Fever Breaking For Momentum Stocks… And Sarepta Surges After FDA Approval 6/21/24

0:03Live from the Nasdaq market site in the heart of New York City's Times Square. This is Fast money. Here's what's on tap tonight. Wilting in the summer heat? We all are. Well, this week, some of the market's hottest momentum stocks, NVIDIA, Chipotle and Costco, started to lose a little of their mojo. Is this a bad sign for the health of the bull market? We'll debate that. Plus, swooshing higher. A bull call today from an analyst on Nike. Our traders set to weigh in on why they aren't buying what he is selling. And later, gearing up for results from FedEx and Micron, a rough end of the week for the big banks.

0:33And what is behind the beating Bitcoins taking right now. I'm Melissa Lee. Come to you live from Studio B at the NASDAQ. On the desk tonight, Tim Seymour, Karen Feinerman, Bono and Eisen, Steve Grasso. I'm not losing my voice. Not a Peter Brady moment. But you've been on the network. This is your third hour today. Yes. That's an aside. We start off with a handful of high-momentum stocks suffering a little heat stroke in the hot summer sun. Nvidia, the obvious example, hitting an all-time high yesterday morning and now down 10 percent since then. That technically puts it in correction territory.

1:04and drops it back to the number three spot on the market cap leaderboard. But NVIDIA is not the only stock following that pattern. Chipotle is down more than 7 % from its Tuesday record and now negative for the week. Eli Lilly and Costco also pulling back from their best levels hit just in the last few days. So there's a fever breaking after these stocks' massive run. We asked last night, mountain out of a molehill. We did see follow-through action today. So molehill still, Tim, or mountain? Or maybe somewhere in between? Apparently, I gave too much information about moles, but I was actually referring to the varmints that live in my yard.

1:40Again, and the question was posed whether this is good or bad for the bull market. Isn't this good? I mean, don't we want to see these runaway trains actually slow down a little bit and start to broaden? Now, it doesn't mean they will broaden, but the parabolic move in NVIDIA is something that I think has a lot of people uncomfortable. The fact that depending on which surveys you're looking at and there's different graphs that look at momentum. The fund manager survey of Bank of America was out this week. I participate in that. It's clearly as overweight equities as it's been in some time or at least near a range where it's near that level.

2:13So I look at where the participation of look, we want to see transports. We want to see industrials. They've actually been under some pressure. We've talked about sectors that don't really seem to matter like industrials. sorry, excuse me, like energy, industrials do matter, like energy, like utilities, so to speak, to the to the more broad market. I actually think that this week was interesting because on top of what we had in terms of maybe these blow off tops for at least some period, is that we've had economic data that continues to show that I think the economy is slowing a little bit. And that's the part of this that's the most interesting to me, because I don't think the market wants to see a lot of that.

2:48But everything else in terms of the price action, look, we were due for this. I am not going to go into the weekend and say this is the beginning of a major pullback. I tend to agree. I tend to agree. I don't think this is definitely a mountain either. And I'm with Tim, I would say, 99 % of the way. We do want to see that breadth. I'm not necessarily convinced that we're set up to see that breadth, however. If you really look at earnings growth, what we've seen over the last year, I would actually purport the last two years, it's really been concentrated in, call it, 5 to 15 names. And I'm not sure that the balance of stocks in the S &P really have what it takes to kind of fill in the gap from an earnings growth standpoint.

3:28That doesn't mean that we can't continue to rally. But now we're predicated on having a PE expansion. And I think this late in the cycle, expecting to see that multiple expand with more stagnant earnings growth, I think that might set up to be a bit more troublesome. I agree with you very much on the on the PE multiple being part of the driver. It has to be earnings. It has to be a beat. The bar is already so high, though. That's the problem. And, I mean, you know, if we look at the chart and squint, they haven't even really topped. They're back to, like, where they were Wednesday or Tuesday of last week.

3:59But that feeling of sort of frothiness that was there, was it just yesterday morning? Yesterday morning. Yes, with NVIDIA hitting a new high. Yes, hitting a new high. I don't know. That just seemed like we just have to be in it, like a panic buying kind of, you know, we've got to be in this name. And so a 10 % pullback is actually nothing in this. I wouldn't actually be surprised if it did a further pullback, which still would be warranted, I think. And I know Tim was saying yesterday, tons of buyers who want to buy it down, I don't know, 20 % from that? 10%. You've got 10 % on here. 115 is a level on the charts that I think people would love to buy NVIDIA, and I think they will.

