Artificial Intelligence News Moves Market. Nvidia, Oracle, NRG Energy In Focus.

0:00It's time to get Brex AF, a Gentec finance that eliminates manual work and puts you in control.

0:04Alexis Garcia:Learn more at brex.com slash AF.

0:16Good afternoon, everyone, and welcome to Stock Market Today for Monday, September 22nd. It's Alexis Garcia here, and stocks edged higher today with the indexes keeping their record-setting streak going. And the big headline was NVIDIA, the AI titan, announcing a$100 billion investment in OpenAI. That had a lot of ripple effects on the market. And here with me to talk about all of that and today's trading action is IBD Market Research Director Justin Nielsen. All right, Justin, what do you have on tap for us today?

0:55Alexis Garcia:Well, you got to start with NVIDIA. And I don't want you to overpromise here. We're not going to cover all of it. It's, you know, we're going to scratch the surface. I didn't have to cover all of it. Hopefully we'll guide people to where they need to go to get more of it. So, yeah, we'll definitely cover NVIDIA. And we're going to revisit Oracle because that also had some news today with some CEOs getting added to the lineup. And look, all this AI, it still needs energy. So why not go with NRG Energy for our final stock today? Energy for you and me, Justin. Before we get to that, let's check in with the major indexes to see how everything finished.

1:33The S &P 500 up about four tenths of a percent today. The Dow up just north of a tenth of a percent. The NASDAQ leading the way here up seven tenths of a percent. And small caps also having a nice day, finishing up seven tenths of a percent. as well, Justin. So let me get the screen share going. But give me your thoughts on the market action today. We saw record highs to end last week, and it just seems like the market wants to keep going.

2:03Alexis Garcia:Yeah, it's not showing any signs of stopping now. Look, for those of you that have joined us on IBD Live or maybe on the podcast, and you've seen Eric Kroll's data that kind of shows, OK, are we starting to get to extended levels? I mean, we're up there. But one of the things that we typically don't do is we don't try and anticipate the top too much because you can end up finding yourself on the sidelines because you were a little bit too early. So a lot of times we're really just kind of letting the market tell us. And it's certainly worth looking at some of your stocks to see, hey, are there places where you can be cutting back on things that aren't working?

2:40Alexis Garcia:Are there places where, hey, these were some trades that you were looking for shorter term moves on, you know, maybe the 20 % gainers, because the reality is not everything should be considered that one in a million stock. You know, if every stock that you own is one in a million, it just doesn't work that way. So it's certainly, I think, worth doing a little bit of homework right now, just in case we are getting close to that top to kind of have your exit strategies in place. But it doesn't mean that you have to be pulling the ripcord on the parachute yet. It's always good to be prepared. And I always like Mike Webster's approach grading your stocks, A through F, you know, having those ratings in mind as you're doing all of that.

3:26But we're on the S &P 500 here, Justin, getting closer to that 67 ,000 level. Any thoughts here before I switch over to NASDAQ?

3:34Alexis Garcia:Oh, and we're going to correct that. You were off a decimal. So 6 ,700. But 67 ,000 would be awesome. I mean, you know, I appreciate your optimism. I am very optimistic and bullish about this market. Yeah. So look, I mean, it's not doing anything wrong at this point. The distribution just keeps on falling off. It's not getting replaced by much. You know, we had this action of stalling in a lot of August, but we're really kind of putting that behind us. So, again, it's really hard to look at anything and say, hey, there's there's a problem here. Now, I will say one thing that does concern me a little bit.

4:08Alexis Garcia:Let's go ahead and look at RSP. RSP, the equal weighted S &P 500, just hasn't been showing quite the same power. So if you're looking at the largest, you know, top 500 stocks that make up the S &P 500, it is not evenly distributed. And if we take a look at FNGS real quick, you know, this is kind of FNGS is showing that, hey, a lot of this is certainly in your kind of mega caps that are showing the strength. But even that, I mean, look at today. Today was flat. It wasn't the mega caps that were necessarily driving a lot of the movement today. there was a lot of things that were kind of working together, I guess, to make it.

4:50Alexis Garcia:But it wasn't evenly distributed. It's really kind of the leadership. To that end, let's also take a look at FFTY, because that has been showing a lot of strength lately. And this is an index of 50 stocks, the IBD 50 index, that is really kind of focused on growth. And this has been showing a lot strength lately. So again, it's not like it's the narrow MAG-7 and that's it that's working. It's really a lot of growth. But again, not everything participating. And it's always important to do your screening there, Justin. And let's take a look at the NASDAQ composite quickly. Again, this went up about seven tenths of a percent.

