Chips Lead Nasdaq, S&P 500 To New Highs: ASML, Dycom, NBIX In Focus

0:00Look, when people start to gamify investing, right? So when you think about people being rewarded with balloons and fireworks for trading, which we know is the more you trade, the worse offer you're going to be in the long run. I'm Joe Davis.

0:12Ken Shreve:And I'm Christine Kashkari. And this is Season 2 of Better Vantage by Vanguard, an eight-part video podcast series hosted by custom content from WSJ and Vanguard.

0:32Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Wednesday, May 13th. It's Alyssa Coram here, and the major indexes powering with the chips leading the Nasdaq once again today. Joining me now to discuss today's action is my colleague, Ken Shreve. Ken, great to see you. Good to see you, too, Ali. Yeah, more all-time highs for the Nasdaq and the S &P 500 today. The Dow and Russell, they lagged a little bit, but let's take a look at ASML in the chip equipment group. ASML is the ticker there. Also, DICOM Industries, ticker DY. And I've seen a lot of biotechs starting to move here, so let's take a look at NeuroCrin Biosciences, NBIX.

1:20Ken Shreve:Sounds like a plan, Ken. We will do that. But first, as we always do, let's take a closer look at the major indexes. So the NASDAQ today leading the gains up 1.2%. Very impressive, given that yesterday, intraday, looked like we could have more of a pause or a pullback. But new highs again today for the NASDAQ. Meanwhile, the S &P 500 up six-tenths of a percent today. Similar story here, back above that 7 ,400 level. The Dow took a little bit of a break today, down one-tenth of a percent. Not quite as powerful, not in new high territory just yet. And the Russell was fractionally higher on the day.

2:12It's hanging in there near recent highs.

2:14Ken Shreve:So, Ken, what do you make of the action in today's session? We're continuing to see this relentless advance. It's really just more of the same. It looked like the market was finally ready to pull back yesterday. It looked like it was really a rough day for growth stocks for a good portion, at least for the first half of yesterday's session. There was some pretty harsh selling, but we got a nice close, a nice finish off lows. Yesterday, we had some economic data that was not really all that friendly on the inflation front. Yesterday, we had consumer prices that were a little bit hotter than expected, at least on the core prices.

3:06And then producer prices today before the open, at least core consumer prices or core wholesale prices, were hotter than expected as well today. But the market shrugged it off. Bond yields really didn't move a whole lot. They were higher yesterday. But, yeah, the market kind of shrugged it off. You have bond yields that have been on the move over the past five days, and they were up maybe four or five basis points yesterday. They did move a little bit today, maybe one or two basis points. They did close off highs. So, again, wholesale prices, the producer price index today, core prices, I think year over year, they were up a little over 5%.

3:55The consensus estimate was 4.3%. So, again, you know, the market is not all that worried about inflation. I think we've seen enough evidence that it's sticky. There are some economists that are still worried about it, but the market seems to think that the economy is still strong and it eventually is going to kind of wind its way through here. So we will see, but we are in this very strong power trend. We're in the strong uptrend. We are probably going to pull back to the 10 day moving average at some point. But this is really all about, you know, semiconductor stocks and a lot of debate whether they've become overheated here and whether or not the chips are eventually going to pull back.

4:48Some are a lot are quite extended, but they just keep on keep on moving here like like like the market. So pretty, pretty strong all the way around. Yeah.

5:01Ken Shreve:And in terms of SMH, it looks like the NASDAQ on steroids, right? Except we didn't quite notch a new high here. But it seems like, Ken, that low from Tuesday's session, whether it's for the SMH or for the S &P, We can also look at the NASDAQ composite, all roughly coinciding with that 10-day moving average that you're talking about. So it seems like on the downside, that would be the first level to look at to see how we handle that. Do we undercut that load? And what does that test of the 10-day look like? Like, is it going to be support like it was previously and offer investors another opportunity to put more money to work here?

