AI Continues To Lead Rally; Sandisk, Lam Research, America Movil In Focus

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0:29Ed Carson:good afternoon everyone and welcome to stock market today for tuesday may 5th and stocks on the move again today this market rally continuing to power higher and a tech-led rally it continues to be, but there's strength elsewhere as well. Joining me now to break down the action in today's session and to cover some stocks to watch, not only from the regular trading day, Ed, but also after hours, we're going to be taking a look at some names, is my colleague Ed Carson. Ed, great to see you. Great to see you, Allie. I'd like to take a look at SanDisk, Lamb Research, and Americamobile. Okay, we'll get to those stocks.

1:13Ed Carson:But first, a closer look at the major indexes. The Nasdaq today up more than 1%. Meanwhile, the S &P 500 up 0.8 % on the day. The Dow was up about 3 quarters of a percent or so. And small caps had a great day with the Russell 2000 up 1.7%, finally getting above this sideways trading range, Ed, that we've been wanting to see. So what do you make of the action here, Ed? We keep getting these glimmers of 1999-esque action. How's that panning out right now for the current market? Yeah, I mean, there's that, you know, as David Ryan was talking about on IB Live in 1999, it was.com. Now, of course, it's AI.

2:04A lot of these AI names, as he was pointing out, are profitable and some very profitable. And that's a difference. So there's something real behind it already. There's other sectors that are rallying, as you mentioned at the beginning. It's not like it's, you know, so it's not, I wouldn't say it's a narrow rally, but it's also not. The real big winners clearly are in the AI hardware space, broadly speaking. But there is a lot going on. So people should be looking at these other areas. Obviously, some of the big winners are there. NASDAQ, you know, it didn't pause that much. It did provide some pause.

2:36And so that was nice. There were some buying opportunities now. I would say that there are still buying opportunities. opportunities uh and you can see with the other indexes there'll be things but there's like there are so there were some new chances and a lot of them are gone now and uh and there's still sometimes like well there was earnings coming up and that's just sort of the way it's been uh but if you've already been fairly heavily invested i mean you can't be too upset if you have a solid you know you're solidly heavily invested and you know these things are going up

3:03Ed Carson:pretty nicely across the board yeah and i would say the silver lining for investors out there who have some capital that they're still wanting to deploy. Something that we've talked about with our senior market strategist, Mike Webster, is if you're talking about this in terms of a breakout to new highs, we could be still in the early stages, even though in the short term from the lows, we have come up a lot. But from this breakout area, again, and in terms of the power trend. It is still early days. So if this power trend continues, perhaps we will get some other buying opportunities with bounces off of the 21 day line.

3:48Ed Carson:That's the green line on the chart. That's a level that a lot of us really like to use to add to winning positions in a power trend. Or like you said, maybe new setups will develop. So we have that to think about as well. But yeah, Obviously, being fully invested here is a great thing to be. Yeah. And as you said, there will be other opportunities. And there have been. And just in the last couple of weeks, there have been some more opportunities. So don't go chasing after stocks, especially those that are really extended, because we might have a pullback before those new opportunities develop.

4:23I mean, that'll be why a lot of opportunities develop. But yeah, a really strong market continues to power higher with crude oil coming down, strong earnings today. I think oil futures were down about 4 % today. So after balancing, basically gave up those gains. And so the market just showing a lot of strength. Yeah.

4:45Ed Carson:Let's take a look at RRSP. This is the equal weighted S &P 500 ETF, up 0.8 % today. So basically in line with what SPY did here, perhaps an update, Ed, on this breadth equation through the RSP lens. Yeah. I mean, obviously it's been lagging lately. It's not going, it's not, it's not leading like it once was. And that's good. I mean, honestly, because we like to see a lot of those growth names doing better, but it's not far from highs. And this is why you should still be watching. There's still some things like biotechs, which I wouldn't say is not growth, but like industrials, there's some banks, there's definitely areas out there that aren't necessarily moving, but you can see there's sort of right around buying areas, like some of these sectors.

5:29And so you could definitely see some of these areas could come back into favor, provide opportunities. So there's definitely some things out there. It's not just tech out there. So there's real breadth. It's just that the super leaders are clearly in the tech and hardware space.

5:46Ed Carson:Yeah, so here's a look at XBI, that biotech ETF that you were referring to. Well, with AI hardware in focus, Here's a look at SMH, the VanEck Semiconductor ETF. A short pause here, Ed, and now moving to highs once again, clearing this little pause area of 3.1 % on the day. Here's a look at the weekly chart. So not quite a short stroke, perhaps, but you did get two weeks of tight closes right around a round number. perhaps a little less relevant for an ETF versus an individual stock, but nonetheless, continuing to see some red hot action in this sector. Yeah. And I do own a position here I didn't add today.

