Bull Market Strengthens As Dow Retakes 50,000: CrowdStrike, Goldman Sachs, Scorpio Tankers In Focus

0:10Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Thursday, May 14th. It's Alissa Coram here. And the bull market continues to strengthen and the Dow Jones crossing a key round number in the stock market today. Joining me now to discuss the action in today's session and a couple of stocks to watch is my colleague, Ken Shreve. Ken, what do you have for us today? Yeah, Ali, it seems like it's been a little while since the Dow Jones has kept pace with the NASDAQ and S &P 500, but it did so today. So let's take a look at Goldman Sachs in the blue chip index. It made a nice little move today.

0:48Also want to take a look at some security software stocks that were on the move today. So let's take a look at CrowdStrike. And then these tankers have been moving. They've been tough to handle. But let's take a look at Scorpio tankers, STNG.

1:04Ken Shreve:Sounds like a plan, Ken. We will do that. But first, let's take a look at those major indexes. More green on the screen today with the NASDAQ up nine-tenths of a percent to take the lead. meanwhile the Dow and the S &P both up about three quarters of a percent apiece the S &P 500 closing just above 7 ,500 and the Dow as mentioned above a key round number of its own 50 ,000 Dow 50 ,000 get your hats out uh we're seeing that round number for the Dow here not quite at all-time highs, but a nice gain today here, Ken. Yeah, you know, I was back home in Pennsylvania just recently visiting my parents and my dad.

1:57My dad was telling me not to age my parents, but my dad used to drive around in his Volkswagen bug and used to listen on the radio saying the Dow hit a thou. The Dow hit a thou. This was back in the late 60s, I believe.

2:13Ken Shreve:But now, well, if you're in your Volkswagen. Yeah, yeah. Now, now, now I'm telling my dad, well, dad, now the Dow hit 50 thou. That's a long, a long time ago when the Dow hit just a thou. But now the Dow hit 50 thou. Pretty, pretty incredible. Yeah. And, you know, the big gainers in the Dow today, obviously, Cisco Systems, big, big earnings report late, late Wednesday. That was a 13 % mover today. Another big gainer. NVIDIA, multiple up days in a row ahead of its earnings report next week. Another big day for chip stocks. We've been talking about the outperformance for semiconductor stocks. And the Dow, it had been a lagging index.

2:58We've been just talking about all-time highs for the NASDAQ and the S &P 500. The Dow Jones and Russell had been lagging, but good to see, you know, not an all-time closing high for the Dow today, but good to see the index, blue chip index pop above that 50 ,000 level today. Yeah, pretty, pretty, pretty good day for the Dow and, you know, the broad market, just more of the same, just no sellers around anywhere, you know, and just a nice, nice clean runway for stocks to continue to push higher here and another all-time high for the Nasdaq composite today.

3:37Ken Shreve:Holding nicely above 26 ,000 as well as that 10-day moving average and the reversal day low from Tuesday. So we'll continue to keep an eye on those levels. Here's a look at the S &P 500, a round number as mentioned here as well of 7 ,500. So this uptrend remains very strong here, Ken. What could get in the way of all of these gains? Well, I mean, you know, distribution days again are going to be an issue at some point for the market headed into today. We had three distribution days for the S &P 500, And that's three distribution days all the way back since April 8th. So we're talking, you know, we're talking several weeks.

4:29I mean, it's been a market where, you know, higher volume declines have virtually been non-existent. We touched on that during yesterday's video. And today, you know, Michael Larkin is writing our big picture column and he's getting started on that right now. But we're going to be losing two days in the distribution day count. So we're going to go down to just one on the S &P 500 because two are going to fall off the count today because the S &P 500, the gain today, now the gain has reached 5 % from the April 23rd distribution day and the April 28th distribution day. So since the index has rallied 5 % from the closing price of those two distribution days, they fall off the count.

