Another Bullish Signal Gets Triggered; Guardant Health, Freeport-McMoRan, Sphere In Focus

0:00Justin Nielsen:Planning for retirement and all the things that go with it can be stressful. That's why Fisher Investments partners with you to understand your unique goals and needs so that they can build a tailored plan that helps you achieve a comfortable retirement. Whether you need help with financial planning, estate planning, tax optimization, or social security, Fisher has specialists to help. Fisher Investments. Now that's clearly different wealth management. Learn more at fisherinvestments.com. Investing in securities involves the risk of loss.

0:40Justin Nielsen:Good afternoon, everyone, and welcome to Stock Market Today for Friday, August 7th. It's Alyssa Coram along with Justin Nielsen. And what a week it was. Quite a few bullish signals to break down, Justin.

0:55Alissa Coram:Yeah, we kind of got exactly what we wanted. and it's looking good so far. So we'll get into that and we'll get into a few stocks that are also looking pretty good, including Garden Health, GH. I do have a position in that one myself. Also, Copper setting up. So we'll take a look at Freeport, McMoran. FCX is the ticker symbol there. And let's throw some entertainment in there with Sphere. S-P-H-R. I had to think for a second. How do you spell Sphere? How do you spell Sphere?

1:23Justin Nielsen:Well, you know, Ticker, company name. Sometimes they are a little different. But you got it. And let's take a look at those major indexes. Green on the screen to close out the week. Also, the weekly charts are going to be fun to look at as well. But on Friday, the Nasdaq Composite up 1.3 % on the day to lead, followed by small caps with the Russell 2000 up over 1 % on the day. The S &P 500 up 0.6 % and the Dow up 0.3 % on the day. And we'll go ahead and look at the weekly charts here. Look at what a week we had for the Dow up 3%. The NASDAQ Composite up 5.2 % for the week, Justin. The S &P was up about 3.6 % for the week.

2:15Justin Nielsen:And let's take a look at small caps, also at 3.6 % for the week. So back in rally mode.

2:23Alissa Coram:Yes, exactly. And look, when you start getting into rally mode, you really want evidence that there's power behind that. And that's exactly what we're seeing here. So remember, what this all started with is we had the undercut below$25 ,000. And look, there was plenty of reason to just be cautious and defensive while all that was happening. We were undercutting support. The leadership was just falling apart. And so, yes, you know, tons of people can, you know, say, oh, well, that was the time to buy. Sure, in hindsight, but it could have gone the other way. And so you always have to be mindful of how do you protect yourself when things could potentially get a lot worse.

3:06Alissa Coram:It really is about kind of containing containing the fire before it just scorches your portfolio. So we had a turn. We're back up above the 25 ,000 level. That's great, but we always wait for a follow-through day. And the reason is because sometimes as you're getting a lot of these hard hits in the market indexes, you will also see some of the biggest bounces. So we were seeing that, you know, some very strong days, but what we really want to look for is evidence that there's a confirmation that there's a follow through on some initial strength. And so we wait until at least the fourth day from a rally day.

3:47Alissa Coram:So we get the rally day. That was the first up day where we're up above 25 ,000 on the NASDAQ composite. And then by the fourth day, we're starting to look, hey, can we get a day of power here. And sure enough, we did. We got a strong day over 1 % as we gapped up above our 50-day moving average line, got the low above the 21-day moving average line, and volume was missing on the trading volume. So this is something where, okay, let's be honest. If Webby were here, he would start screaming like volume is dirty and everything like that. And there's a lot of reasons to agree with them. Here's a case in point.

4:29Yeah.

4:30Alissa Coram:One of the reasons why trading volume was lower on Tuesday than on Monday is because of a few cheap, cheap stocks. Let's take a look at MGN. And people might be saying, Megan, I've never heard of this stock. Well, it's trading at 10 cents. There's probably a reason why you've never heard of this stock. Yet this stock traded almost a billion shares, almost one-tenth of the entire trading volume on the NASDAQ exchange was in Megan Holdings on Monday. So if you take the top four stocks, they were all trading below 25 cents, I believe 25 cents or 50 cents, and that was 25 % of the trading volume on the NASDAQ exchange.