4:37Yeah. I was talking to Santoli this morning on Squawk on the Street, and he referenced the outside reversal day back in March, which Guy talked about last night. If you pull up that chart, what happened after that outside reversal day? We had a breather, right? I mean, that came in at$200. But that was a buying opportunity. It was a buying opportunity. And as long as they hold 80, 85 % share in AI, all of these sell-offs are going to be buying opportunities. I feel like you started a new game, Mountain or Mole Hill. So I think it'll be Mole Hill. Just because I use the word or doesn't mean I'm setting up for a game.

5:07I get excited for games. Friday, it's a game. So I'll play the game. So I'll play my game. So I think it's a molehill on all of these. And to Karen's point, as she said, if you squint, these things are right where they were. Lilly is the holy grail. It seems like the holy grail right now. Chipotle, they're splitting next week. Tuesday, I believe it is, right? 50 for one. So you're going to see a little bit. Maybe you get a better entry level here if you are not included. The day of record was the 18th. Does anyone think that you're not going to see international growth out of Chipotle? I don't think so.

5:44So is it factored in? Definitely not. Mole Hill. Mole Hill. Costco. Renewal rate, 90%. Mole Hill. This is going to be for them. All these fundamentals, which are great. It doesn't mean that these stocks are not overvalued, though. Well, overvalued is speculative on a daily basis. It could be overvalued or undervalued. When we were looking at NVIDIA, there were analysts that thought when NVIDIA was trading at$900, that$1 ,350, when that was, oh, my gosh, that's so high that the stock would still be cheap. And it turned out that it still was cheap. So are you going to see these pullbacks? Yes. Are they still on?

6:21NVIDIA is on that mountain with a molehill on its feet, conflating here. A molehill on its feet. Just a little bit. Go with me here. Go with me here. Twin Peaks. Thank you. So if you think that, as I said before, they're so far ahead of everybody else. There's other ways to make money in AI. but until further notice, NVIDIA is still the king. Would it buy lower by 11 bucks or so? Maybe, yeah. I mean, I think the valuation is defendable. I think if I look at the charts, and I certainly think there's a context for where you want to leg into trades. If you want to own this market long-term, you're looking for that opportunity to buy it.

6:59So for clients I have that want to own NVIDIA, I feel like they've left out. I mean, you're going to start to leg in the trade. They want to own the market. Question is, you know, where do you want to be underweight or overweight and how much you actually want to get there? The fact that, look, NVIDIA, even after a heroic run over the last two years, in April gave you an opportunity to buy it down, you know, at$65 or$70. I mean, so the question is, how do you want to tactically get to the place you want to be in terms of your position size? I would just say that this week was also very interesting because you saw the NASDAQ, you know, kind of reassert itself in terms of fresh relative outperformance to the S &P.

7:34The NASDAQ hadn't done that. We talk about semis all the time. They had done that. But the Nasdaq jumped back into that phrase. So I look at, again, the market that we had this week. And I think there's a fly like the talk of wildlife here. Anyway, I sorry. I keep getting buzzed by a fly in the studio. It's tough. I think we have a case here where there's nothing that happened this week that isn't surprising. And there's nothing that happened this week when you consider where the positioning in the market is. This pullback to me is very healthy. It's not even a pullback. I mean, we're talking about 18 hours of price movements, really, or 36 hours.

8:09It's really, it's the peak of yesterday and today's session. And I understand outside reversals can be powerful. But I'm just, the only reason we're having this conversation is because the move was so extraordinary to the upside. And it was 13 days in a row we saw NVIDIA go higher, and we just kept coming in every day. And the fact that it's not, and it's given a little bit back. And we also haven't had a 2 % sell-off in how many days? 333 days in the S &P. So this is a long time coming and people are waiting for it. So we're hypersensitive when we're going to get the crack. As a trader, you don't ever think that you're right when you make that first purchase.