5:17So now we're looking at a market pulse in tonight's big picture that's just going to have one little distribution day for the S &P 500. That's on May 4th. So, again, you know, this is a market where higher volume declines have just not gotten in the way of this uptrend. And even if we get, you know, one or two or we start to see some higher volume declines come into this market, we'll pay attention, you know, when we start to see signs of distribution or signs of institutional selling. But it's really going to take a lot to really derail this market. You know, the S &P 500, you know, we'll let it test its short-term moving averages here, that 10-day moving average, the 21-day line.

6:02But at this point, the rally has been so strong, you know, a pullback down to the 21-day line, which is that green line on your daily chart here. that's going to be a pretty, that will be a pullback that will be maybe painful for some growth stocks, but on a percentage basis, considering how far we come, it's really going to be a fairly mild pullback here. So again, whenever the market does decide to pull back, we'll watch the nature of the pullback. We'll watch to see what the volume looks like. And if we start to see some distribution, it's not going to be the end of the world. But if we start to see it cluster and we start to see it really become prominent, then we may start to get defensive and start thinking about taking some profits in these big winters since April 8th.

6:55But we're still in a very strong uptrend, still on a power trend, as our senior market strategist, Mike Webster, likes to remind us on IBD Live. So, you know, we have to respect the power trend and we need to give our leaders as much room as possible because the leading stocks during this uptrend are still acting extremely well and very, very strong, still holding short-term support levels. And even those that are pulling back, they're finding support, you know, right where they should at short-term support levels.

7:33Ken Shreve:They sure are. You mentioned a pullback to the 21-day line. So I was just curious. I'm going to do this on the NASDAQ deposit instead of the S &P. And the powerful move off of lows last spring when we had a power trend. I'm just curious about the 21-day extension there. So currently, and we know this in many respects is even more powerful. So as of right now, the NASDAQ is about 5.7 % above its 21-day. Let's take a look where we were back last May. I'm seeing 7.6 % above the 21-day. And that was actually a pretty orderly pullback. Maybe in real time, like you said, for growth stocks, we'd have to check on those specific days, like the 21st of May, 1.4 % down day on the NASDAQ, potentially harder hits for growth stocks a couple of days later, a 1 % decline there.

8:34Ken Shreve:So who knows if this is any guide. And of course, it was a little bit of a different position that it was in, but we did get extended as much as 7.6 % or so, it looks like, from the 21-day in the early stages of a new uptrend last year. Who knows? We'll have to see where we ultimately start pulling in here, Ken. Fundamentals of the market still look very strong. I mean, we're coming out of a first quarter, you know, earning season that really has been spectacular, really. I think I saw that first quarter earnings are up close to 30 percent, something like that, from a year ago, which is really well ahead of expectations.

9:25And then, And, you know, from these AI companies and companies that are growing so quickly from, you know, the data centers and AI growth. I mean, they're really talking a fairly bullish game, not only, you know, for second quarter, third quarter for the remainder of this year, but they're talking pretty, pretty bullish growth for 2027 and beyond. So the earnings season has been strong, and I think there's a reason why the market has been moving up so powerfully. So I think it's too early to declare the bull dead here. And again, I think the important thing is if your leaders are not giving you any reasons at all to lighten up and the market is not giving you any reasons to lighten up, you need to just kind of sit tight here.

10:16and listen to the market. And the market is telling you to just kind of sit tight and hold tight. All right.

10:26Ken Shreve:Well, let's talk about a new issue that went public today, CBRS. CBRS, yeah. We have been waiting. It took a while to open up, but it finally did. And this is why we wait, Ken. Yes, yes. I've been calling this Cerebris. I'm not sure of the pronunciation. Cerebris Systems, but it is an AI chip stock. This is a company that is going to be competing with NVIDIA to some extent, but it was a much-anticipated IPO today. It took several hours for the stock to come public. It priced last night at$185. It was initially supposed to come public, I think, between$150 and$160. So demand was very strong here.

