Cautious Rally Into Nvidia Earnings; Robinhood, Interactive Brokers Flash Buy Signals

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0:35Ed Carson:Good afternoon, everyone, and welcome to Stock Market Today for Tuesday, August 25th. It's Alyssa Coram along with Ed Carson here, and we saw green across the screen, a cautious rally, perhaps, headed into NVIDIA earnings, Ed. Yeah, I do want to take a look at NVIDIA. I also want to look at Robinhood and Interactive Brokers, which made nice moves today. Okay, we'll check out those stocks. But first, as always, a closer look at those major indexes. We'll start with the S &P 500, arguably in the strongest position of all the major indexes, up three-tenths of a percent on the day, a similar gain percentage-wise for the Dow today after a trip near that 50-day moving average.

1:18Ed Carson:Meanwhile, the Nasdaq composite did lead on the day up about six or seven-tenths of a percent rebounding from a test of the 50-day line. However, not sure we're quite out of the woods here yet, Ed. It is good, of course, to see a bit of a bounce instead of a slice right through that 50-day though. Yeah. I mean, look, any time you can get a little bit higher is a positive, but there's just so much. I mean, since the fall through days, the NASDAQ is down, especially over the last week or so. And it's been difficult in general. It's been hard to trade, but especially there. And we have a lot of earnings.

2:00We have NVIDIA, we have CrowdStrike, we have Okta, we have Salesforce, and then some more later in the week that are really important for the NASDAQ. So yeah, I mean, it could be in a few days we'll say, oh, this was obvious. It bounced off that 50-day line. How were you a fool not to buy? Or I'd say, what were you thinking? It's tumbling through the 50-day line, obviously the index was in trouble. So really, really important few days of earnings for the NASDAQ, I think in particular.

2:29Ed Carson:Yeah, definitely. I mean, we have looked at this as now sort of a double bottom. We had a bullish pause and a move above an area that didn't pan out, Ed, but now maybe this is a handle that we are tacking on. And we'll take a look at NVIDIA's chart, of course. So maybe, you know, the silver lining here is we are getting some new buy points that are, you know, after that big move off lows, right? Seeing a bit of a digestion period, maybe we just needed a little bit longer than those couple of days after the follow-through day. But to your point, it wouldn't take much to get this already wobbly market looking more negative here.

3:16Ed Carson:So what does that mean for investors? We should be looking for stocks setting up, but waiting for some of these big catalysts perhaps to give us more direction on the overall market? I think that's exactly it. And one more catalyst is that there's the Fed's favorite inflation gauge. That'll be tomorrow morning. So there's a lot going on. Yeah, I mean, get those watchlist readies, but be patient, especially if you want to fixate on the on the tech side. There are other areas that are working, though, you have to be nimble to get to them because sometimes like, oh, they'll move up and then two or three days later, they pause or we come back down.

3:55And it just makes it, it just has been tricky in general. So when I lose watch lists, you can make some plays, but make those plays, I would generally say incremental because look here, S &P looks the strongest, but if you bought at the close of the follow through day, you are down. I mean, it's just, it's not like anything horrible, but it's just been hard to make progress. Maybe this is a handle kind of, you say, it's a high handle kind of on this. So yeah, I mean, there's a lot of things that could really be setting up. And maybe if those fears over AI turns into positive, everything will go great.

4:29Or if the oil prices come down quite a lot and yields come quite a lot. Oil, one thing about today is that oil and yields clearly lifted the market. And that's one reason I thought it was cautious. Given the drop in oil, given the drop in treasury yields. And I think yields actually fell a little bit more after the settlement at three o 'clock Eastern. Modest gains. Modest gains, modest gains for the market given those drops. And I can understand. I mean, look, we've been rallying on this. Oil and yields have been rallying quite a bit. So it's not like this is all safe. You know, we're all safe.

5:03But if those things keep coming down, you could definitely see the market taking off in a bigger way. It's just, so we'll just have to see.

5:12Ed Carson:Yeah, that good old analogy we like to pull out at times where you got to be ready like a basketball player to pivot quickly from offense to defense seems like we're back in that mode. I think absolutely. Okay, let's take a look at a couple of other charts here. Is the RSP all quiet on this front, Ed? Yeah, this is one that hasn't really been a pullback. There was never a pullback. And we said this a bunch of times. It's this, I mean, little mini pauses, but it's basically held the 21-day line the whole time, never tested the 50-day, not since April. So yeah, it does show you that outside of certain areas, there is a nice uptrend.