5:30Nice day finishing in the upper part of that trading range.

5:34Alexis Garcia:Yeah. And here it's a little bit more, you know, Because if we look at the Qs, for instance, which is the NASDAQ 100, that was up a solid half a percent. And QQEW, which is equal weighted there, about the same. So not nearly the kind of discrepancy here that we're seeing with the S &P 500. So that does tell me that certainly tech is one of the places you want to be. You look at like an XLK, which is the technology sector spider. Or if you want to get a little bit more specific, you look at SMH and the day that that had, of course, NVIDIA, a big component of SMH, the VanEck semiconductor ETF. But that was certainly the winner today among many of the ETFs.

6:23How about just a quick look at the Dow Jones Industrial Average? You know, this one also having a nice day, four straight days of gains here. So thoughts here about this index?

6:33Alexis Garcia:Yeah, it's the Dow. It's 30 stocks. It's price weighted. You know, I think it does a remarkable job of capturing what's happening in the markets. But sometimes, you know, depending on where that strength is, it's either doing a really good job or a really poor job. So right now, I think it's doing a decent job, but it's certainly the NASDAQ and, you know, some of these specific areas that are really showing the strength. And as we saw from the RSP, it's not everything. It's very targeted. And let's look at small caps quickly, because this has also been running pretty well here, Justin, up about six tenths of a percent today after kind of a bearish look on Friday.

7:15Alexis Garcia:And even today, it was, you know, looking a little iffy, right? There was a lot of weakness to start the day. So here you got that strength coming in at the end of the day, a reversal closing near the peak. That's that's that's a good look. So this is certainly as ugly as Friday was. I mean, and again, it wasn't that bad considering the strength of Thursday. It was still a very strong week. This IWM, the Russell 2000 small cap index, was one of the better performers for the week last week. So, yeah, this is another case where, again, it's not it's not just your mega caps. The small caps are getting their participation in.

7:53Alexis Garcia:Part of that does have to do, of course, with zero T and X, the 10 year treasury, how, you know, the rates have been coming down a little bit, even though they've they've been coming up recently. We're still in an overall downtrend with the 10 year treasury yield. And that's that's good for small caps when you're new in business and you're using debt to kind of grow your business. and you're not sitting on a whole pile of cash like Apple or some of those mega caps, you know, your rates that you're paying for your debt make a big difference. And so with the rate area getting a little bit easier for small caps and that 10-year treasury coming in, the yield coming in, that's really helped.

8:33Alexis Garcia:And we've seen that with the IWM. If we just real quickly look at the weekly chart, you can see that there was a lot of false starts here with IWM where it just wasn't participating. But now we've come out of this long base and it seems like there's a lot more action and that relative strength has improved considerably. And I should mention that I do have a position in the Russell 2000 with various leverage, futures, stuff like that. All right, Justin. Well, we covered FFTY and SMH, But let's look at IGV quickly. That's the software ETF. This one, I'll switch back over to the daily here. This went up about half a percent today, but again, looking pretty nice here.

9:19Alexis Garcia:Yeah. So another area of tech, of course, you've got Oracle that we're going to talk about in a little bit. That's a big component here. Microsoft is in there, which, you know, that one's, you know, hanging out of the 50 day moving average line. But again, it does go to show that tech is certainly one of the strongest places to be right now. And how about IBIT? That's I-B-I-T. That's the Bitcoin Trust ETF. This one's falling today about 2.6 percent. So what's going on with Bitcoin, Justin? I have no idea, but I can tell you that the chart is not looking as great as it could. You know, it's been kind of struggling around that 50 day moving average line.

9:57Alexis Garcia:It gets back above it. I still do have a position from earlier, but I was I was trimming back some of my Bitcoin and Ethereum position. So if we just look at ETH as well, that was not a good look today as it undercut a lot of the low recent lows. You know, if you look at the weekly chart, when you kind of get this move and tight action, you kind of expect it to break one way or the other. This isn't the way I wanted it to break. So right now, this is trading below its 10-week moving average line. And so, you know, I still have cushion on my position, but it's certainly one of those areas that I was scaling back on.

10:35Alexis Garcia:And, of course, there were a lot of places where I wanted to put that money. So one of the first places I was looking at was, OK, what areas are not working so well? Right. Well, let's look at NLR. Maybe that's a place that's working. I'll switch back to the daily. That's the uranium and nuclear ETF up about 2 % today, Justin. Yeah. So, of course, with all this AI, one of the big questions is energy. Where are you going to get it from and what types are looking interesting? So whether it's NLR or URNM or URA, there's all these uranium nuclear plays that you could be doing. They were all up. So there's a lot of that interest in nuclear and as an energy source.