11:30Very interesting technology here. This is a company that basically has this huge 12-inch silicon wafer that acts as a single processor. So compare that to NVIDIA. It gives faster performance than NVIDIA that uses typically a cluster of GPU-based systems that is used for AI training. So I saw the CEO on CNBC this morning, and he held up this basically a 12-inch silicon wafer. And he said, this is the single processor. And normally, these tiny integrated circuits are cut out of the silicon wafer, literally hundreds of thousands of tiny little chips. But this was a 12-inch processor. And it's just one wafer that Cerebris systems use.

12:28So it gives faster performance, higher latency, and it promises faster performance than these GPU-based systems that NVIDIA is known for. So last year, their revenues were up 76 % to just over$500 million. So, you know, we'll see what this is sort of a better mousetrap for AI inference training. training. And the stock opened at$350 and it looks like it closed at around$311. So we'll have to see. But we'll kind of watch and see if an IPO base takes shape here. One day of trading, we wouldn't have been buying today, but we'll watch and see how it trades over the next week or two. And maybe we get a nice little IPO base here and maybe a stock that will be buyable in the not too distant future.

13:24Ken Shreve:Yeah, a very compelling story that you're laying out there, Ken, with this company. And it's in the right space, right? AI, chips, that is what's hot right now. That's what investors care about. And I mean, if you're talking about a company that was originally supposed to price at$150, ended up pricing at$185, and then opened at$350. Yeah, so that is eye-popping demand right there. But like we've been saying, we wait because if you're just a retail investor, you're waiting for it to go public. You're waiting for that opening price. And maybe you're getting in around 380, closed at 311 today. So you are down on the position.

14:13Ken Shreve:So looking for something to trade off of, like you mentioned, an IPO base. It doesn't take as long for that to form as our more traditional basis year cup cup with handle double bottom etc but some level to trade off of over the next couple of days or weeks will be ideal and it's very exciting ipos are are very exciting to watch and to trade so we're going to be all over this one in the coming days. But I know a lot of folks on IBD Live were asking us about this, and we were saying, not on day one. And this exactly shows you why. Yeah, yeah. So we'll see. There is a fundamental story here. This company definitely has the new that we like to see.

15:02It's definitely a new product. It seems like it's a better mousetrap. It seems like they're going to be competing with NVIDIA. I don't know that we have an industry group classification yet here. I don't know that we've put it in an industry group yet, but I assume it's going to be in the chip, the Fabless chip group. We'll have to see. I assume that's going to be classified within the next day or two, but probably will be in NVIDIA's industry group. So we will see. But, you know, if you want to see what a good IPO base looks like, sometimes I go back to Solve Energy, which we have on leaderboard right now, ticker.

15:41I always do SOLV. MWH is the – I do SOLV all the time myself. Well, because it's in a trap. MWH for megawatt hours because Solve is, you know, battery storage. And yeah, but so this is, you know, Solve Energy was a classic IPO base. And we added this to leaderboard soon after it broke out of this IPO base. So Solve Energy came public and, you know, it just it consolidated for a short, short period of time. It was more than two weeks, but it was just a classic, you know, first stage IPO base for MWH. So we just we watched the base take shape. It was a classic, you know, early stage, first stage breakout.

16:29And then look at the look at the breakout that it delivered. Now, here was a stock that was down four percent, you know, today. But, you know, our entry was our entry was so solid and at the at the right time that, you know, we didn't we didn't need to sweat a four percent decline because it didn't even amount to a test of the 10 day moving average. But the entry was at$33.55 on April 14th. So, you know, with IPOs, just wait for them to form a base just like Solve Energy did. And if you buy right, you can, you know, hopefully get a good entry and then you can kind of just sit through normal pullbacks.

17:13Ken Shreve:Exactly. And I think this is another example of it had a good day one close, but many stocks undercut the day one low of the IPO. And this one did. So maybe you think you're safe for a few days. But yeah, that IPO base really, really makes all the difference. So that's what we're going to be on the lookout for, for Cerebris. Yes, especially with CBRS, too. There's obviously going to be a lot of price discovery going on over the next several days. Initially, when this first filed, the proposed range was 115 to 125. So once they realized that the demand was going to be off the charts, it went from 115 to 125 to 140 to 150.