5:57And so there are a lot of things that are working. It's just been hard because there's been a lot of rotation even outside of tech. But yeah, there's still a lot of underlying strength in this market.

6:07Ed Carson:And let's take a look. We haven't looked at small caps yet. So here's the Russell 2000 IWM ETF. We're sitting close to the 50-day, another pullback here in the context of an overall uptrend. And very close to new highs. I mean, honestly, if you have a really good day, this could be at a new high tomorrow. I mean, it would not be that surprising. Less than 2%. Yeah, less than 2%. And small caps can easily do that. So, yeah, it's just one of those things. It could go either way. We're near highs. We're near key support. Mm-hmm. And, you know, obviously, like you said, it can be difficult to not make progress or get caught in a choppy market or a choppy stock or a choppy rotation.

6:58Ed Carson:But these pullbacks, we've been talking about how buying, you know, after a pullback, seeing some sort of rebound can often be a better buying opportunity versus buying a breakout to new highs. It can help you avoid getting shaken out in some scenarios, Ed. Yeah, especially if you're going to go up and down, you want to get as close to the beginning of the up. And yeah, you're right. Then maybe it'll have escape philosophy or the worst, it'll roll over. But then you can get out, you know, with some time, you know, you can get out while you still have a gain or don't have a loss. So, yeah, I think in this in in choppy markets, I think early entries are even more important.

7:41Ed Carson:Okay, so we'll be on the lookout for that. Let's take a look at some of the sector action and biotechs. That's been an area of focus for this rotation. And look at that today, outperformance XBI up 3 % on the day looking quite strong. Yeah, very strong. There are some strong moves here. Obviously, a lot of this is mRNA, which is trying to clear this little range. But its 14 % move is so huge. But there are a lot of things in the biotech and the drug space that are just looking pretty strong right now. All right. And elsewhere, let's take a look at chips. Of course, NVIDIA earnings loom large. and even though chips up 1.7 % on the day, not in a strong position here.

8:32No, and you'd often be, you know, you may want to think just to put your short seller cap on, even if you don't want to do it, just to put in the mindset. It's like, if this comes up to 21 day line, you know, after earnings and then fades, or comes up even more to the 50 day line and then fades, especially if it's a weak rally, that could be a shorting opportunity. So it's just sort of that mindset. that that's one reason why it's dangerous to buy in that area, because there might be a riptide. If things go bad, this could be where it comes down. It did it right around, just around the 50-day line.

9:03It's sort of done that a couple of times already. So, yeah, it needs to show a lot of strength, needs to get over that 600 level, I'd say, before it would start seeming like it's turning a corner for real.

9:15Ed Carson:Read. Okay, we want to take a look at the software area. Here's the IGV ETF. We have a handle and a little bit of a pause here over the last couple of trading days. And then more specifically looking at cybersecurity, a key test at the 50-day moving average. We've been talking about a lot of the leaders, whether it's a crowd strike with earnings this week or some of the others in uptrends, but have been pulling back. So will this be an opportunity or will this be the beginning of a more substantial breakdown? It's going to be interesting to see how the next couple of days play out. Yeah. And then on the IGV front, like some of the recovering names like Salesforce and ServiceNow, they actually look a little better technically in the very short term.

10:04Obviously, they didn't have the uptrend. Believe me, I get it. I mean, I would have, you know, but they have done a little better. So it's a little where Salesforce looks weaker than some others. But, you know, it's so it is interesting. Very big week for this this whole space service now sort of pausing nicely here. I would obviously like the whole base to be of the Tunity line and the cybersecurity looks pretty good. But, yeah, definitely have to see how those play out in the next couple of days.

10:33Ed Carson:And one more ETF to look at before the three stocks of the day for this show. And that is I bet the Bitcoin ETF. So now up quite a few days in a row here, Ed. It looks like, what, seven days adding to that gain again here. Now going back to levels from the last couple of months, that may high around 46.56. So a big advance in recent sessions. Yeah. And the one that you marked, that would seem like the day to get because there was still room to the 200-day line. You didn't know how this would go. I mean, it could easily hit resistance there. So there was a little space and it's gone through. Ideally, this would pause for a few days right between that sort of that 45-ish area and the 200-day line and then move out.

