

The Nasdaq still sits 5.7% above the 50-day line. It's not yet extended, but it won't be long. A 21-day test of the line could also be beneficial.

Tuesday, industrial and software names were the big winners. Travel continues to be a strong performer, as do home furnishings, oil service providers, drillers, and machinery companies.

Chips, and especially semiconductor equipment manufacturers, had a rough session.

What to Do Now

After some head-fakes last week, leaders such as Dynatrace and Datadog, along with CRM stock, are now making more convincing moves. This reflects a broad market, with software being a standout.

The action of this week shows that investors should pay attention to the market signals and buy when there is a healthy upward trend. Last week's head-fakes are a good example of why investors should not increase their exposure on one day and be prepared to back off if the new purchases aren't successful.

The inflation report on Wednesday could reverse recent gains made by recent winners such as Roku, Caterpillar, and HubSpot.

In the last few weeks your watch lists should have swelled with names from different sectors.

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