The Dow Jones Industrial Average outperformed small caps in the stock market today. However, the Nasdaq and related tech sectors continued to charge up the emerging new bull run in equities.
Strong earnings news in the database software space amped up buying. Institutional activity appeared to perk up as well.
Volume edged up nearly 4% on the NYSE vs. Monday and inched higher on the Nasdaq.
While the Dow Jones, at 34,152, turned in a soft gain of less than 0.2%, the Russell 2000 eased 0.3%. However, the latter index at one point fell as much as 0.9% in the early going. Midcaps fell about the same amount.
In contrast, the Nasdaq held on to a 0.9% lift for its eighth straight gain. That's an unprecedented streak in 2023. The S&P 500 closed 0.3% higher.
Nasdaq 100 index tracker Invesco QQQ Trust rolled nearly 1% higher for its own eight-run win streak.
As seen on a daily chart, QQQ rose further above the flattened 50-day moving average, a promising sign.
The exchange traded fund is also showing more signs of breaking a three-month downtrend starting with the July near-term high of 387.98..
Inside The Dow Jones
Back to the Dow Jones industrials, six of the 30 components rose close to 1%.
Leading names included UnitedHealth, which gained 0.8% and got closer to a breakout point of 546.78. The health insurer and medical data analytics giant has been forming a gargantuan saucer with handle.
Walmart and Nike rose 0.5% and 2%, respectively. Among the three, WMT scores the highest Relative Strength Rating at 87.
This means the retailing and grocery titan is currently outperforming 87% of all companies in the IBD database over the past 12 months.
Walmart is crossing a very shallow seven-week cup without handle that furnishes a 165.85 proper entry point. Therefore, WMT stock is in the buy zone, which goes up 5% from the breakout price, or up to 174.14.
Bond Yields Plummet Again
Meanwhile, the yield on the key U.S. 10-year government bond dropped hard again. As institutions scooped up Treasuries, locking in a healthy return in inflation-adjusted terms, the yield sank 9 basis points to 4.57%, down from 4.99% just a few weeks ago.
"Our base case in the next six months is still a soft landing (softer inflation, continued growth), which means the Federal Reserve is on hold and not cutting," Jeffrey Cleveland, chief economist at the Los Angeles-based bond fund giant Payden & Rygel, told IBD in an email exchange. "But what we want to highlight is the risk of the second most likely scenario: a no-landing."
"In this scenario, growth remains above trend, but inflation is too sticky for the Fed's liking. After a pause, the Fed might be raising rates again, and we do not think investors are even considering this, much less pricing it in," Cleveland added.
The U.S. central bank last Wednesday decided to keep its short-term lending rate to banks, the fed funds rate, unchanged at a 5.25%-5.5% range. In January 2022, that rate was at 0%-0.25%.
Cheap Stocks To Buy And Watch Now
Database Dynamism
All of the "Magnificent Seven" megacap techs rallied in the range of 0.4% to as much as 2.1%.
Dynatrace, MongoDB and Adobe all benefited from a huge earnings surprise by Datadog.
DDOG shares romped more than 28% higher and at one point rallied more than 30%.
The specialist in monitoring of cloud applications reported a 96% leap in third-quarter earnings to 45 cents a share as revenue jumped 25% to $547.5 million. Datadog issued a strong full-year earnings forecast well above views.
Return on equity, on a quarterly basis, continued to exceed 25% for a fourth straight quarter. In general, leading growth stocks show an ROE of at least 17% at the start of their big price runs.
Within the database software industry group, Alteryx jumped 19% in the heaviest turnover since September following solid third-quarter results. The stock is trying to end a months-long downtrend and retook its 50-day moving average. But shares remain nearly 18% below the 200-day line, a key long-term technical level.
The self-service data analytics platform posted earnings of 29 cents a share vs. a net loss of 5 cents a year earlier; revenue rose 8% to $232 million, following top-line gains of 73%, 26% and 4% in the prior three quarters.
Salesforce, a member of the Dow Jones industrials, rallied 2.1% in above-average volume. It regained the 50-day line and is still working on a new base with a 238.22 standard buy point.
Watch for a potential trendline breakout to emerge near 213-214.
A New Breakout
DDOG stock jumped past a 102 entry point in a double bottom to 102.20. Thus, Datadog shares are in the buy zone.
The 5% buy zone in the new Leaderboard member runs up to 107.10.
The stock is still in a consolidation, though, so watch to see if it can get closer to the base's left-side peak of 118.02. In other words, an extra buy point may also develop.
Datadog, based in New York City, has 325 million shares outstanding, a float of 266.2 million shares, and a market value of $33.2 billion.
Numerous members of the IBD Mutual Fund index have become DDOG shareholders.
They include T. Rowe Price New Horizons (PRNHX), which more than doubled its stake in Datadog in the third quarter to 4.64 million shares.
Artisan Mid Cap Investor Fundt (ARTMX) and Virtus KAR Mid-Cap Growth Fund (PHSKX) also own stakes.
Beyond Dow Jones: These Energy Stocks Get Thumped
On the downside, oil stocks outside the Dow Jones Industrial Average got thrashed by sellers amid a 4.3% pounding in light sweet crude futures to $77.38 a barrel.
Tidewater, which reported earnings late Monday, issued a sell signal by collapsing below its rising 50-day moving average in heavy volume.
Investor's Corner: The Seven Most Important Words On Wall Street
Shares fell 12.5% in volume running more than four times normal levels. The 3.58 million shares traded was the highest in at least two years.
The company reported strong Q3 results (EPS up 133% to 49 cents, sales up 56% to $191.8 million). However, Wall Street had expected earnings on consensus to come in at $1.29, among four analysts polled on Yahoo Finance.
Meanwhile, the operator of tugboats and other transport vessels for offshore drilling platforms offered a full-year revenue forecast of $1.4 billion-$1.45 billion.
On the exploration and production side, ConocoPhillips showed weakness below its 50-day line. Shares fell 2.9% in light volume.
Weatherford International, a leader in the oil equipment space, is close to triggering a separate loss-cutting sell rule. The stock fell 6% below a 97.88 buy point in a narrow cup with handle.
Please follow Chung on Twitter: @saitochung and @IBD_DChung