18:05And then it priced last night at 185. And then opened at 350. So we'll probably see, you know, quite a bit of price discovery over the next several days, even the next few weeks. But it'll eventually settle down and, you know, base properly. And then, you know, again, we'll see an IPO base at some point. And then, again, you know, we'll see what the base looks like and then get a decent entry.

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19:03Ken Shreve:Well, okay, let's shift gears here and take a look at CrowdStrike. Now, the broader software sector, Ken, has really struggled, you know, since late last year. And CrowdStrike was hit during that period, fell some 40%. But boy, has it made a comeback in recent weeks. Now, back at highs. I'm going to go to the weekly chart to get a view. So a very powerful comeback for not only CrowdStrike, but it sounds like the security software group. I think it's really worthwhile to talk about the security software group. And you're right. I mean, the selling in the software sector in recent months has been well documented.

19:52I mean, it has been really, really ugly. And it's been broad based. And the security software group was not immune. But, you know, it was Fortinet recently that recently came out with a strong earnings report. And that started to lift a lot of these software stocks. So you could see the really, really strong move that Fortinet made last week. And it has extended gains. I mean, talk about a move straight up off the bottom last week. But, you know, it lifted CrowdStrike and Palo Alto Networks. It's really a fragmented group. There are a lot of lagging stocks in this group. Not all stocks are participating, but it looks like the real outright leaders in security software right now are, you know, CrowdStrike, Fortinet, and Palo Alto Networks.

20:44So we can look at CrowdStrike. Palo Alto Networks is also very good. That was a nice, you know, breakout into all-time highs today. CrowdStrike is pretty close as well. Technically, it's still in that blue shaded area and still in the 5 % buy zone. But this is just a reminder that when you have a stock that has moved up so sharply in multiple up days in a row, even though it's kind of near that left side high and we call it still in the 5 % buy zone, want to be careful chasing a stock that has moved so far so fast. And I do talk about this a lot, but it bears repeating that you probably just want to, you know, keep this on the watch list and wait for it to kind of pause and digest gains here.

21:35It does have an accumulation distribution rating of A. There's no doubt that this stock is under, you know, some accumulation here. That's a good sign. You do want to ride the coattails of, you know, big investors that have started to reaccumulate this stock. But, you know, let's see if we just get a pullback here. I'd rather not chase it, but see if it pulls back closer to that 566 pivot. Maybe it pulls closer down to that 550 level. Look for a low volume decline. It's going to pause and digest gains at some point here. So if it does it in light volume and it's an orderly pullback, We're not looking for wide and loose, crazy, volatile price swings on the pullback.

22:19But if we can just start to drift lower, calm, orderly, I think we can get a better entry here. I would say the same thing for Palo Alto Networks, and I would also say the same thing for Fortinet. I think these three stocks are kind of the quality in the group right now. I would look at these three names as opposed to stocks that are just kind of struggling near lows and below moving averages, stocks that might look like they're on sale. But you want to look at the strong performers. Palo Alto, CrowdStrike, Fortinet have arguably the best fundamentals in this group as well, which is why they're showing the best relative strength at this point.

23:02Ken Shreve:Exactly. Yeah, relative strength off the charts over the last week plus. So now that we've seen that power, can they pause here, pull back in an orderly fashion, give us something to trade off of versus sticking straight up in the air? Totally agree. All right. Moving on. Let's take a look at Goldman Sachs in the Dow. Breaking out of a cup with Handel today. Shares up 1.4%. Yeah, not a fast mover like these security software stocks, but just a good example of a stock, you know, breaking out during a market uptrend here. Obviously, we like to see relative strength lines, you know, shooting into new high ground along with the stock.

