Broad Rally On Fed Rate Hopes; Meta, Goldman Sachs, Sea In Focus

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0:26Ed Carson:good afternoon everyone and welcome to stock market today for tuesday august 12th it's alyssa quorum here and a broad market rally in the stock market today on the heels of renewed fed rate cut hopes and joining me now to break down the action in today's session is my colleague Ed Carson. Ed, what do you have for us? Yeah, I'd like to take a look at Meta, Goldman Sachs, and C. All right, we'll check in on those stocks. But first, let's take a closer look at the major indexes and the power that we saw out there today that was broad-based. So first, a look at the Nasdaq composite up 1.4 percent by sessions closed.

1:05Ed Carson:We had the S &P 500 up 1.1 percent on the day, back at new highs. Same for the Dow in terms of the percentage gain today, up 1.1%. Small caps in the lead ed with the Russell 2000, very powerful here, up almost 3 % on the day. Maybe let's start with the Russell. Yeah, I mean, really strong. I'm not sure if it got quite above that high from a few days ago, a couple weeks ago, but it's basically at six-month highs. Really powerful. All the indexes, just breadth all around. I mean, I came on last Friday and said, I'm a little worried about breadth. But today was a lot of breadth. And not just the indexes, we saw a lot of leadership, a lot of stocks from a lot of different areas.

1:50So, I mean, today, before the open, we got an inflation report. Some of it was good, some of it was not so good. The core inflation was actually a little higher than expected. But I think the feeling was is that It would have had to be a horrific report for the Fed not to cut rates after that really weak jobs report. So Fed rate hike, Fed rate cut odds actually rose basically a lock in September. Now the odds were moving towards three rate cuts in the year. So that just really pushed everything higher. And, yeah, just a lot of strength. S &P and NASDAQ hitting all-time highs, you know, the Russell, the Dow, RSP all moving above the 21-day line, QQEW over the 50-day line, and I think it got over the 21-day line.

2:37It was right, right there. So I think it may have did just sneak above. So yeah, I mean, just really, really nice to see that gain on, you know, on really an important piece of economic data. Absolutely.

2:51Ed Carson:So with QQEW and RSP, those two breadth measures that you were talking about, so seeing some improvement there, which is what we want to see in a market rally, it's not a necessary ingredient, but it does always help when you see a broad advance. Absolutely. Okay, let's take a look at a couple of ETFs of note, starting with IGB. This is the tech software ETF of 1.2 % on the day and at a critical level. Yeah, so bouncing back and this ETF probably masks some of the weakness that we've seen, a lot of weakness in software, but finding support at a key level. It still needs to get above the 21-day line, unlike the indexes.

3:36Ed Carson:Yes. What do you make of the rotation here if traders wanted to play the software sector? Is this, I mean, this is one way to do it, but is it the best way to do it? Yeah, it's a tough one because it seems like you've got a few extended stocks that are hard to buy and then you have a bunch of laggards. So, I mean, this is sort of in between. I'm not sure what the best way to go would be. I mean, you could buy it basically with that trend line getting above the 21 dollar line. And I'm not sure what the right way to play software is, to be honest with you. Well, maybe, you know, find a leader and get in with the proper entry.

4:14Ed Carson:Exactly. Yeah. But if you do want to play some ETFs, sometimes these sector or thematic ETFs can be useful. But you want to get that outperformance. So, you know, if this is something that you've been in for the last couple of months, you haven't gotten that benefit of outperformance, right? You might as well just be in SPY. Exactly. Okay, let's take a look at chips. Here's SMH getting to highs, up 2.3 % on the day. So definitely outperforming the major indexes. And this is probably something you could be doing because this is like, well, there are some that are doing even better. A lot of those are extended.

4:51It'd be great to find opportunities in those names like AMD, Alab, NVIDIA. But those are extended. But you could do something like this or there's other names like LRCX, KLAC. that look basically like this, but then, you know, maybe you get outperformance, but you also have single stock risk with something like that.

5:10Ed Carson:Okay. So some setups there in the semi-equipment group and an interesting look today to that SMH chart. Let's go to financials. Here's XLF, a notable move back above some key levels up 1.2%. Yeah. So that's nice to see. There's a lot of names that were sort of flashing some buy signals. We'll look at one, but there were a lot in the financial sector that were looking interesting today. Okay. And JETS, so the travel sector really lighting it up today, Ed. Yeah. This is also one way to play airlines because they do fairly move together and you take out the risk. For one, the CPI airfares surged after airfares have been falling generally for most of this year.

5:55So a big spike. But the The real news, Spirit Airlines was just exited bankruptcy five months ago. It was like, oh, it looks like we might be going under again. But that's good news for all the other rivals who wouldn't have to face that competition. So big move here.

6:10Ed Carson:Yeah. Jets up 7.3 % on the day. Pretty hefty move there. If your organization isn't managing its data with Everpure, then it's likely scattered all over the place. my lord three days have i ridden to bring thee warning the records thy great ai machine requires are strewn across five kingdoms yeah the ever pure 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 ever pure a new era in data management okay let's take a look at some stocks of note first in the mega cap tech space, Meta, a compelling setup, up 3.2 % on the day.

6:56Ed Carson:Not too long ago, we had that gap up on an impressive earnings report from Meta. And more or less, the stock has gone sideways ever since and arguably actionable here today, Ed. Yeah. I mean, this was our stock of the day. And Chris Guss has been talking about, hey, a lot of it is that you look for things that sort of extended to short pullbacks, this one has the advantage of forming a shelf just above the prior base. When you think of that whole 340, 347, it's not that extended out there. And this is showing leadership. It just sort of popped up there. You could have bought it when it sort of went above that trend line or if you waited for it to get above all of that.