5:13Alissa Coram:Now, it was very difficult for Tuesday to overcome that huge volume on those four stocks. Now, the top four stocks were about 15 % of the volume, and they were also almost all below 50 cents. One, I think, was 86 cents. But again, it's these distortions that really can make finding a follow through day using volume difficult. Now, instead of throwing volume out completely, and again, trading volume is very problematic when you have these low price stocks skewing the volume by, again, almost a billion shares for MGN. But what can happen here is if you use dollar volume, that's a little bit more indicative of where the money is actually flowing.

5:59Alissa Coram:And for those that don't know the term dollar volume, that's simply just taking the price times the volume. And remember, for the Nasdaq exchange, we're going to do that for each stock on the Nasdaq exchange. And then we're just going to add all of those up together. So the price times the average volume, and then you add all of those up, and that's your dollar volume. And that gives you a sense of how many dollars, not shares, how many dollars were trading hands on the day. And so that can be a much better indicator for what kind of money and institutional involvement there was. And of course, as you would expect on both Monday and on Tuesday, some of the top dollar volume stocks were more stocks that we recognized, like NVIDIA, Micron, AMAT, stocks like that.

6:46Alissa Coram:So it makes a big difference when you use dollar volume. And I should point out, Tuesday, dollar volume was higher. And so using that measure, it was a legitimate follow-through day. And that, again, is what starts us in motion to say, hey, we've got to start buying something. As long as there's merchandise that's setting up. And in this case, we had some.

7:10Justin Nielsen:Exactly. So we got that powerful signal. and like you said, if Webby was here, he would have said, I'm not going to use volume if it helps me, not going to use it if it hurts me.

7:23Alissa Coram:He's going to be consistent and not use it at all.

7:26Justin Nielsen:Yeah, exactly. So it had the look of power and the positioning of it too, I think was favorable. We did get some inklings of clues, especially when you look at the S &P, right? because it was able to retake some key moving averages last Friday, and that was pretty notable and build on that. So sort of in even stronger of a position to break out. So we really liked seeing that. But what we also like to see, you mentioned, you know, getting the low above the 21-day line. That's great for the trend change checklist. Also above this marked high. So tell us more now about what signal was triggered with today's action, Justin.

8:17Alissa Coram:Well, again, one of the things that we did for market school when Mike Webster, Charles Harris, and I worked on that, we came up with this rule of five days above where you have the index above the 21 day moving average line, meaning the low stays above the 21 day moving average line for at least five days. And then we look at can it do it for 10 days and can it keep on doing that? And so keep in mind, market school, we did that over 10 years ago. We've learned a little bit in the decade since. Actually, it's almost closer to 15 years ago now. Wow. And one of the things that Mike Webster, as he was looking more and more, he said, you know what, really, if you get three days, that's enough.

8:56Alissa Coram:So as part of Webby's trend checklist, he's kind of switched that to say, hey, once you get your low above the 21 day moving average line for three days in a row, then, you know, you can start kind of shifting one more gear higher. And I should mention that we really want that to happen on an up day. So yesterday was our third day with the low above, but on a down day, you know, and look, yesterday was a little choppy. There was a lot of back and forth action, kind of this feeling like, okay, you had a strong day and you're kind of pausing a little bit. So it wasn't breaking. You know, we kind of use as the follow through day, we use the low of that day as kind of a backstop for us, you know, a little guardrail.

9:41Alissa Coram:As long as we can stay above that, we're probably in good shape. But if we do close below that, that's going to be a little bit worrisome because a lot of times if you close below the low of your follow through day, you're more likely to close below the low of the rally. And that means all the way back down below 25 ,000. So we want it to hold above there. We want it to hold above the 21-day moving average line. So far, so good.