11:19Who knows what Bitcoin will do? But yeah, it has gone up a lot, raising the risk that it's ready for a pullback. So that's what I'd like to see. But yeah, if it got above 35, that would be a bullish move. But it would also feel extended if it did it right away.

11:35Ed Carson:That makes sense. OK, well, we know a lot of Robinhood traders trade crypto. Let's check out Robinhood. Up 8.2 % today, Ed, forming the right side of a bottoming base type formation here with those moving averages all trying to right themselves. Yeah. I mean, there's a lot. This is still in recovery, but it did almost double from the lows earlier this year to where the cut base started. So clearly, there was a prior uptrend. I mean, sometimes when we've looked at some bottoming bases, they really haven't done anything and are bottoming at the low. So that's a positive. You could have bought it today.

12:16I think you could have bought it a couple of days ago. As an early entry, they were sort of breaking a trend line, sort of. It's not too far from the 50-day line. I mean, it's risky. Crypto, it's crypto related. I think crypto was more important in the past. I think that's clearly a factor why it's rallying the last few days. You'd have to be silly not to think that. But there's also prediction markets and some other things that have become real growth areas. So I don't know if it's as crypto dependent, which is probably one reason why it rallied from 60 to 120 when Bitcoin really wasn't. you know but so the growth is probably trying to turn around a real tough time starting to turn around we'll see there was definitely some issues i don't know what's going on if it's just tough for comparison so it's still choppy but it's always sort of i mean there were some wild times but there's been a choppy nature this because of i think all the crypto trading goes up and down people just run in and out so we'll see but yeah this one this one is aggressive i don't know how far you'd want to go.

13:14I mean, you could also wait to see if it pauses near the recent highs, forms a handle there. Again, you don't have to buy it just because something flashes a buy signal. Doesn't mean you say, well, I got to buy it. It's like, well, you might say, I think I'll pass. There is a lot of trading. Yeah, that line there, that's an important area. It'd be great if it came up there and paused.

13:36Ed Carson:It'll be interesting to see if these sort of risk on And higher octane names can start participating in the market. Clearly, this one has as it's formed the right side of the base and, like you said, doubled off the lows. But more progress to be made. And I agree with you on the fundamentals. So some notable improvement in the most recent quarter. Estimates look a little questionable. but we have plenty of time before the next quarterly report. So we don't need to worry about that aspect just yet with this one. Okay. Well, elsewhere in the trading sphere, let's go to interactive brokers. This is IEBKR breaking out of a base today up 5.5%.

14:29Ed Carson:Whether it's clearing a trend line or the recent marked highs, I mean, it's right there, breaking out. Volume did pick up today. Yeah. And this one, if you looked like at a five-minute 10 minute. I think this one offered opportunities to buy it near those short-term highs or the trend line. It traded there. Yeah, right there. It sort of paused right around there for a while and then took off. So you probably could have bought it somewhere in there or when it took off and maybe gotten in a little early without buying it. Sometimes it's like, oh, it's at the first minute. And so you didn't really get a great opportunity to go.

15:01But this one paused, paused right at the short-term highs and then moved off. But it's not crazy above the 50-day line, even at today's close. So I think this one's been better to buy off the 50-day line because there's been some failed breakouts to be sure. But this one has a nice relative strength line. I mean, this one, it's not in the AI sphere kind of thing. I'm sure they're doing something with AI if you're not, whatever. But it's not the same kind of situation. The earnings growth has been pretty solid. I think the last earnings were the best in quite a while. There's been sort of a nice nice revenue growth was in the last quarter uh so yeah i mean these two stocks sort of help each other it's like if you like interactive brokers it's nice to see hood doing well and vice versa i mean it's like there's uh and schwab is which you might think is the most boring of them all that one has just been plowing higher that one's extended uh so there is something these brokerages and again the rs line isn't the greatest over time but uh that one has been moving up so there's something with these online brokers that are all sort of working, which is a positive, you know, and you're thinking about it.

16:09The RS line is not at a new high, but it's coming up toward those highs. And the trend has generally been pretty good. So yeah, I think this one, and again, I think the ATR is also reflective of not being as wild as a Robinhood or a lot of a lot of stocks. So yeah, I like this neck.