5:53Ken Shreve:We'll have to see. And if we do get some sort of pause, does that 21-day line catch up? But I would say in terms of like your first line in the sand, that seems like for the NASDAQ, the S &P, and the chips has a first level to keep a close eye on. Without question. Yeah, that's obviously this is just a key technical level to watch here. So we'll keep an eye on yesterday's low. Like you said, it happens to coincide pretty close to the to the 10 day moving average. We have Iran and oil prices at least out of the headlines for a day. President Trump landed in China today. So his meeting with President Xi is going to be in the headlines for a little bit.

6:42He's saying that the talk with President Xi is not going to be about Iran at all. It's going to be more about trade. And he has a bunch of CEOs in tow with him, including Jensen Huang from NVIDIA, Tim Cook, Elon Musk. So it'll be nice to have Iran and oil prices, at least in the background, for a little while. But we're still going to have to deal with these volatile oil prices and the situation in Iran. So likely we'll see some volatile headlines going forward. But I'll tell you, this uptrend has given growth investors a lot, still dealing with quite a lot of extended stocks out there. So you've got to be careful not to chase performance here.

7:38Obviously, the crop of stocks that are not actionable anymore is quite large. But, you know, even in today's video, we're still finding a few stocks that are still in buy range. So they're still out there, just getting a little harder to find at this stage of the game.

8:00Ken Shreve:Absolutely. And regarding the U.S.-China summit, I think it'll be really interesting to see what news comes out of that on the trade front. but in particular for the tech sector with a lot of those heavy hitting CEOs that you mentioned, you've got to wonder, would they be making that kind of trip if there wasn't the opportunity to strike some key deals? So I know we'll be watching the headlines coming out of that very closely. Well, yeah, I thought what was really interesting was that initial media reports when they were saying which CEOs were going to be attending, Jensen Wang was kind of missing and wondering, well, why wasn't he attending?

8:49And President Trump, CNBC reported this morning, well, President Trump called him personally on the phone, asked him if he would come. He actually flew to Alaska and was picked up by Air Force One on the way to China. So that was kind of an interesting little sidebar. But he did eventually make the trip. And I'm not sure it's kind of hard to keep track what is all going on with NVIDIA and the ship sales in China, what is being allowed to be sold there and whatnot. But we'll likely get some more detail on that front. But, yeah, we'll have to see. But more headlines from China coming for sure.

9:38Ken Shreve:Mm-hmm. All right. Ken, anything else at the market level before we take a look at some stocks? Yeah, I just think it's – there was an interesting note from Barclays that I made note of today. CNBC reported it. I just wanted to read what Barclays said about the semiconductor rally. And they said that the semiconductor rally has been impressive, but fears of an imminent bubble bursting are overblown. This is according to a note from Barclays today. So they're saying the fears of an imminent semiconductor bubble are overblown despite superficial similarities to 2000. We are now, according to Barclays, in a full cycle semiconductor boom powered by real revenues and committed CapEx.

10:32So a lot of companies coming out and literally spending hundreds of billions of dollars over the next several years. So Barclays is saying there's a lot of reasons why these semiconductor stocks have been going up. And, you know, I mentioned in the IBD Live news this morning, there was a big earnings report from Tower Semiconductors, TSEM. And they were talking about just this so much demand going forward, not only in 2026 and 27, but they were talking about demand in 2028 as well. So I think there is something to this Barclays note that there's just sort of this readjustment going on and that the fundamentals, we're not talking about just growth in 26 and 27, but really, you know, going out several years and that this really could be a multi-year cycle.

11:26So, you know, it doesn't mean, yeah, a lot of good news could be priced in quickly in a lot of these semiconductors. And, you know, it's hard to justify buying a tower semiconductor after such a run. And even after a 22 % move today, a lot of these stocks do need to consolidate and take a breather. But, you know, if they do, it could just be the pause that refreshes. So you don't want to chase stocks that have run up so quickly, but you also don't want to say, well, this move is done and it could just be a bear market next for the chips. This could be a multi-year run here. And if they do pull back, it could just be another buying opportunity and they could just start to resume uptrends again.

12:13So we'll see how it all plays out. But you just want to be careful. We have run a lot over a short period of time, so you just want to be careful not to chase.