10:07Justin Nielsen:All right. Tell me about the S &P 500, Justin. I mean, I clearly have a cup with handle drawn here. We really liked the look of that. How do things stand here?

10:20Alissa Coram:Yeah. And for a lot of people, you look at the – this is something that was very strange about this market because the NASDAQ looked so different. You know, it was so much weaker. And the S &P 500, even before the follow through day, yes, it was below the 50 day moving average line. But for a long time, the power trend was staying on on the S &P 500, whereas it had turned off much earlier on the NASDAQ. And even stranger was while the S &P 500 was correcting, even when it was below its 50-day moving average line, if you looked at our SP, which is the equal-weighted S &P 500, that was getting into new highs long before, while all these things were correcting, this was trending above its 21-day moving average line.

11:06Alissa Coram:Now, I kept on dipping below it. So the low wasn't staying above it. But it was for the most part, really having a great time staying above the 21 day moving average line. And of course, as the follow through day happened on the NASDAQ, this was already at new highs. So again, a lot of a lot of stocks weren't following the leaders down. And remember that some of those leaders were down over 50%. Yeah. But meanwhile, the RSP was making new highs. It was very strange. And let's also just take a look at the Dow Jones Industrial Average. Not something we normally are spending a lot of time on, but that was making new highs very early on.

11:46Alissa Coram:And look at what happened to that on Tuesday, gapping up in a huge way to all-time highs. So forget about that 50 ,000 level. We're up there We're at 54 ,000 level now. So that was good to see. And you also had the Russell 2000. A lot of times we use IWM, the iShares Russell 2000 index there. That was also getting right there to new highs. It had gotten support right around the 50-day moving average line. And so Tuesday, it was nice that you not just saw power in one index, you saw it in all the indexes. And when you have everybody rowing together, that's where you can really make some progress.

12:32Justin Nielsen:Exactly. Okay. So speaking of seeing a lot of strength out there, what are your thoughts on the leading sectors to watch right now?

12:44Alissa Coram:Well, one of them that, you know, we can't, we got to spend a little bit of time on IGV, the software area, because that was certainly something that was looking very, very problematic. Remember, Anthropic was coming up with all of these different things that were going to basically make software obsolete. You know, we've got a we've got an AI agent for that instead of an app for that. We've got an AI agent for that that can do your taxes, that can do all these things, you know, your customer relation management, you know, whatever, your your Photoshop, everything, you know, and so IGV was really struggling.

13:21Alissa Coram:Now that has gotten back above its, uh, it's 200 day moving average line. It's 40 week moving average line. So a lot of power there.

13:28Justin Nielsen:Uh, huge week up almost 9%.

13:32Alissa Coram:Very big. Um, we of course are seeing, uh, the magnificent seven come back in a, in a nice way. So MAGS, um, that's having a lot, a lot more participation, even though we've got some drags on this. You know, Google just kind of, or Alphabet, I should say, you know, it's their fault for continuing to use the technology. I know. You know, so, you know, this didn't have a great week. This, you know, came right back to its 50-day moving average line. Meta is still -

14:05Justin Nielsen:Yeah, news related. Absolutely, yeah. With the AI scientists leaving.

14:08Alissa Coram:Yeah, departing, you know, smart people going out and making their own company. uh meta that's still below its 50 and its 200 day moving average line and tesla you know pu i mean it's kind of not looking great there um so despite all of that the magnificent seven is still looking uh looking pretty strong and was able to kind of go against all that weights partially with the help of amazon which i know you guys covered last friday Um, Microsoft in the software space really, uh, you know, kicking itself into high gear as it got above that 200 day moving average line and just kept going, didn't stop.

14:49Alissa Coram:Uh, so yeah, there's, there's a lot of these that are, that are doing very well. And, um, you know, that's, that's making XLK, the tech sector look pretty good. Um, if we want to dive a little bit deeper or more granular in the software space, uh, taking a look at bug or CIBR or hack any of those. I do have a position in bug myself. You do have a lot of the software security stocks that have started to look a lot better. And let's not forget the chips, you know, whether you use SMH or SOXX, those have started to look a lot better, you know, back at the 50 day moving average line again, after some pretty hard hits there.

