Blue Chips, Techs Tumble As Selling Reaccelerates: RSI, Ligand, ANDG In Focus

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0:29Ken Shreve:good afternoon everyone and welcome to stock market today for wednesday june 10th it's alissa quorum here and stocks tumbling as more weakness hitting the market a couple of bright spots which we'll talk about joining me now to do just that is my colleague ken shrieve ken what out for us today. Hey, Allie, good afternoon. We didn't get that close off lows like we did yesterday, but yeah, let's talk about three stocks. First off, IBD 50 firm Rush Street Interactive. RSI is the ticker symbol there. And then we're going to take a look at a profitable biotech called Ligand Pharmaceuticals, LGND, and then finish off with a recent new issue, consulting firm called Anderson Group, A-N-D-G.

1:19Ken Shreve:Okay, great. We'll take a look at those stocks first. A closer look, even though we don't want to take a close look, the major indexes, it hurts to look, Ken, right? But we've got to analyze where things stand. The Nasdaq down 2 % on the day, taking the hardest hit. Meanwhile, the S &P 500 down 1.6 % on the day. The Dow was down about 1.9 % on the day, and the Russell 2000 down some nine-tenths of a percent here. So we did see a tech-led decline, but it was pretty broad-based selling. And like you said, we did not see any sort of recovery by the close. Looks like we closed pretty much at the dead lows.

2:10Ken Shreve:Maybe one redeeming factor, if you can find one, is the fact that on the NASDAQ here, we did hold above the Tuesday low and we're above that 50-day moving average. But a test here is looking pretty imminent, Ken, of the 50-day, and we are below the 10-week now on the NASDAQ. What are your thoughts? Yeah, well, you know, maybe a couple of other redeeming factors that I'm going to throw in here as well. Yeah, another one. Let's go glass half full here, Allie, right? Yeah. Another redeeming factor, we did have a tough volume comparison. Obviously, yesterday was an unequivocal distribution day, so we had a tough volume comparison with volume so heavy yesterday.

2:58So we did get lower volume today. So it wasn't like a, you know, a vicious day of institutional selling today. We had quieter volume on the downside today. So that's a positive. It was not a great day, but lower volume was at least good to see. And, you know, yesterday there was, you know, the breadth in the market was actually a decent story. Breath was not nearly as bad as you would think it would be on a down day yesterday. And today, as a matter of fact, it was also not too bad. It was, at last check, it was about three to two negative. So on a day when the NASDAQ was down, what, close to 2%, 1.9%, something like that, it was about three to two negative.

3:49So you think maybe more than two to one negative, three to one negative. but it was about three to two negative. So you had a lot of stocks, you know, up on the NASDAQ today. I mean, obviously chip stocks were under a lot of pressure, but there were a lot of stocks in the market surge, growth 250 that were up. Granted, they were, you know, defensive stocks in nature. You did have a lot of, you know, oil and gas stocks that were up today and a lot of defensive stocks as well. So, you know, semiconductor stocks under a lot of pressure today, software stocks under a lot of pressure. But advancers, decliners, you know, three to two negative, not too bad on the NASDAQ.

4:34But, you know, it does look like a test of the 50-day moving average is imminent for the NASDAQ. And, you know, not a great day. We didn't get that close off lows like we did yesterday. And it was the selling did did seem to accelerate, like you said, into the into the into the close. And it was a decent a decent open. And we tried to we did try to hang in there for a good part of the day. But it just kind of kind of weakened into the into the close.

5:05Ken Shreve:And I would say now we are looking for some sort of bounce or reversal. But with this kind of damage, Ken, it seems like a trip, a quick trip back up to new highs is not the most likely scenario at this point. No. And we're just starting to see more and more leaders coming under some pressure here. It's not like we're seeing massive breakdowns left and right. I mean, you're looking at a name like Google, for example. I mean, this is a big market leader, Alphabet, G-O-G-G-L. Yeah, I mean, that is now starting to, you know, threaten a break below its 50-day moving average. We're starting to see some big leaders in the data center field, maybe a name like Verti, VRT, you know, names like this starting to give up their 50-day moving averages.

