The stock market sprinted ahead in early action Tuesday but then gave back most of the gains. Meanwhile, two optimism gauges sent contradictory messages.
Optimism surged in the May reading of the National Federation of Independent Business, topping the highest estimate in the range, according to Econoday. But the IBD/TIPP Economic Optimism Index fell 5.4 points to 53.2 in early June.
Small caps in the Russell 2000 initially responded with the index rising 0.8% but then retreated to fall nearly 0.3%. The Nasdaq was barely below break-even, and the large cap S&P 500 was barely up. The Dow Jones Industrial Average initially trailed but then held to a sliver up.
Volume in the stock market today inched up on the NYSE but rose solidly on the Nasdaq vs. the same time Monday.
Cat And Cisco Rise
While the blue chip Dow Jones trailed, some stocks in the 30-component index scored strong gains. Caterpillar (CAT) gapped up as much as 3% and then eased to a 2% gain.
Cisco Systems (CSCO) chipped in a 1.5% gain as it neared a buy point. The stock has sketched a stage two, flat base. A stage two base is actionable. As a stock rises, it pauses to consolidate. Breakouts from the first two consolidations are more likely to work than those from later patterns.
Cisco's stock price is up 33% so far this year.
In the S&P 500, Dollar Tree (DLTR) surged 4% in heavy volume but then eased to a 3% gain. The stock retook its 50-day moving average for the first time in about a month.
Breakouts were scarce Tuesday morning.
Financial services provider Fiserv (FISV) crept above a 91.29 correct buy point but then reversed to more than 3% under the entry. Volume was below average.
Air Lease (AL) cleared a 39.94 buy point but then fell back under the entry. The stock was down 0.2%. Turnover was weak.
Among IBD's 197 industry groups, steel and retail enjoyed some gains. On the downside, food, hospitals and homebuilders fell.
Technicals painted a mixed picture. The Nasdaq continued to battle near its 50-day line, but the S&P 500 appeared to have conquered its 50-day line. In the meantime, new highs were on track for another day of outnumbering the new lows.
But the distribution rating for the major indexes remains at a worst possible E. The reading has been stuck there for the past nine sessions. Once a market uptrend is confirmed, as it was on Friday, bullish action will often lift the rating. That hasn't happened yet.
Exchange Traded Funds
Innovator IBD 50 Fund (FFTY) shaved off 0.5%, while the Innovator Breakout Opportunities (BOUT) lost 0.9%.
The iShares Home Construction ETF (ITB) dropped 1.1%. Year to date, the homebuilder ETF is up 28%.
Beyond Meat (BYND) dropped 21% after J.P. Morgan's downgrade from overweight to neutral. Also, Zoom Video Communications (ZM) slid almost 9%.
Please click here to read the original article on the Investor's Business Daily website.