Dow Jones Futures: Market Rally Suffers Big Losses As Key Inflation Report Looms

Dow Jones futures and S&P 500 futures edged lower early Friday, while Nasdaq futures rose slightly as investors await a key inflation report before the open.

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The stock market rally suffered significant losses Thursday, with the major indexes undercutting key short-term support. Beneath the surface, conditions are even worse, with decliners trouncing winners and breakouts not working.

With that in mind, Ulta Beauty (ULTA), Dollar Tree (DLTR) and Canadian Natural Resources (CNQ) are right around breakouts. All have relative strength lines at or near 52-week or record highs.

ULTA stock has been flirting with a 426.93 cup-with-handle buy point, according to MarketSmith analysis. Shares ultimately dipped 0.7% to 422.35 on Thursday. DLTR stock is close to a cup-with-handle breakout, but also is sitting right above its 50-day line, so that could offer some more safety. Dollar Tree stock has a 166.45 buy point, but a move over Thursday’s high of 163.36 would offer a trendline entry. Shares fell 0.9% to 159.85. CNQ stock isn’t too far above its 50-day line, and is part of the market-leading oil and gas space. Shares declined 2.4% to 66.65, near a 69.56 handle buy point. Canadian Natural Resources was Thursday’s IBD Stock Of The Day.

Meanwhile, Fortinet (FTNT) rose 1% to 303.50, just reclaiming its 50-day line, fueled by a 5-for-1 FTNT stock split announcement. Shares neared the 200-day intraday, but backed off as the market sell-off intensified. The cybersecurity leader is worth watching, with its RS line rebounding toward highs. FTNT stock is in a messy consolidation and is a long way from traditional buy points. Fortinet stock is an IBD Long-Term Leader. Investors could take a position in FTNT stock as a Long-Term Leader if it regains its 200-day line decisively. But recent gains have come on light volume, while the current market climate isn’t encouraging.

Tesla Stock

Finally, Tesla (TSLA) fell 0.9% to 719.12. For a second straight session, Tesla stock backed off solid intraday gains, hitting resistance at the 21-day moving average. TSLA stock is a long way from being actionable.

China sales and production rebounded in May, while Tesla Shanghai output reportedly is now back to full capacity. Meanwhile, The National Highway Traffic Safety Administration is expanding its Autopilot probe to 830,000 Tesla EVs. The investigation started last year with a focus on Autopilot crashes with emergency vehicles. NHTSA is seeking to determine if Autopilot undermines “the effectiveness of the driver’s supervision.”

The video embedded in this article analyzed the market action and discussed TSLA stock, Adobe (ADBE) and Quanta Services (PWR).

China Giant Nears Highs As It Seizes EV Crown, Becomes Tesla Supplier

Consumer Inflation Report

The Labor Department will release the May consumer price index at 8:30 a.m. ET. Economists expect a 0.7% jump vs. April, led by energy and food prices.

The CPI inflation rate should dip for a second straight month to 8.2% from April’s 8.3%. But that isn’t a notable decline, and there’s a significant possibility that the overall inflation reading will pick up.

Stock and bond markets could react badly to a hotter…