6:05So starting to see some leaders break down. What was the other one? MCOR, E-M-E is another one. This is sort of in the cooling space, MCOR. So seeing some leaders start to break down here. And this is, again, just a sign when you're seeing some of the leaders start to break down here. It just gives you an idea that we may be in for a little more of a pullback here. But again, we were at a point where, remember, the NASDAQ was well over 10%, 12%, 13%, 14 % above its 50-day moving average. So maybe a little period of consolidation here. And if the NASDAQ does eventually undercut that 50-day moving average, sometimes that's a good shakeout that the market needs.

6:56But this is a pretty sharp pullback over a one, two, three, four, five, six-day period. So we've come down a pretty large amount over a quick period of time. So we could get a quick shakeout and a quick rebound as well. So we'll have to see what the rest of the week brings. We've got that SpaceX IPO coming on Friday. So more volatility to come for the rest of the week, for sure. We've got the producer price index tomorrow. Muted reaction by the market to consumer inflation earlier today was pretty much a non-event. Inflation data came in in line as expected. So not a great day for the NASDAQ. So we will see.

7:46Lower volume kind of soften the blow a little bit.

7:49Ken Shreve:Right. And on both the NASDAQ and the S &P 500, we've been keeping an eye on the May 19th low, which the S &P tried to hold today, Ken, intraday, but ultimately falling below that level as well. So we have 7 ,400, the high from Tuesday, the high from Friday, all short-term hurdles that we'd like to clear, but it does seem like we are a magnet for that 50-day. Yeah, pretty much the same situation on the S &P 500. And this is where on the NYSE, the breadth was also about three to two negative. So not too bad on the New York Stock Exchange as well. And this is where we actually saw more movement underneath the surface where we saw a lot of oil and gas stocks outperforming.

8:44We saw the XLE was one of the best performing S &P 500 sectors today with, you know, oil and gas stocks outperforming. And again, insurance stocks had a good day. So there were, you know, there were definitely a rotation going on underneath the surface. Financial stocks outperformed again in various areas, various different groups in the financial sector. Like I said, insurance stocks, food, beverage, tobacco, a lot of defensive areas of the market. So at least enough gainers to help with the market breadth today. But yeah, tough day for the S &P 500. That was down sharply as well. But again, much lower volume than the prior session.

9:37Yeah.

9:38Ken Shreve:And here's a look at the Dow. It was able to find support at the 21-day line on Tuesday. Not so much today. So back below 50 ,000. So notable retracement there. And then in terms of small caps, looking at the Russell 2000, it was also trying to fight around that 21-day line. But reversing lower in today's session as well. Still holding above 2 ,800 and the 50-day line. So maybe, you know, a little bit better comparatively, you know, holding a slight gain on the week as of the moment, but definitely not looking strong by any means. No, but actually still holding relatively close to the 21-day moving average.

10:29So compared to the NASDAQ, not looking as bad. And again, the Russell made a pretty good stand with the other indexes yesterday, closed near that 21-day line and still holding above the 50-day. The Russell 2000 is probably the most sensitive to movements in that 10-year treasury yield. And bond yields have really settled down lately. The 10-year yield really has just been kind of trading tightly. It didn't really move a whole lot today on that inflation data. It came in pretty much as expected, so it wasn't really a surprise to the market. I mean, year-over-year core prices are still elevated.

11:14We're still dealing with sticky inflation. prices were up 2.9 percent and this is the number fed wants to see closer to two percent so you know 2.9 percent was higher than what we saw in april which was 2.8 percent so it's not really going in the right direction so sticky inflation but you know bond yields are kind of behaving themselves here so as long as that 10-year yield doesn't start to push higher hopefully small capsule can hopefully stay near that 21-day line. But indexes sure look like they're ready to test their 50-day lines, and we'll see. If we do get a break below that, it could unleash a wave of selling.

11:56But again, that could be a good shakeout that could pave the way for a nice rally. We'll have to see how it all plays out. Yeah.

12:04Ken Shreve:And here, let's quickly check in on the dollar as well, Ken. Yeah, well, I wanted to just take a look at a daily or a daily weekly chart because a lot of people have been wondering about gold. But, yeah, the daily chart, I wanted to just kind of get a look at a good breakout because the dollar index had a good breakout on Friday. And maybe we could just get a look at maybe a look at the daily chart here. We could show the dollar index had a breakout on Friday. Kind of tough to see on the chart here. But the dollar index did break out on Friday, and it's holding its gains. So the gold and silver and all these precious metals are going to really have a hard time moving when the dollar index is technically as strong as it is.

