Blue Chips, Small Caps Lead Up Session; Williams Cos., Extreme Networks, Ormat Technologies In Focus

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0:25Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Thursday, May 21st. It's Alyssa Coram here. And a mild update for the major indexes with some outperformance from small caps as Nvidia earnings failed to have a positive impact on the day. Joining me now to discuss the action from today's session is my colleague, Ken Shreve. Ken, what do you have for us? Yeah, it was kind of an interesting day. A big mover in the Dow in IBM and a big loser in the Dow in Walmart. So we did have some outperformance in blue chips and small caps. We'll get into all of that, but let's take a look at Williams in the oil and gas space, WMB.

1:09Also want to take a look at a networking stock, Extreme Networks, EXTR, and then a renewable energy firm, ORMAT, ticker. Well, O-R, gosh, don't have the ticker, but ORMAT. O-R-A? O-R-A, thank you very much. OrMAT Technologies. Thanks so much.

1:29Ken Shreve:All right. We'll get to those stocks. The ticker database there. There we go. It's a shared mind, a shared brain that we have collectively at IBD for the tickers. Okay, let's talk about the major indexes. The NASDAQ up two-tenths of a percent on the day. A little bit of an upside reversal there. Meanwhile, the S &P 500 also up some two-tenths of a percent. So good to see a little bit of progress after Wednesday's up session to break that little pullback that we had. Let's talk about blue chips. As you mentioned, a solid gain there in comparison, up about a half a percent adding to the gains. But really, it was the small caps today with the outperformance here, Ken.

2:18Ken Shreve:The Russell up about three quarters of a percent. Let's start there. Yeah, well, we had this big, big move in bond yields recently. We had some relief in that 10-year Treasury yield yesterday, that big, big drop in bond yields, big rally in bond yields, had that big breakout. And so we had a little bit of movement in that 10-year Treasury yield today, but it was up sharply earlier in the session. But it did back off highs, and that gave small caps a little bit more of a lift today. So that was good news for the small cap index. And it made a nice move yesterday, and it made another noteworthy move today, getting above that 10-day moving average.

3:09So, you know, after a fairly precipitous three-day drop, a pretty nice two days in a row gain for the small cap index and, you know, benefiting from a little bit of a pause in that 10-year Treasury yield.

3:24Ken Shreve:Exactly. Let's go to the Dow. And it looks like this was a closing high for the Dow. Yeah, absolutely. And interesting movement in the Dow today. Your big gainer was IBM, and that was actually a big, big gain for IBM and the Dow today in the Trump administration. Again, kind of doling out some money to your quantum computing firms to the tune of$2 billion, dollars giving out a big tranche of money. IBM getting, I think, a billion of that money. And then Global Foundries, GFS getting some of that money. And then some of your whole slew of quantum computing firms getting some of this government money.

4:12The Trump administration is going to be taking minority stakes in some of these quantum computing. We're talking firms like QBTS, D-Wave, Quantum, IONQ, you know, some of these more speculative names. But this is what gave IBM a big lift in the Dow today, which caused some outperformance. But then we had Walmart, which was a big decliner in the Dow today. So, you know, the blue chips held up pretty well because this was a big, big dive by Walmart today, a retailer that had been holding up pretty well. And they didn't give a pretty good – they did not give a very good outlook. But, again, these higher oil prices are really dragging on some of these retailers.

4:58They're not really giving good outlooks, just these higher energy prices weighing on spending and some of these lower middle income people having a hard time keeping up with the groceries. So Walmart not keen on their earnings outlook maybe in coming quarters and that weighed on the stock. But overall, you know, good performance for blue chips, mostly helped by that big gain for IBM today.

5:27Ken Shreve:Absolutely. Okay, and here's a look at the S &P 500. We were talking about the undercut of the reversal low from earlier in the month and a rebound. Our senior market strategist, Mike Webster, was modeling two and a half to three and a half days of a pullback in this power trend. As of now, we are still holding the low from this pullback and above the 21-day line. Let's see where we are versus the 21-day on the S &P. At this point, we're about 2 % above that level. So we'll have to see how this digestion of the powerful move off lows continues. But looking good so far. I would say so. I would say that Webby, even though he's taking a little bit of time off, he's got to be pretty happy with the way this power trend is looking.