23:46You know, Goldman Sachs is in the Dow. It's a slower moving stock. You can see that with the relative strength rating of 72. So the relative strength line is not going to be as strong as we like to see, just like the relative strength rating. But, you know, this is a stock that's, you know, breaking out over some key resistance levels here. 2.01 is the high point in the handle here. And you can see it's breaking out and not stretched at all, still holding well within that 5 % buy zone. I would say financials are not a leading area of the market right now, but we are starting to see some financials show some signs of life here.

24:29For example, if you look at XLF, which is a very liquid financial ETF, XLF, I mean, this is not really a picture of leadership right now in the market. This owns a lot of high-profile financial stocks. You can see it's kind of struggling underneath the 200-day moving average. but you know you do have names like like goldman and even morgan stanley you know is another large cap financial that is you know starting to to look okay here but i think goldman is you know for a financial stock if you wanted to you know kind of branch out with some you know different industry group exposure this is a decent name in the dow and when you have the dow you know starting to look pretty good here, closing above the 50 ,000 level.

25:19It probably makes sense to look at some high-quality blue-chip names here. And with Goldman Sachs breaking out of a cup with handle base here and the market in an uptrend, maybe not a bad name to consider.

25:30Ken Shreve:In position there. Thanks for that breakdown, Ken. Next on our list, let's take a look at STNG, Scorpio Tankers, and the Transportation Shipping Group. recently broke out and it's still in a buy zone. Yeah, we had David Ryan on IBD Live in recent weeks. He's been mentioning some of these tanker stocks off and on. And it's not an easy group to handle. They can be quite cyclical, but they have been leading the market. And I liked how Scorpio Tankers pulled back to its 21-day line yesterday and closed off lows and found support. And then it just kind of edged a little bit higher today back into a buy zone from that 81-85 entry.

26:26It was a little bit of a breakout several days ago over 81-85. And now it has just kind of pulled back and is retesting the buy area. as it tests that 21-day moving average. Stocks come back and retest their buy point more often than you might think. I mean, obviously, when a stock breaks out, you'd like to see it break out and make progress. But stocks come back and test their buy points. So that's what Scorpio is doing now. Composite rating of 96 earnings over the past two quarters have really turned around. So in the tanker group or the transportation ship industry group, this is, I think, one that's worth paying attention to here.

27:16Relative strength line is off highs a little bit as the stock has pulled back, but it's just kind of testing a buy point here. So if it can, you know, still in a buy zone, 8272, about a point above that buy area. still seems like we're seeing some money flow into this industry group 25 out of 145 groups so another name i'm keeping an eye on here you know again have a lot of tech exposure right now so just kind of looking into some other industry groups that uh you know are seeing some uh some money flow here and uh scorpio you know could could be a name that uh continues to work here

27:55Ken Shreve:Yeah, you mentioned the cyclicality. I really like the recent triple-digit earnings growth and the estimate for next quarter also quite positive, showing potential for another quarter of acceleration on both the top and bottom lines. So we like seeing that as well. Yep. This company is based in Monaco, and I know they have some operations in the Middle East, so they're busy in that area. Some business challenges going on in Iran, but again, technically still holding up here, and the group is, again, highly ranked, So you've got other stocks acting well in this group. So technicals still look pretty good here, and fundamentals not too bad either.

28:53Ken Shreve:Then after the close, we have a notable earnings report out. Just one, but a big one. It's a bellwether. Yeah, so Applied Materials, ticker is AMAT here. I'm seeing shares up some 3.7 % right now. Now, AMAT, a very powerful prior uptrend heading into the report. Yeah, what's the deal? A tech stock not up 10%, 15 % after earnings. Yeah, this should be up double digits. What's going on? I know, I know. It's up 3.5%. We'll take it. Yeah, it's only been a few minutes. We've been spoiled. We saw Cisco up 10%, 15 % yesterday, so we're getting a little spoiled here. We really are. The Chip Equipment Group has been on fuego and looks like good numbers from AMAT.