12:49So not only did the dollar index break out on Friday, but it is holding gains, and it is still setting up for a breakout over this 100 level here. So it is really setting up in what looks like a base to me. So dollar with, yeah, so you can see. But either way, on Friday, it was a breakout for DXY, and it is just kind of holding on to these gains and set up for, to me, it looks like set up for further upside. So we'll see. We'll see. But, you know, with the prospect for higher interest rates, that could mean more strength for the dollar. So to think that gold could head higher, that's going to be a tough environment for gold to make headway with the dollar and dollar acting as strong as it is.

13:37So we'll see.

13:40Ken Shreve:Yeah, good context there. Okay, we want to also quickly take a look at energy. Here's XLE seeing a cup with handle here. And this is a sector holding up in this volatile market relative strength on the move higher here in recent sessions, Ken? It was the best, or at least it was one of the best S &P 500 sectors for a good portion of the day. And like I said, oil and gas stocks were among the best performers during today's down session. So you see XLE did give back some early gains. It still ended higher by more than 1%. It is still battling near the 50-day moving average today, as you can see.

14:29And support is still in question here. It did close near its lows today. So we'll see. Still energy. We'll see if energy is ready to take a leadership baton maybe in the second half of this year, along with the financial stocks. It's possible it could happen. I saw some interesting movement in oil and gas stocks today. I'm not convinced they're ready to take a leadership role yet, but we're still keeping an eye on energy. If, in fact, you know, chip stocks and technology stocks in general are ready to kind of, you know, surrender their leadership and maybe financials, maybe energy is ready to lead.

15:09We'll keep an eye on energy here and as a possible leadership area. Like I said, not convinced yet it's ready, but possible. And if indeed this rotation is for real, we'll keep an eye on energy and see it because it's possible. Possible energy could lead as well as financial and some other areas that we're starting to see outperform. Okay.

15:38Ken Shreve:We already looked at the chips. You talked about the chips. So I think that we can go to our individual stocks that we want to talk about today.

16:11Ken Shreve:What's news to subscribe now. Here's an outperformer from the session, Rush Street Interactive, up 4.5%. You mentioned this was an IBD-50 name. Yes, Ken? Yes, it has been kind of a mainstay in the IBD-50 for quite some time. And first of all, it's a fundamental heavyweight. You can see in the annual earnings looks great. The company has been producing annual earnings. I believe they're based in Illinois, Chicago, Illinois. but this is a company, they operate casino games. They operate a mobile gaming platform. They have a big presence in Latin America as well. And, you know, you can look at companies like DraftKings and FanDuel, and, you know, the fundamentals are very, very choppy in a lot of companies in this industry group.

17:05But with Rush Street, you can look down along the bottom here, and you see very, very steady track record of earnings and revenue here. And you also have technicals that are pretty outstanding as well here. So nice breakout recently, relative strength line that is pushing into new high ground and a nice bounce off the 10-week moving average here. Didn't see any specific news on the stock today, but just a nice 10-week bounce. Probably a little bit extended from the 10-week line at this point. But, you know, trying to break out of a little short consolidation here. So really like the fundamentals at Rush Street.

17:45It's a big company, you know,$6 billion market cap. I mean, not huge, but it's definitely a mid-cap stock. And this is a first test of the 10-week line. So, you know, trying to form a little base here and right at the top of a little short consolidation. And, you know, just a company maybe to do a little more research. And again, it's got a pretty strong business in Latin America and the earnings and revenue growth is there. And I think the fund sponsorship is pretty decent as well here. So again, in a group where people thought that DraftKings and FanDuel and some of these other popular gaming sites would be big winners, You know, profitability has been kind of tough to come by for a lot of these companies, but Rush Street has really been able to, you know, deliver pretty consistent growth.

18:42So a company I recently discovered in the IBD50 and is looking pretty solid here. So one to watch for sure.

18:50Ken Shreve:No doubt. Next on the list, another name that we talked about on IABD Live this morning from the medical sector, a profitable biotech, Ligand Pharmaceuticals, an RS line blue dot here as the stock tries to break out this week. So nice relative strength there, outperformance versus the S &P 500. It did close off highs today, but a breakout nonetheless in a very shaky market. Yeah, very profitable biotech, like you said, Allie. And this is a company that collects royalties. So what they do is they provide upfront capital to pharmaceutical companies to help them develop drugs. And then they collect royalties when these drugs come to market.