11:17Alexis Garcia:So this has been, I mean, you go to the weekly chart, this has been an area that keeps on having these really strong moves and looks like it omits another one. All right. Well, let's look at the Utes ETF. That's the My Cousin Vinny ETF, U-T-E-S. This is utilities, Justin. I'll switch back to the daily here. This went up about one and a half percent today. And look, we've got a, we've got a, and I do have a position in Utes myself, just because I like Joe Pesci and Ralph Macchio. Well, actually, Marissa Tomei, she's my favorite. Yeah, she makes that. So, you know, a nice, a nice hand, you know, cup with handle pattern, maybe a little bit short for a typical handle, but I'm going to call it a handle because it looks, looks pretty good to me.

12:03Alexis Garcia:So we had a breakout here. So this is looking very interesting. And again, this just goes to show that energy component is still very important, whether it's your nuclear or your utilities. The fact that the Utes is participating very strongly in the AI move, it's an AI adjacent thing. And that's why the utilities have been going so strong along with AI. And let's wrap it up with a look at GLD. That's gold. And Justin, we were talking about this before the show. Gold is running in addition to everything else. So up about 1.7 % today. So what are your thoughts here? Yeah, I did not have this on my bingo card.

12:42Alexis Garcia:I do have a position in a gold miner, but I actually very early on had a leverage position in GLD. And I'm like, it's gold, what am I doing? All this AI is moving. So of course I got out of that just to watch this thing go up real far without me. But yeah, this is a very unusual situation and just kind of goes to show you Sometimes you can outsmart yourself out of a good trade, you know, whereas the chart will tell you a little bit more about what's going on. So whether you're looking at GLD or let's take a look at GDX, which is the gold miners, this is, you know, certainly well extended. This has been a strange, you know, where you normally don't get this kind of correlation.

13:26Alexis Garcia:Gold is moving right up there with the tech and the markets themselves. So if you've got it, you know, hold it while you got it. But it seems like it's working so far. If your organization isn't managing its data with Everpure, then it's likely scattered all over the place. My lord, for three days have I ridden to bring thee warning. The records thy great AI machine requires are strewn across five kingdoms. Yeah, the Everpure data management platform unifies data so you can always find it. No messenger needed. No more running around? Get out of the data dark ages with Everpure, a new era in data management.

14:06All right. Well, let's take a look at some individual stocks then. And again, the name on everyone's lips today, Justin, NVIDIA. This went up almost 4 % today. Just shy, it looks like, of this flat base buy point here, but perhaps an early entry with the retake of this 50-day line. Yeah.

14:25Alexis Garcia:So we had a retake of the 50 day moving average line. And if you just go back a week to the high on Thursday and draw a line kind of there. Yeah. Oh, I'm sorry. Not last Thursday. Two Thursdays ago. That red. There's a little pink day there. Yeah. Right there. Perfect. You know, if you just kind of look at the high there when we cross that, that was kind of an early entry to this flat base. And let's go ahead and take a look at the five minute, because this is certainly not the way NVIDIA started. But you can see when this news came out that you mentioned, Alexis, where, hey, we've got a hundred billion dollar investment by NVIDIA.

15:03Alexis Garcia:One of the things that they're doing is, hey, look, they're looking to put data centers to the tune of 10 gigawatts. You know, I mean, look, you only need 1.2 gigawatts to get, you know, to the future for a time machine. So the fact that we're talking about 10 gigawatts as opposed to 1.2 is pretty incredible. A big partnership here with NVIDIA and OpenAI, which is, of course, who does ChatGPT. That partnership is looking very interesting to a lot of people. And they kind of had in their note how they challenge each other. So this is something that Patrick Seitz wrote an article in investors.com about.

15:42Alexis Garcia:So if you want more information, certainly kick the tires on that article. But this is something that a lot of investors were looking at as, OK, is something changing here? Because let's go back to the daily on NVIDIA. I'll be honest, it was kind of not exciting me so much. You look at the relative strength and it just it just hasn't been participating in the same way that a lot of these other stocks have. But, you know, it certainly was today. And another area that, you know, does tend to do well, Taiwan Semiconductor TSM, you know, because who's making the chips for these guys? Well, Taiwan Semiconductor, they're the foundry.