6:41I mean, this looks like a ligard compared to a lot of individual chip names. That's for sure. There's some chips that have just been doing tremendously. But yeah, this is where that sector, it hasn't come and touched the near vertical 10-day line. And this is almost a laggard. So, you know, just really a lot of strength in chips right now. And not just in AI, but definitely AI is a huge factor.

7:06Ed Carson:Exactly. And so in terms of your ownership here, Ed, a reminder for folks on how to play some of these things and use IBD's market timing strategies to get invested. And I mean, the follow through day was a very clear signal. So really nicely done on this trade ed. Well, I mean, you want to stop it. I wasn't sure what to buy necessarily. And I didn't add to my position because I've been looking more for individual stocks at this point. I'm fully on some other things. But, you know, sometimes when a rally moves, you know, that's a way to go into whether it's a broad market ETF or a Nasdaq kind of thing, or something like a sector ETF.

7:49And that's a way to get involved. Because I wasn't sure if this rally would last. I mean, there was a lot of news out there, but it's like, hey, we had a follow-through day. You know, it's sending a signal. And so, you know, I wanted to take part and get my foot in the door. And that makes it easier to start, you know, walk more into that, you know, forward. So, yeah. So, but I mean, there was lots of things people could have done right then. And this is just one of them.

8:13Ed Carson:Yeah. I would say, though, also, this is a way to get that relative strength and exposure to a higher octane type tech area without that single stock risk. Because that's the other thing about a lot of these leaders, right, is they're just pretty volatile. So something like this, it has a 21-day ATR average true range of 2.7%. So you get the heat. Ed, where's the metaphor here? We get the heat, but you don't get the individual stock. You got the heat, but not the fire. You're standing outside. So you're right. That is, that is. The single stock risk not having that is nice because I haven't really worried about it too much.

8:54I mean, it's like, oh, there's been a day or two where it's like, oh, that wasn't a good day. But it's not like that. The last few nails, that nail biting situation where they're like, oh my, is this going to go up 15 % or go down 15 %? It's nice during an early rally and during earnings season to have something that's also just like, you know, that it's just a little easier to handle.

9:17Ed Carson:And so I know you mentioned the 10 days. So it sounds like that would be probably your first line in the sand. Yeah. I'm not sure how quickly it would have to be. Yeah. I mean, because I like this area. If it got below this area like that, yeah, that line too, that 500, especially if we go any higher, I might do some trimming. It just depends on how everything else is going. If it's graceful, if it's very gradual, it'd be more like the more violent it is, the more likely I would take some action. But I'm pretty happy with it. I've got a good gain. And I'm also we're getting close to like after this week, we'll have gotten through a lot of earnings.

9:53So see how we go from there. Then it'll be, you know, maybe it'll quiet down even more.

9:59Ed Carson:Sounds like a plan. Hi, this is Alex Osula, host of the WSJ's What's News podcast. We bring you the biggest news of the day, from business and finance to global and political developments that move markets. If you're looking for more insights and tools to understand the latest headlines, consider becoming a subscriber to The Wall Street Journal. Visit subscribe.wsj.com slash what's news to subscribe now. All right. Well, this is a good segue to our next stock that we want to talk about, and that is Sandisk SNDK. And full disclosure, I do have a position in this one. Shares up 12 % on the day. And the last couple of weeks have been impressive here alone on top of an already jaw-dropping move that this stock has had.

10:53Ed Carson:I was getting back in when it got back above the 50-day line. I think I tried it in the early March timeframe, but it had a downside reversal beneath the 50-day. So I got shaken out, got back into this one, added on the follow-through day, added on the little shelf here, and made it through earnings. That's great. So we'll see where it goes from here. But I think the thing is, Ed, this stock is not alone, right? I mean, it's this theme that is really on fire right now. Memory is completely on fire. You know, this is the top performer in the S &P 500. It's up 492 % or so. But, you know, the other names are all in the top 10 and they're all over 100%.

11:41So it's just been really amazing growth. I mean, you know, it was interesting. All the IBD Live panelists today, other than myself, but I agree with them, is like, these stocks are getting really extended from their 200-day lines. I don't think anybody would call these climax-type runs. They're not like that, but they're really extended. So you could certainly imagine a pullback. They're really extended from the 10-day lines. I mean, it's just amazing amounts. On the other hand, the growth is just insane, and these really are not expensive. If you had growth, when you have growth that's over 50%, 60%, it's not that uncommon to see tech stocks with PE ratios of 100, like forward P's.