8:45You always say that's why you don't buy 100 percent of your position the first day. You actually get accustomed to hoping that you're wrong with that first purchase, whether you're dividing it up in 20 percent lots or a third. So if you're haggling over NVIDIA, whether it's a great buy at$126 or you're waiting for$115, just buy it. Just buy 20 % of your position and hope you're wrong. Not to mention that today is we've had rebalancing. We've had option X3. We've had futures X3. There are definitely things under the surface that have nothing to do with valuation, why you're having buy and sales and perhaps mismatches.

9:19Do you think that expiration is contributing to this decline that we've seen in NVIDIA, though, or these momentum stocks in general? I don't think that it's immaterial. OK, sure. I think there's an argument to be said. Listen, and I've always said this. You should expect some volatility in something that has I don't know exactly what the beta is, but I would argue probably 175, maybe even north of two. So you're expecting this. What I'm saying is that when you have positions roll off, maybe I don't know how many of the options expired in or out of the money today specifically. But that coupled with the rebalancing and all of that buying momentum that you had by the XOK going into the print today, it wouldn't make sense that perhaps it takes a bit of a breather.

9:58I see 167 as the beta, but they're partially responsible for part of the beta. I feel like, you know, but I very much agree with Steve's point. You never you you want to be wrong at the beginning when you buy something. And I kind of want to be wrong for having sold some and want to from NVIDIA and having, you know, want to be wrong for buying puts. Were you looking to sell any more today? I was not. You were not. I had my puts. I sold some calls and I sold some stock. And now I feel like, all right, I still have a lot of exposure to the space between Dell, Amazon, Meta, Google. Right. It's a big position also.

10:32So sticking where I am. And I just get back to where I think you could pull back to. It's great we're about to have Carter come on the show because this is what he does really well. But you could look at the semiconductors or the SMH, the ETF that tracks that. You could see that pull all the way back to 240. and that would be another, I don't know, 10 % from here, and you'd still be holding that uptrend, and that's an uptrend that's from October of last year. One more thing, because we give a lot of useful information on this show. Moles are less dangerous than voles. And I have voles in my yard, too.

11:02Moles are just eating grubs. Moles are less dangerous than what? Voles. What's a vole? There's a difference. It's a terrible-looking rodent, and it's blind. Yes, it appears to have what were eye sockets or something, but they don't have eyes. We do have to remind ourselves that we're on air. But Volzee plants. We're not a break. So they could take down a very mature rhododendron, for example, and you won't even know it until it's too late. Be careful out there. I don't know if it's useful or not. It's very useful. Let's bring in Carter Braxton Wirth, the chart master, to tackle whether these stocks have in fact lost their mojo.

11:39Carter, what do you see? I'm stuck on rhododendron. But so, yeah, I mean, look, we can't call it a dip to make the ball. Nothing happened. Right. I mean, you're talking about most sectors are up this week. Tech, of course, one of the ones that was down, but almost every sector up at some point. We are all waiting. Right. When does this is sort of getting to be parabolic, over love, crowded, expensive run pause. But I will point out that if you look at the top five largest holdings, we'll get to some charts in a second. in the momentum ETF, three of them were down for the week. But anyway, we know that the breath is terrible.

12:18And this has been the case. You know, even the Nasdaq 100, the equal weight Nasdaq 100 has not made a new high. But these are the top five holdings in the iShares momentum ETF. And in fact, NVIDIA was down for the week. Vago was down. Meta was down. But the one that really jumps out and we'll look at some charts is meta. But first, let's look at a few charts relating to this ETF compared to the market and compared to other aggregates. But meta of all of these, it peaked on the 8th of April. Every other stock, the top five, made a new 52-week high this week. And so meta is the one that I would say.

13:02Looking at semis, certain semis have been struggling for months, right? AMD, for instance. And so just a quick reversal on MU or Nvidia, that's sort of day-to-day stuff. But meta is about to break trend here to my eye. And worse is its relative performance, I think it's the final chart we have, to the momentum ETF. So now you're getting into some autocorrelation, but it's a pure exercise. It's one of the parts juxtaposed against the whole meta relative to the iShares momentum. And it is already broken trend. This is the one that I would say keep an eye on. We know that Salesforce is cracked, Intuit is cracked, but this is a lot bigger name.