19:48Ligand is also interesting is that they also have a proprietary drug delivery platform that they also license to pharmaceuticals. So they collect money that way as well. So basically a royalty company, but again, you can see very profitable. They derive earnings and revenue and not surprising to see the stock get pulled down with the market today. But definitely, you know, on IBD Live and in recent days, we've been seeing a lot of biotechs working in this market. Another area that is doing well as tech stocks, you know, chip stocks come under some selling pressure here, seeing a lot of biotechs outperforming.

20:36So, Ligand is doing well here. Again, you know, got pulled down with the market today, but still in a buy zone here from that 247 pivot and like to see that relative strength line pushing into new high ground. Again, great fundamentals here, good growth prospects, and a very well-run company. It's been a longtime leader with great fundamentals.

20:59Ken Shreve:Yeah, I'm going to zoom out, take another look at the weekly chart and the monthly view as well. So to your point, the last couple of years, it's seen some really impressive outperformance. Okay, let's round things out. We do have some earnings news after the close, but we want to, before that, go to A &DG. This is Anderson Group, a relatively new name to the market, an IPO that came out in December, Ken. And it's shaping up with a pretty orderly test, first test of that 10-week line. Yeah, not appearing in our screens at this point because it's getting dinged with a composite rating of 44 and not because of the annual earnings.

21:52You know, it's looking pretty good, at least this year and next year. I think the composite rating of 44 is being weighed down by just some inconsistent quarterly earnings in recent quarters, as well as some choppy earnings coming up. But the top line growth has been there pretty consistently. So I'm actually willing to look past this composite rating of 44, especially in light of the stock's technical setup currently and the fact that it's a new issue. You see that it came out of a beautiful first stage IPO base here. And it's coming down to the 10-week moving average in a really choppy, not so great market right now.

22:34And it looks like it's getting ready to test the 10-week moving average for the first time. Look at what the stock did today, reversed higher in a down market. So this looks like a pretty good test of the 10-week moving average. It's a consulting firm, so it's a pretty boring business, but it's a very consistent business. So I don't think you have to worry about a company that's going to be dealing with soft business or inconsistent business. The consulting business is fairly steady during all types of economies. So I think Anderson Group is going to be enjoying pretty good business all the time.

23:17And I think that's why the stock is performing as good as it is. And it's why the company has been able to deliver very consistent top-line growth. So earnings have been a little bit choppy. And again, I probably have to dig into why that has been. But the top line growth has been there. Again, a new issue and really has been trading quite well since it came public and trading nicely above its offer price, too. So I think it's one to watch. And we'll see how that test of the 10-week moving average plays out. but impressed with the stock's technical picture so far.

24:01Ken Shreve:Absolutely. Okay, Ken. Well, before we go, we do have a stock to check in on Oracle earnings. So here's a look at Oracle. Down 5 % is what I'm seeing on a mixed report. Oracle was looking really good with all those other software stocks, including IGV, because IGV, I know, really was taking off above its 200-day moving average right along with Oracle a couple of weeks ago. Yeah. And then everybody kind of rethought this software rally, and software stocks have come under pressure just like Oracle did. And Oracle below the 200-day moving average ahead of the report, and it is under some pressure.

24:50So I think with Oracle, they're carrying a ton of debt, and that has been sort of a cloud hanging over the company and how they're going to service the debt. And I'm sure that's going to be a focal point of the conference call. So they're doing good business, and they're still generating really nice top-line growth. But we'll have to listen to the conference call, see the stock down 6 % under some selling pressure ahead of the results. So, you know, certainly not a data center leader, but a company that is, you know, certainly back in growth mode. But we'll have to see what they say in the conference call and see why the stock is under some pressure here.

25:37But, you know, certainly was a little vulnerable ahead of the numbers.

25:43Ken Shreve:And, you know, seeing this type of reaction, not really helpful to the AI rally, right? Yeah, it's true. It's definitely, definitely true. And coming out with earnings during a time when there's some selling pressure in the broad market and sentiment not really great in the broad market doesn't help matters. But if the numbers were just were just OK and if they didn't raise guidance by enough, you know, sometimes you just you're dealing with a tough market that has high, high expectations. And Oracle is not, you know, not not exactly a cheap, cheap stock at this point, too. So the results might have been good, but not great.