16:21Alexis Garcia:But other areas that were maybe not doing so great is Broadcom, A-A-B-G-O. So, you know, that was not participating in the move today. So you got to wonder, is this going to kind of shift some of the competition away from some of the others and more in favor of back to NVIDIA? So certainly something to watch. But NVIDIA certainly was the place to be. I was buying some of that today myself. So I do have a position. All right. Let's look at Oracle, Justin. That's O-R-C-E-L. This one, another big winner today, up 6.3%. So what was the news there? Well, you know, we had a CEO shift. The CEO is going to be in a different role, I think, on the board, vice chairman.

17:09Alexis Garcia:And now you've got two co-CEOs that are coming on board. And look, this was a, you know, this was a nice move previous to this news. The last earnings report, very strong gap up. I mean, consider how big this company is, the market cap on it. If you just go to the weekly chart real quick, this is an easy way to see the market cap of any stock. It's approaching a trillion dollars. So 921, it's approaching a trillion dollars. I mean, this is why Ellison surpassed Musk, you know, And they're going neck and neck in terms of richest man in the world. But going back to the daily, that big move that you had in Oracle and the fact that you've kept most of that.

17:50Alexis Garcia:So for me, rather than buy into this, and I do have a position, we also put this on Swing Trader. Instead of putting this on at that big gap up, what I was waiting for is, OK, can I get an area where I can cut my loss, you know, where I'm going to know that I'm wrong? And as this came in below 300, I tried it as it was, you know, bouncing. It looked like it, you know, two days later, it was looking like it was really coming out of there, but then it immediately pulled back. So I got out of my position, but it's holding. And so now I've got a very clear area, whether I use the 10 day moving average line or 300 or even the low that it kind of tested over there.

18:31Alexis Garcia:I've got a way to really cut my loss here. And that's what, that's what made me comfortable getting into the position. So whenever I can take a stretched stock that I really want to be in and I can get into it while managing my risk, that's something that I'll take that trade as much as I can, because especially if it's something that has a lot of potential to go forward, if I can reduce my risk to a smaller amount with huge potential, that asymmetry is where we really kind of get our edge, a large potential return with small risk. All right, Justin, a great analysis there. Let's wrap with a look at NRG.

19:10That's NRG Energy. This went up 4 % today. And again, looking like maybe there's a little bit of a handle here, Justin, but in this cup base on Paderbrecht here on Market Surge.

19:22Alexis Garcia:Yeah, so I'm looking at that handle the same way that you are, Alexis, and I like the fact that this kind of got right above there. Now, you could go with the Utes, you could go with the NLR, you could go with those energy plays, or you can go with some of these single stocks that are giving you a nice entry here. Certainly, one of the things against NRG is that last earnings report, it did take a hit. But when you see something kind of recover pretty quickly, that's a positive. So this is certainly getting a boost, most likely from all of the AI stocks that are moving, because, again, these AI stocks, they do need the energy, whether it's an NVIDIA, the chips that it's creating.

20:04Alexis Garcia:They are just they take up a lot more energy. They're hotter. I think they produce seven times more heat, which requires more cooling, more infrastructure. there's a whole follow-on effect to everything that's happening in AI. Because again, you don't just add 10 gigawatts without having to do some support for that. So this is one of the areas of support and you can kind of think of it as the picks and shovels. It doesn't matter necessarily who wins the AI game, you know that they're all gonna need energy, these data centers and the infrastructure that goes behind it. Well said, Justin. Well, that wraps it up for today.

20:43I know you're a busy little bee here hosting. What do you have coming up? I know you've got the podcast. What else is on the docket for you?

20:51Alexis Garcia:Yeah, so last week was busy, but this week it's a little bit more chill. We've got Jack Kosar of Asbury Research. We've had his dad on a number of times, but, you know, the next generation is coming up. When John Bollinger was on the podcast not too long ago, I got to meet his daughter Zoe. and Zoe and Jack, you know, they kind of have their next generation group that they chat with each other. So we're going to get into some of the quantitative analysis that he's doing, some of the looks that he does with leveraged ETFs to kind of gauge when things are getting euphoric. It's going to be a great conversation.

21:25Alexis Garcia:And then on IBD Live later on this week on Friday, our special guest is going to be Thomas Carr. Dr. Stocks is his other name that we use. So it's going to be great to talk with Dr. Thomas Carr when he's on IBD Live. All right. Sounds like a great week ahead, Justin. And that's it for today. We'll be back with more market analysis tomorrow, starting with IBD Live. You can head on over to investors.com slash IBD Live for all the information there. And thanks so much for watching.

22:12Alexis Garcia:This podcast is brought to you by Federated Hermes. We put our investments through a ruthless vetting process because we don't like surprises and neither do our clients. Learn more at federatedhermes.com slash US. Investments are subject to risk and may lose value.