13:44And any further weakness from here will start to mean something. I almost feel stupid. We've been focusing on NVIDIA and Broadcom for so much of the show. And you're saying, take a look at meta. That's the one in danger. But Carter, you know, in terms of reversals and how reversals go, don't they signify something in the charts or no? Do you just not really? Sure. I mean, down one day, I mean, let's say, again, it's at 18 hours or something. If a stock has gone up 30, 40, 50 percent in the course of several weeks, it's entitled to drop one, two, three, four, five, not to personify the stock. But what NVIDIA has done is nothing.

14:21Now, can it turn into a route? Maybe it crashes Monday. But the point is, we can't come to that judgment. At least I can. If any of you can, I would say I'll come work for you. But the point is, yes, I see the cracks. The semis were the most steep, most loved. So they're the ones that sort of got hurt today. But one can't impute from this small bit of data further downside, other than to say they should all be a lot lower in the sense that they're all over-owned, overbought and, I think, over-loved. So does that mean that you would not recommend buying them? And I guess I'm asking, is the uptrend intact still, even if we see, you know, dips here?

15:02We're speaking of the market or NVIDIA? No, NVIDIA for semis. Yeah, for semis. Yeah, the break, remember, you have to put in the context of the breakout, right? Semis were range-bound, and then they broke out, NVIDIA being the big contributor. And now you have a two-day give-back. You wouldn't even call it a dip or a sell-off or certainly not a correction or a drawdown. A two-day giveback in the context of something that just broke out. I would say you surely should get more than just two days. But how much more before it becomes an opportunity? I wouldn't read all that much into it. All right.

15:35Carter, thank you. Carter Braxton Worth of Worth Charting. Karen, are you worried about your meta now that Carter's alerted us to the break in trend happening? Yeah, I mean, you know, I like Carter's work, so I don't love it when he has something that he feels, you know, is destined to trade down. But I just look at the Meta valuation and I look at the NVIDIA valuation or some of the other ones, even Amazon, Microsoft. It's a different stratosphere kind of. Some of the NVIDIA stratosphere is much higher. But so Meta at 24 times earnings, and that doesn't include the cash. I don't feel like there's a tremendous amount of downside.

16:12I want to own it right here. I've not sold any. All right. Let's dive deeper into the drop in NVIDIA, specifically the AI Darling closing out its first down week since mid-April after two days of losses. But options traders are still piling in on the bullish bets. Mike Coe has the action. Mike? Yeah. I mean, this one is, of course, the busiest single stock option by a good margin. It actually traded over 8 million contracts today, which exceeded even the number of contracts that spy the ETF, which is usually the busiest contract traded. We did see calls outpacing puts, though, by about 5 to 3.

16:44And if we exclude those contracts which expire today, the busiest contracts all expiring next week were the 130, 135, and 140 strike calls. The 130 has traded almost 180 ,000 contracts. Buyers were paying a little over$2.90 a contract for those. It is worth pointing out, though, that some of that could be a substitution. You could see some people who are deciding that they're going to take profits on their shares and buy a little bit of upside just in case it actually regains its mojo. Mike, thank you. Mike Coe. I think you have, I mentioned it before, we're at peak corporate buyback in mid-June.

17:18You have yourself a little over a week because then you run into real strong seasonality strength in July. The 15 best days for the market since the inception of markets. So if we're going to see this weakness and we're going to see weakness in Meta and NVIDIA, you literally have a week or so to really absorb that weakness. So don't be too cute if you're looking for bargains. Yeah, I totally agree with the seasonality. And that's one of these dynamics that I think, especially with the Fed out of the way. And I would argue that the Fed's a non-factor until December. I mean, they could go in September, but the Fed's out of the way.

17:54And so with earnings kind of coming a couple of weeks away, you do have different periods where markets can just focus on where there are flows and passive flows that want to take this thing higher. I do think that when you had the kind of move that NVIDIA has had and some of these, I mean, the fact that Micron is treated the way it is when a year ago, if you asked me about Micron, this was a truly commoditized company that was trading six, seven times and people felt like that's where it belonged. So after the kind of move you've had, some of the seasonal stuff, I think, doesn't mean all that much, especially when you consider just how overdone we are to the upside in many people's view.

18:28Again, I think there's so many people that want to own NVIDIA lower that I think there are a handful of places where it would be very well supported. You have a position, right, in NVIDIA still? What are you doing with it, if anything? I will probably add if we do get another 10 percent. I don't think that's outside of the realm of possibility, especially given where sentiment is or how quickly sentiment might change. With that said, I still don't think you have another AI growth story where I have zero concern in the short term. Every time they are presented with a challenge, each and every earnings, they knock the cover off the ball and then raise guidance.