15:32Alissa Coram:And part of that is certainly helped by NVIDIA, you know, which has really not been one of the leading chip, you know, chip makers, despite it being the big, you know, gorilla in the room. It really hasn't been the leader in this space for a while. And yeah, here we are, NVIDIA looking a lot better. I do have a position in this myself. Mm-hmm. Yeah.

15:57Justin Nielsen:And I think at this point, it seems like there is a separation between the winners or the leaders and the laggards in the chip and more broadly AI, right? I feel like this week was kind of a key week. And of course, things can always change. But a key week to see what's getting back on track and what is still struggling. And I think something like an NBIS is in the latter camp, right? I mean, this was a pretty clear rejection at the 50-day line. So it's not like, all right, the market's back in go mode. Buy any and all AI stocks again. You still have to be selective. And I think look at those moving averages.

16:42Justin Nielsen:Seems simple and easier said than done, but just one tool that we like using in the toolbox, in addition to, of course, the relative strength.

16:52Alissa Coram:Yeah, absolutely. I mean, look, it's still – stock picking is still important here. And look, if you're just buying indexes or even leveraged versions of the indexes, that's fine. You can do a lot with that. But if you're going with individual stocks, that's why relative strength is so important for us. Relative strength lines really tell a lot about where your stock is, because if your stock can't beat the S &P 500, and that's what the relative strength line is doing, it's basically telling you, are you beating the S &P 500 or not? And if you see that trending lower, it means you're not beating the S &P 500.

17:30Alissa Coram:Why on earth take the single stock risk? at that point, just buy the index or find something better. And that's what we tend to try and do. I should also mention a few other areas of rotation that, you know, we've been seeing, I mean, look, energy, you know, whether it's XLE or, you know, XOP or any of those, look, it was having a very strong move as all of the Iran fears, straight of Hormuz things, started coming, percolating back up to the surface. And while I'm not declaring victory on anything yet myself, but the market seems to be discounting a lot of those fears at this point. Medical is also another area that in looking at a lot of stocks that were meeting my screens, a lot of medical was still there.

18:21Alissa Coram:And this XLV does tend to be on a little bit more defensive side, but IBB, I do have a position in this. This is the biotech ETF. So you can use either IBB or XBI. XBI is a little bit more spread out with, you know, smaller positions and IBB can get a little bit more concentrated in some, but both of those are looking strong. So yeah, there's, there's a lot of areas of strength that I think are worth watching. And one more, just if you're, If you're looking at what's going on with the treasury yields and the dollar and everything else, gold has to be on your radar as well. So this has been a very strong rally here, potentially breaking a downtrend.

19:03Alissa Coram:Now, look, it's still below the 40-week moving average and just got above the 10-week moving average line. But certainly worth looking at. This could be something. And a lot of times we play these with gold miners, GDX or GDXJ, which is your junior gold miners. Those are two ways to play these. So yeah, very, very strong action.

19:26Justin Nielsen:GDX up 21 % for the week and gold up over 7%. We've got to let those Spotify podcast listeners know what the gains were here. But we'll have to see if it turns into more. But a notable move this week, no doubt, as you mentioned, Justin. let's talk about a medical name and that is garden health gh up seven percent on friday clearing the last couple of days of trade so a good look to this one yeah and look it can be

20:05Alissa Coram:very difficult to uh see a gap up on earnings like that and say okay what do i do here um and I, again, I do have a position in this myself. This was actually something that I had, um, before and I, I lost my nerve because everything was coming in and I'm like, I just have to get more defensive. And so when this crossed below the 21 day moving average line, there was part of me. That's like, should I wait to see if it crosses below the 50 day moving average line? But at a certain point I was like, ah, I just, I just want out, you know, kind of out of everything. Um, but Then we had this earnings, which look, we were still in the thick of earnings season.