7:34But this is one way to play earnings gap ups. Because if you bought on the top of that earnings gap and then the next day, it didn't, you know, it might have been like, I don't know. And, you know, it ultimately all worked out. Sometimes it's nice to let that shake out. A lot to like about this name. Growth picked up in the last quarter. RS line, it's getting pretty close to highs. If it wasn't there, might have been there on a weekly. So yeah, it looks like it's at a high on a weekly. So a lot of strength here and still showing strong growth.

8:05Ed Carson:That it is. Let's now take a look at Goldman Sachs, ticker GS, one of the financial names that you teased we were going to talk about today, up 3.3 % on the day. And one of the stronger looking names in this sector. Yeah. And so it's clearing several weeks of trading. It's bounced off the 21-day line. There was a lot of names that sort of looked like this. And I say exactly. So I think this is viable. I believe this one was added to swing trader today. Nice action here. And I think one of the factors that was out there is that I think the 10-year treasury yield was sort of flat, but the shorter end, which is more tied to Fed rates, that came down.

8:48So if you feel like, one, that's just good for banks, they borrow short, lend long. And then it's just like, if you think that the Fed rate cuts will boost the economic growth, well, that's really important for the banks too. So the financials got it on both fronts. They're just a positive, positive trend for a lot of the banks.

9:06Ed Carson:Yes. So a buy point there that got triggered for Goldman Sachs. And let's round things out with a look at C, that is S-E, company S-E-A. Ed, up 19 % on earnings today. 19%, yeah, and really gapped up. And it wasn't looking that good heading into earnings. I mean, there was some high volume. It was basically at the low of the base. It didn't quite undercut it, I believe. So it wasn't a double bottom or even a sort of double bottom, but gapped up today. Strong earnings, the best sales growth in several years. so it really took off and you could have you could have bought it today you could still buy it tomorrow or you could wait a few days and see if it just pauses around lets things catch up but really nice really nice action today this one has been a steady incline and they really do have the growth right now so a lot to like about about c yeah that triple digit earnings growth quite impressive and sales growth, which you discussed as well.

10:10Ed Carson:Up 38 % for the quarter. Not too shabby at all, Ed. Not too shabby. Okay. So with a stock breaking out on earnings, up 19%, like you were saying, you could buy it, but could you also wait a couple of days, to your point, on the meta chart? Yeah, that's exactly. I think that's how I I prefer it when it gaps up that much. And I feel like, especially the last couple of weeks, one is that sometimes we've had a lot of intraday things where it'll pop up and then sell off. That didn't happen here. That strengthened. It did pretty well. But we've seen a number of stocks that do really well on day one, and then they come down a lot.

10:48I mean, that's just part of the nature of it. And if you're nimble and you want to do that and you play it, you just really have to be able to get out. I usually like letting it settle down. I'm going to miss some opportunities. This might go up 5 % tomorrow. And so it's like, oops, now I missed my chance. And I understand that. So you have to do a strategy that works for you, but that's something that I am more likely to do.

11:08Ed Carson:Yeah, there's definitely benefits to both. And it depends on the stock, depends on the market and a lot of other factors and how you individually as a trader prefer to manage that risk. And your conviction level. I think that also plays into the decision-making process with an earnings gap. All right, Ed, anything else to add before we wrap? Well, let's take a look at a few stocks after the close. The core weave, a lot of attention, made a nice move through the 50-day line during the regular session. It's down now. It looked like it was a wider than expected loss. Revenue might have beat. I mean, who knows how this will go?

11:46There could be a lot of things on that. Another one is for Getty Computing, RGTI. Full disclosure, I have a position. I had sold some before. Oh, now it turned higher. But honestly, it was down until literally like 10 seconds ago. I don't know how that one did. And there's not much revenue on a company like this. Kava, people still hold out hope that things are going to be better. It's not getting better before it gets worse. And it's hard when a restaurant stock has that kind of valuation and the growth is starting to slow. It can take a while. So that's not great. And one more.

12:18Ed Carson:Down 22 % for our Spotify listeners. Spotify listeners, 22%. And one more is Lumentum, ticker Light. And that one's just up slightly and that's extended. So there's not really much you can do about it. But that's been a strong performer in the last several months. And so that's what's going on after the close. Great. So CoreWeave, just looking at the numbers there, looks pretty liquid because the numbers are jumping around a lot. seeing it swinging around down 7 % to 8 % as of now. And we also know that overnight action doesn't necessarily always translate to the following regular session, but we do have your overnight column, Ed, to keep us up to date on the action as well as IBD Live in the morning.

13:04Ed Carson:We will definitely be covering a lot of these movers. So we have that to look forward to in terms of the team's analysis. So thanks so much, Ed, for pointing those out for us. Thanks, everyone, for tuning in. That is it from us for today. But it is Tuesday, the second Tuesday of the month. So we have our monthly Swing Trader status update show live at 5 p.m. Eastern on our YouTube channel. This is one that you don't want to miss with IEBD's own Mike Webster and Justin Nielsen walking you through a Swing Trader's perspective on the market, some recent trades that the Swing Trader team has made, an update on where we're at in this market, and a look at how to manage your portfolio given current conditions.

13:52Ed Carson:So check that out on YouTube live at 5 p.m. Eastern. You can also watch the recording at investors.com slash videos. Thanks again, everyone, for tuning in. We'll see you in the morning on IABD Live, investors.com slash IABD Live for all the details, and we'll see you right back here tomorrow. Thank you.

14:41Ed Carson:can help people move forward with confidence, backed by MassMutual's 175-year legacy. Learn more at MassMutual.com.