6:23And after this three-day pullback, a nice rally for the market yesterday and minor gains for the NASDAQ and the S &P 500 today. But a mild obsession for both of the indexes today. But we'll take it. We had some volatility in oil prices today. I'm not really sure where that came from. I think the market might have been hoping for some movement maybe between Iran and the U.S., but that was a pretty big drop in oil. I think oil, WTI benchmark crude oil, traded as high as$102 a barrel. And then it went all the way, you know, traded, went sharply lower starting at around maybe 1 o 'clock this afternoon East Coast time.

7:14it started to really, you know, trail off. And you can see that downside reversal for USO. So we'll see. We're supposed to be getting some headlines between US and Iran soon. Some sort of deal. We will see. I'm not really sure what we're going to hear. But the oil market is, yeah, really kind of held hostage by this. But seen a lot of volatility in oil prices. And And we're just going to have to wait and wait and see what what what what to make of it all.

7:49Ken Shreve:Well, speaking of oil prices, let's check out XLE, the energy sector ETF, working on the right side of the base here. Perhaps a handle on this cup with handle that's forming. It's trading above the major moving averages that have all consolidated. But we do have two down days here, Ken. And what are you seeing on the chart? Well, it's coming down into a pretty significant support level here right at that 50-day moving average. So two down days, and we'll see if it can hold support right there at the 50-day line. So that down day yesterday was with some heavy volume, and volume today did quiet down a little bit.

8:35So maybe coming into an area where it will find a little support. So we will see. But, you know, it looks like a fairly orderly decline at this point, especially after, what is that, six up days in a row, an area where you would expect it to pull back. So it's pulling back and maybe it'll firm up at that 50-day line. All right.

8:59Ken Shreve:And one more thing I want to talk about before we get to the three stocks of note, and that is the NASDAQ. We have NVIDIA earnings out of the way, Ken, and NVIDIA itself reversing lower on the day, down less than 2%, but still a 2 % decline after the earnings report, which did show triple-digit earnings growth of 130%, also revenue acceleration. Yet again, 85 % growth. So is this a situation, Ken, where it's a stock that ran up so powerfully off of the lows that you can't get too disappointed on a down-day earnings reaction, I guess, especially if you think about the overall market, right? The Nasdaq was still able to close up on the day so it's not like this dragged down the broad market in a notable way.

10:01Ken Shreve:What are your thoughts on the impact or lack thereof after NVIDIA earnings? Well, it's still very perplexing to me because, in fact, this whole earnings season, there were so many stocks that were making such explosive moves going into earnings. I mean, stocks that were rallying 20%, 30 % headed into earnings. And you'd think, well, they were pricing in so much good news. Of course, they're going to sell the news going into earnings. And yet, so many of these stocks were going up another 20 % or 30 % after reporting earnings. So they'd had these big pre-earnings rallies. And then they were just going up even more after earnings.

10:48So then NVIDIA was rallying pre-earnings and then this one decides to sell the news. And NVIDIA had been lagging the market for so long while it was producing such extraordinary results. So I wasn't really surprised. I mean, this was a stock that was supposed to move 14, 15 points up or down on earnings. And it was just sort of a ho-hum reaction. You know, the numbers were incredible again, and it's obviously a company that is just hitting the ball out of the park. I think the stock obviously still looks fine. You know, it's just still near all time highs here. It was a downside reversal today.

11:36Volume, you know, volume really wasn't even that heavy. It was a little bit above average. average. So I thought it was, even though it was a downside reversal, it was a fairly orderly performance for the stock today. So I think it was fine. I wasn't expecting it to explode higher, you know, on the results. It was a very, very strong, you know, rally ahead of the results. So I thought the performance today was fine. We have this on leaderboard. I own the stock myself personally. And so, you know, I think it's just a stock that's been trading just a little, just kind of on its own, you know. But it's been a great, I mean, look at this move from$160 a share all the way up to, you know,$230.