12:19And this is like a forward P. That's that. That looks high. The forward P is below 10. I mean, it's like you can't, I mean, that kind of growth over a year, that's just crazy. I can't remember a stock because the growth is so amazing. So it almost feels like it's a value stock that's gone crazy extended. So I mean, it's like, it's just the thing is here is just what's your strategy. You can sell a little bit on the way top. You can just keep on holding. You can wait till it goes through the 10 day line or the 21 strategy out there. And again, that strategy you may not need to use for a while. This one could run up to 1800 before it does anything wrong.

12:56But just remember that this stock could go through a 30-40 % correction. Would you want to wait until this got down to 900 before taking any action? I mean, just throwing that number out, that's not... So it's just you have to keep that... That's pretty regular for this to have a 30-40 % correction. And then it might double again, but you just don't know how that would go. You're right. I do think the fact that there's the whole theme is there. This is the hottest spot and the hottest part of the market. So I get it. This one could go to 2 ,000, 3 ,000 and it wouldn't look that crazy, you know, richly valued, you know, kind of thing.

13:34And I know we don't talk about things, but still it's just sort of crazy how low on that. The growth is so amazing to go from minus 22, 644 to like 7 ,900. It might be actually versus the earlier loss. That's not quite equivalent, but you can just see those. But the next quarter,$11 ,200. That is over a profit. I mean, that's just crazy. That's crazy. It's hard to conceive of that kind of growth for a real company. This isn't like a company that just popped up. I mean, it's been doing stuff. So anyway, it's just a lot of things.

14:07Ed Carson:It seems unprecedented. So it feels like there's a lot of things, a lot going on. So just try to have a strategy. I think which how you've been handling it's great, great buys. It's just things to be thinking about. What are what are you things? How would you like to scale out of this or not? And again, you know, you could scale out a little bit at some point, whether on the way up or on the way down and then hold a lot of it or, you know, but just have your strategy. But, you know, everything about this on the fundamentals is great. I could certainly see this going a lot higher. I'm not like actually, but it's just something.

14:38Wow, this is one. I hope someday we have new model books because this one should be in it because this one tells a great, great story, you know. And so it's sort of fun to watch from the outside.

14:52Ed Carson:Exactly. Yeah, this is definitely, without a doubt, a model book stock in the making. I think even if the run is closer to the end than the beginning, just given with how it's acted over the last couple of quarters here, Ed, like you said, that outstanding growth. And for our style of trading, you know, from a technical perspective, yes, it had that original move last fall. But, you know, the numbers didn't really kick in until last quarter. So I think that the more recent base here, if you're a traditional IBD-style trader, right, it seems like that is probably when your first real opportunity has been.

15:42Ed Carson:And luckily, it was aligned with when we did see a really notable shift in the market. So in terms of how to handle it from here, not near a proper buy point. so let's see if it can develop some sort of tight area like it like it did before i mean that was a good example that little shelf an area to to trade off of it went side it wasn't a full-on flat base or anything or even a three weeks tight but it did give you an area to trade off of that's something else that we've been talking about on ibd live sort of this uh raging bull market or 1999 playbook what are some of the things to be looking for.

16:26Ed Carson:So some of these shorter consolidations, I think, would be one thing. And then on the sell side, like you said, have your level where you would start trimming. If you are recognizing like you are, Ed, of how far it is above these moving averages, and I'll just put some percentages to that. So in terms of the 200-day, it's 284 % above the 200-day, and above the 10-day, it's 28%. So even just a trip down to the 10-day moving average at this point would be a pretty notable haircut off of highs. So yeah, having that risk management plan in place. And then for those who are trying to hold it for a bigger move like I am, taking a look at the weekly chart you can see that since last fall it has respected this red moving average that is the 10-week line so i'm gonna try to give this one some room to run especially you know given that it is a model book stock in the making the impressive fundamentals the technical strength the kind of market environment that we're in the fact that we're in a power trend.

17:36Ed Carson:So I want to give it room. Will I do nothing until a test of the 10 week? You know, I think I would want to be taking some sort of action to lock in the gain sooner than that. But incremental decisions is something that we emphasize here. Yeah. And you did a good job. You tried it once, didn't work here. The market wasn't in great position, but the one, you know, you were quick to get into and that made it easier than to do some add on buy. So a lot to go on. This model book could have a long runway, as it were. So we'll see. Yeah, we'll have our levels in the short term, too. And like you said, it depends on how it pulls back.

18:17Ed Carson:Is it graceful? Is it, you know, a big downside reversal off highs or a big gap down? We'll have to see. OK, moving on elsewhere. Let's go to chip equipment stock land research. Now, this one isn't as extended from some of those moving averages, Ed, and I think arguably actionable here above recent highs after a pullback to the 21-day. Yeah, and it's not that extended even from the base, which is, you know, like more that 256. It might technically be sort of in range from that. But, yeah, this shelf is where I think was where you could buy it. A lot of chip equipment names, including LAM Research, are exposed to the memory space.