19:06Until I see that reverse, I will continue to look for entry points when I think the panic has started to set in. Coming up, analysts leasing up on Nike, but should you swerve on the swoosh? Wire traders aren't just doing it. That's next. And a pullback in bank stocks. Regulators flagging some major issues for the money center names, why they are sounding the alarm and what the banks need to do to fix it. Don't go anywhere. Fast Money is back in two. This is Fast Money with Melissa Lee. Right here on CNBC.

19:45Welcome back to Fast Money. Nike shares higher after Oppenheimer upgraded the sportswear giant to outperform for market perform. The firm reinstating the athletic wear company as a top mega cap pick saying it is poised for a gradual rebound. While analyst Brian Nagel told me in Squawk on the Street this morning that the market for athletic shoes is expanding, Nike has been lagging competitors like On Holding and Hoka Maker Deckers substantially this year. So do you believe this call? Do you think that this is, you know, worth believing or do you just sell this one? Well, I think the analyst, I think it's it's great to get out there and make a call.

20:18It's great to get out there on a company like this. It's had a big a big pullback. And I respect that. But what I heard from this buy was nothing emphatic. I don't see a catalyst. It trades cheap relative to its historical one point. One point one to the market multiple is something it rarely does. But what I heard is at some point it's going to break out. Like at some point the stock's going to move and blah, blah, blah. And that to me isn't overly compelling, even though I hear you. But I still think that we have headwinds on the consumer. And I still think that the multiple could get cheaper.

20:49And by the way, the market multiple is a little extended. So that's not this. This outperform is not a reason to go out and buy it to me because there is no catalyst to go say other than earnings. They'll tell us something different. I mean, he didn't mention the Olympics. The Olympics have traditionally been a catalyst. But I specifically asked him, I said, what is the context? In the world in which you described where Nike reassurts itself as the leader in athletic wear and athletic shoes, where is Hoka? Where is On in that equation? Do they lose market share to Nike again? And he said, no, they're still there.

21:21It's because the market has expanded because more people are wearing sneakers. Right. Sneakers. Yes. If we were in the U.K., we'd be calling them trainers. Trainers. We'd be calling them trainers. But more people are wearing sneakers now, and they're not winning. To me, this sets up very similarly to Lululemon, right? A very similar thing. A very high-quality company that has really done a great job for years and seemed to have lost its way a little bit, and for the first time started to face some competition in Viore, right, that they hadn't before, and sort of losing its mojo. And to me, the setup is really about an asymmetric risk of expectations aren't that high.

22:03Right. And if if they put up a good quarter, I think the stock will really do well. I think it pops. And I think the I think to the upside, because technicals, it's actually working on on an ascending trend line as well. And if you look at on the bottom there, if you zoomed in on the lower right, that's where you're going to see it. And you talked about it with the Olympics. It's going to be a marketing and branding campaign. There's not going to be Hoka there. There's not going to be Han there. It's going to be all Nike all of the time. So I think you have an opportunity here for Nike. So to the upside, you run into a little resistance, maybe 5%, 10 % higher.

22:39But that's where Tim's talking about. That's the prove me state at that point. Yeah, I've snobbed some shares over the last month or so. Like started to, as you said, and been wrong. Got in a little bit too early and started to average in. But with that said, I'm mixed on the call. I don't think that it's a call to buy shares ahead of earnings. In fact, they've even argued that they expect Nike to guide down and to come in a bit late. Their numbers are a bit lighter than consensus numbers. But over the long term, I do think sentiment has swung so negatively. And taking market share becomes an incrementally tougher game for On and Hoka and all the others.

23:17And great read, shoe dog. This is a company that is committed to marketing spend. Now, that doesn't always translate into additional top line growth, but you are not going to out present the Nike product. And that's worked over the long term. And I think it will continue to work in the long term. All right. There's a lot more fast money to come. Here's what's coming up next. Fed's raising the warning flag as some major money center banks don't make the grade in planning for the worst case scenario. The name's in need of some changes. Next. Plus, another big boom in biotech. Sarepta Therapeutics surging on the latest approval out of the FDA.