12:26So we can't get too spoiled here. It's obviously a company that is executing, you know, A-plus execution. and it looks just fine. So, you know, three months from now, we're going to hear, we'll probably hear more bullish commentary from Jensen. And so I think it was a perfectly fine day. And we'll see how it trades from here. But I think the growth story is still very much intact. It was more accelerating growth. So I think it was just fine. Right.

13:05Ken Shreve:And it's still above the 21 day. So if it does continue to consolidate and pull back, we'll see how it handles a test of that level. But yeah, what a rapid rise this one had headed into the report. So what we didn't see today was waves of institutional selling in the stock today. It really just looked like a day of mild selling, maybe some mild profit taking. So all in all, not too bad.

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14:37We have a refiner on the leaders list right now in the leaderboard model portfolio, seeing some little bit of volatility in the refiner group. But in the integrated group seeing some actually some constructive price action here. So Williams companies, you can see this was a heavy volume breakout and you had a downside reversal yesterday, but that downside reversal came in light volume. There was another decline today that came in even lighter volume. So here is a stock that is just kind of coming down in lighter volume after some heavy volume gains and it's just kind of retesting a buy area. So look at Williams as one of the higher quality names in the integrated group here.

15:21So just a good quality name. When you're talking about an integrated group, I mean, it's a company that does all different kinds of things. It's involved in oil, natural gas. It does a little natural gas processing. It does a little oil and gas drilling. So it's just kind of integrated in a lot of different a lot of different areas. So Williams is just kind of right in a right in a buy position here. And I think it I think it looks pretty good relative strength line lagging a little bit. We're seeing a lot of that among the oil and gas stocks relative strength ratings, maybe just a little bit a little bit below that 80 and 90 that we like to see, but kind of a slow, steady movie mover here.

16:07I know it has been in the big cap 20 in the past. I'm not sure if it's in there now, but just in the early stages of breaking out here. So in the integrated group, Williams Companies, I think, is a pretty good name to keep an eye on here. Pulling back in light volume, kind of retesting a prior buy area, and kind of a good name to keep an eye on. We'll see if it can firm up here right at the top of this prior base.

16:35Ken Shreve:Great. Yeah, because even though as individual investors we do like fairly concentrated portfolios, it is worth considering having a little bit of diversification there. And if you take a look at the monthly chart, you do see that outperformance over the last five years or so versus the S &P 500. And I also will point out the earnings stability here of 10, which is pretty good. The lower, the better. So we do like seeing that as well on the weekly chart. You can also see that as of late, that earnings line is picking back up. So just a little added helper there. Oh, yeah. Yeah. Earnings. Love that earnings line.

17:22And, you know, David Ryan on IBD Live, that's one of the things he likes to look at the most. And he likes to see that green earnings line and a nice, sharp uptrend. And that's a good point there, that Williams earnings line really on a nice, sharp uptrend there. So I like to see the earnings going in the right direction. And that's a feather in Williams' cap, no doubt about it.

17:48Ken Shreve:It sure is. Okay, next on the list, EXTR. This is extreme networks in the computer networking group. This group, 11 out of the 145 groups that we track. A powerful move on earnings. This one had about four weeks ago, Ken. And now it's trying to set up a new buy point potentially for those who missed that power coming up the right side of the base. yeah and again just another another stock that uh that moved uh very well on earnings and i like how it's just kind of uh kind of digesting gains again right at the top of a base here it's a little more speculative i mean it does have a three billion uh market cap so it's just it's it's a small cap uh small cap name uh it's very liquid you know trades uh trades a little over 2 million shares a day, but the fundamentals are pretty solid here.

18:49The growth rates, annual growth rates are looking pretty good as well. So here is a stock that you can see just a few weeks ago made a really nice earnings move. And again, just kind of sitting right at the top of a base here. Like it when you see a big weekly gain that this stock made on earnings, and then it's just kind of trading tightly and holding onto these gains. So it's showing a lot of strength and support. Longer it stays up here and trades tightly, it just tells me that this one could be ready to make another move here. So we'll just kind of keep an eye on it and see if it can fully break out of this pattern here.