18:59And so they are, in a way, memory adjacent. and but everything like there's just a man for chips of any kind so chip gear makers are doing pretty well the growth has been strong there was a little bit of acceleration the last quarter uh this one this was just acting well this was one of those that showed a buying opportunity today uh it held up reasonably well even though there was you know it was a little bit of shakeout you know when it came back but there were some names like that that that struggled despite seemingly strong earnings but it bounced back and you know that's sometimes have to watch out that it happens Sometimes the reactions are a little bit negative on earnings, but then there's a day two or day three reaction.

19:36And that's sort of what happened. It was a shakeout, found support where you'd like it to right at the top of that base, ultimately, at the end of that week, and has really come on this time. So, again, another name that's just acted really well. Not as extended, not as powerful a growth, but what does. But, yeah, a nice performer here. ReloStrengthLine isn't at high, but it's close to highs. And that's after a strong uptrend. I mean, you know, it doesn't have to hit new highs every time, every day. But this one's doing really well.

20:06Ed Carson:Yeah. And then I think another great reminder for folks out there is when you're making a new buy, how do you think about where you set your stop, right? And a lot of times for us, we do look at not only relevant price areas, but moving averages. So if you got a decisive close below the 21 day here, which it's currently 8 % above, just think about that in terms of your stop. The traditional how to make money in stocks stop rule from IBD founder Bill O 'Neill is a 7 % to 8 % loss from your purchase price. So having that line up with a moving average roughly, some traders use tighter stops, some traders use wider stops, and then adjust position size from there.

20:57Ed Carson:But just a good reminder there, Ed. And it depends on the setup. It depends on the stock and how it's acting around relevant moving averages. It seems like given the power of this market, it would be rare to look at something that's looking good and is still close to the 50-day, right? If it's close to the 50-day right now in this market, it means it's probably been underperforming. So using a shorter-term moving average or a relevant price low is probably more likely at this point. Maybe not completely. It depends on what sector the stock is in, but just a thought there. Yeah, I mean, not everything that that is issue when it's this far weeks, you know, it's it's hard to find something perfect.

21:47I mean, those things that were close to everything, they were the super leaders that were so close to moving averages that were just clearing their first entry. A lot of those are gone. A lot of the gone. And so, you know, you have to be really nimble and you have to be thinking you have to gauge maybe how much how big of a position do you take on these things? It is a power trend. You can try to be more aggressive with things, but power trends still have big pullbacks, as some of these stocks have. So, yeah, it's a little bit delicate. And this is one reason why it's nice to get involved early on in the process.

22:16Ed Carson:But hey, with that strong growth that you pointed out and a solid uptrend, LAM research could very well continue to participate here. Let's shift gears and take a look at AMX. This is America Mobile in the telecom services group, up 2.8 % on the day, and it cleared some recent highs. It's not at a new high, but it is getting close to that 2770 high. Yeah, and it cleared the bulk of that thing. And I think that might have been a closing high, too. So there was like if you, you know, I think that today would have been an opportunity, different ways of looking at it sort of cleared the bulk of what it's been trading at.

23:00You know, there's a lot of foreign telecoms that are doing well. I mean, honestly, this is one of the areas others are sort of nibbling or nudging around buy zones. But this is actually a sector that has a number that are flashing some buy signals right there. The growth isn't amazing. And it does have a little bit of lumpiness to its earnings. The growth sometimes is really big and then it comes back down and then goes back up. So but the revenue growth has been solid. And it's just so, you know, this has been a strong form. And it's making another little move here, short consolidation. organization uh it's just another way you could sort of branch out so not everything is an ai stock so you don't have that day when you're on margin and all the ai stocks fall 10 percent and your portfolio is down 15 percent uh so um you know this you know just something to make sure that you're looking around looking for those spots and maybe this is also an area that will hold up better when there is a correction in a u.s based domestic you know u.s based ai stocks This one, you know, may not, you know, I'm sure this will have an impact, you know, but they might hold up pretty well.

24:04This one has a strong RS line, and it's just a way to think about other things out there as well.

24:10Ed Carson:All right. Thank you very much. Moving on, let's take a look at some after-hours movers here. Here's a look at AMD. This is advanced micro devices. AMD up almost 7%, the early earnings reaction here, Ed. BeatFuse guided higher. And again, this is impressive because AMD has been running on positive news from Intel and others about the CPUs. Because AMD does sort of everything. They do CPUs, GPUs, which is NVIDIA's big thing. But so that's really been helping. So strong move here. Another name in the chip space is ALAB. And, you know, and A-Lab was, it sort of moved out a little bit today. So it was already sort of, you know, you could treat this as a high handle to a small base or a handle to a big base.