16:28Ed Carson:Yeah. So the average true range, an indicator of the volatility, for lack of a better word, 3.5 % for interactive brokers. Let's compare that to hood. So yeah, almost 6 % there. So that's sort of the average movement of these stocks. And it seems like in this type of environment, going with something a little bit lower, a little closer to that longer term moving average does make a lot of sense there, Ed. And let's check out NVIDIA ahead of its earnings report. The 21-day ATR here is 3.2%. So here you have one of the biggest names in AI now has turned into basically a market performer. with some spurts about performance here and there.

17:22Ed Carson:What will happen with the reaction to earnings? I think it'll be quite interesting. Ed, what's your take? Yeah, I mean, all that's true. It's like you could argue, oh, it's due for another run because the earnings line has continued to do well. It's supposed to be another quarter of acceleration. Oh, no, no, it's not. It's another quarter of acceleration on the revenue front. Earnings are supposed to be strong. I assume that they'll probably beat, so they'll at least double once again. I mean, just tremendous earnings when you think about the year over year after year of comparisons. This isn't, I mean, it's just stacked, stacked upon stacked from where it was in 2022 of 33 cents.

18:00But here we are. I think we'll say, yeah, the ATR, like if you're holding it in the middle of nowhere, yeah, this one's not, this one's fairly calm or can be. The issue is that with earnings reports, that is very risky. It either has a tendency to either sell off on earnings or surge on earnings and then reverse lower either that day or the next day. So it's highly dangerous. And I would say that also means for all those chip names, if you're like, oh, I'm not buying NVIDIA, I'll buy this other name. But they'll reverse lower too if NVIDIA does. So the chart looks interesting here. I think you could break the downtrend if I like on earnings, but just be ready for that riptide.

18:32It is just tough. There's definitely been issues with that, with earnings. And, you know, in the last few quarters where it seems good, it seems like everything's going great. You know, maybe this is the time it really does go. But it's going to say a lot. If it can't go with all the earnings, it's really, really important for the AI ecosystem. And there's just concerns about, just a lot of concerns. Again, there's a lot of growth in there, but people are worried about the future. And I don't know what he can say that will really allay those concerns because he's so upbeat about the future. And he's had reason to be.

19:07But, you know, I guess if he comes out doom and gloom, people will run for the hills. But if he's upbeat, I don't know how that will really excite people either because he's, you know, he's such an evangelist for the AI system for good reason. So just be watching for it. Obviously, huge report, but at the same time, just know the history of it. And so you don't get too excited if it's strong overnight or strong at the open on Thursday morning.

19:36Ed Carson:Yeah, such great points there, Ed. And I think that this is a great example of why looking at charts is so important. Because we know this has the numbers. We know it has the story. And like you said, the CEO as the evangelist for the AI future and all the headlines around financing and just everything that they're doing to build out the data center boom. But with that being said, that doesn't mean that the earnings reaction is a lock, even if they do have a big beat. You said it, Ed. We've seen in many recent quarters, I feel like it's been a while, really, since NVIDIA has had a sustained strong run sparked by its earnings reaction.

20:28Ed Carson:And so does, is Wall Street going to care about any commentary around circular financing? And I'm sure Jensen Wong is going to, he knows what he's going to say regarding that with the increased scrutiny on that front. And so, yeah, I got my popcorn out. And I think that this could be setting up a notable buying opportunity, but definitely don't want to get too aggressive too quickly, even if we do see this stock clearing that 220 level or higher. Absolutely. Yeah, really, really important report. Okay. We'll be watching. Anything else to discuss with our viewers before we go, Ed? No. Thank you very much for having me.

21:20Ed Carson:Good stuff. All right. Thanks, Ed. We'll see you next time. And thank you all for watching. We will see you in the morning on IBDLiveInvestors.com slash IBDLive for all the details. Tomorrow, we will be joined by Mark Minervini, I believe. I need to look at my calendar, but I think that's what's happening tomorrow. So make sure to join us starting 10 minutes before the opening bell, investors.com slash IBD live for all the details. We will see you then. And then we'll also see you right back here tomorrow after the close.

22:07Ed Carson:This show is for informational and educational purposes only, and nothing should be construed as a recommendation to buy, hold, or sell any securities. Any securities and investment strategies discussed may not be suitable for all investors. Make sure to consider consulting with your financial advisor before making investment decisions.