19:30So let's kind of go back to the daily chart here and see how it's consolidating. And it's still kind of holding in this 5 % buy zone here. So anybody, you can kind of just kind of watch it from here and see how it handled itself. But I think it's probably good for the watch list. Right now, it was down for, what, four days in a row. Again, notice how the volume is just kind of quieting down as it consolidates. You can see during that four-day pullback of the volume was really you know kind of quieting down and uh attention turning away so i just like the way it's a consolidating here especially again after that that big move up so um you know good one for the watch list not a widely known name in the networking group it's still a top uh a top rated group but a lot of these networking stocks they're really seeing you know newfound growth and a lot of these companies are in new growth phases because of, you know, all this AI networking and data center networking.

20:33They're really just kind of in new growth phases because of kind of new conditions in their industry. So, again, not a widely known name in the networking group, but network, extreme networks, I think a name to watch in light of a really good recent earnings report and pretty good technical action as well.

20:50Ken Shreve:All right, let's round things out with a look at ORA, ORMAT Technologies. In the alternative energy group, another high-ranking group that we have, 19 out of the 145 groups that we track. Sort of a similar story here, Ken, with a powerful move up the right side of a base on earnings. Earnings growth, a standout here for the company. Earnings almost doubled in the most recent quarter. Revenue also picked up the pace quite a bit with 75 % top-line growth. and the stock looking solid in the trading action since then. Yeah, this is all about renewable energy. And you can kind of see me working here, Allie.

21:34You know, we're in this market where, you know, there's like, boy, the semiconductors and a lot of technology stocks. We're dealing with a lot of extended stocks out there right now and a lot of semiconductor stocks that are well past proper entries. I'm kind of looking around in different areas of the market and different industry groups and just looking at stocks that are, you know, have shown strength that are just consolidating up around the tops of bases. So ORMAT, again, renewable energy, another top-ranked industry group in the market. So, you know, a stock that started moving on earnings a couple of weeks ago when it gapped up over the 120 level, it eventually gapped up over the 130 level, and now it's just kind of sitting near the top of the base here.

22:22You see the heavy volume on up days has improved the accumulation distribution rating. So here again, it broke out to new highs. It was a low volume pullback to the 10-day moving average. And now it is starting to make progress again. I think it's actionable right here, especially after that pullback and test of support. You know, again, a compelling growth story. You look at the earnings that they produced in the, yeah, I mean, the growth story is pretty compelling here. It's a bigger company, too. I mean, this is, I think it's an$8 billion market cap, liquid as well. So you get, you know, fundamentals and technicals here as well.

23:10So another interesting name to keep an eye on. Thank you for helping me out with the ticker symbol, too, at the beginning of the show. That was totally slipped my mind. O-R-A for ORMAT.

23:23Ken Shreve:Not a problem. I mean, it happens when it's not a stock that you cover very often, right? Very true. All good there. And we do have some notable outperformance versus the S &P 500 since the Q4 2024 timeframe. frame and a spiking earnings line on this one as well. Good relative strength line here too. Much better than Williams and some of the other names that we looked at earlier. This one is up near high. So yeah, better looking RS line here. I like to see it. All right. Well, thanks again, Ken. We always appreciate it. All right. Thanks everyone for tuning in. That's it from us for today. We will be back with more tomorrow morning on IBDLiveInvestors.com slash IBDLive for all the details.

24:20Ken Shreve:We'll see you there. And then we'll also see you right back here tomorrow after the close.

24:41Ken Shreve:Hey, this is Telus Demos. And I'm Miriam Gottfried. We're reporters at The Wall Street Journal and the hosts of WSJ's Take on the Week. It's a weekly show that gives listeners a leg up in the world of markets and investing. From the Fed's moves to market bubbles, we dive into the biggest deals, key players, and business news ahead. If you're looking for more news and tools that you can use to help navigate the markets, consider becoming a subscriber to The Wall Street Journal. Visit subscribe.wsj.com slash takeontheweek to subscribe now.