12:24Ken Shreve:Yeah, totally agree with everything you said there, Ken. I mean, between the earnings acceleration that we've seen for so many names in this sector, the reactions, the beats that we're seeing, and the earnings estimates and outlooks, it's just on all fronts, you are seeing very impressive numbers and stock performances. So we'll ride the trend for as long as we can and use our rules to guide us. Yes. All right. So study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the Unreal College Deal. Everything you need to study and play with select Windows 11 PCs.

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13:31Ken Shreve:Speaking of the chip sector, let's go to ASML. In the chip equipment group, up 4 % on the day of recent breakout that we highlighted. And shares are still in the buy zone. Yeah. And, you know, I mean, arguably you have a lot of chip equipment stocks that have, you know, that have broken out. And even though this one, you know, has a relative strength line that is, you know, still a little bit off highs, you know, I still think you have to look at ASML as, you know, a leader in the group, not only because of exceptional fundamentals. but again, it's still in a buy zone here. The breakout about a week ago was strong.

14:20After the breakout, it came down to its two short-term moving averages that are pretty much converged here. But it came down, found support, and it's still in that 5 % buy zone, just below 1 ,600 here. So ASML is really a leader. They make these lithography machines that are used for making really, really high-end chips. So Intel uses their machines. Taiwan Semiconductor, TSMC, uses ASML machines. So again, this is just a stock that still is in the early stages of breaking out. The weekly chart, I like the look of the relative strength line on the weekly chart here, up near highs. And again, a stock that after a really, really strong move last week, you can see on the weekly chart here that that weekly bar, it's really it's holding on to those gains, still holding in a buy zone here.

15:18So I still think this one is is actionable. Good way to own a really high quality name in the chip equipment group. It's a five hundred billion dollar market cap company. So it's a very, very large Dutch company, longtime leader. I still think it's a good name in the group and just like the technical setup here and good long-term track record of fundamentals here. So good setup and a stock that is still actionable here.

15:50Ken Shreve:Right, which, as we've been saying, there's not a whole lot in the chip sector that is still within range and not crazy extended, but still has the solid fundamentals behind it, the strong prior uptrend. So strikes a good balance there, still within range, not too stretched. And even when the stock did pull back on Monday and Tuesday this week, the two-day pullback came in lighter and lighter volume. And when it pulled back, it closed up at its high both days. So there were buyers around both days that lifted the stock off lows. It came in kind of shrinking volume. And yesterday, it found support right where it should off of those converged short-term moving averages.

16:46And then, you know, today, volume wasn't huge, but it did pick up the pace from yesterday, and it bounced nicely. So just a good, strong move today after two days of kind of soft volume declines. And, yeah, I think it looks perfectly fine here.

17:05Ken Shreve:Good stuff. Okay, let's move on to ticker DY. This is DICOM Industries in the telecom group, up 3.6 % on the day, pulling back and rebounding after a recent breakout here, Ken. So actionable as well. And yet another stock that has a strong prior uptrend but isn't too stretched. Yeah, we actually added back the quarter position on leaderboard today. We like the stock's action today. Again, a higher volume rebound after support yesterday at the 21-day line. You can see it was a little bit of a shakeout yesterday. The stock came down and found support. But we liked the retaking of that 10-day moving average today.

17:59And it did, you know, it did for a period of time, it reclaimed that 445.52, you know, buy point. Closed a little bit off highs into the close here. So it did close just less than a point below the prior entry here. But it was just a nice retaking of the buy point. Volume picked up the pace a little bit. So we just re-upped the stock, put it back to a half position on leaderboard. This is a company that got its start. They've been around for a while, telecom, utility, infrastructure company. But they made an acquisition late last year in December. It's a small acquisition. They acquired a company called Power Solutions.

18:47This is a company that's an electrical contractor. does a lot of data center business. And it's a small acquisition, but it's just DICOM's way of kind of moving into the data center field just to get some data center exposure to their business. So again, a small acquisition, but a company that should benefit from some additional data center work in their business. So again, stock that is just in the early stages of breaking out of a base here, a good relative strike line on the weekly chart. And earnings coming up in 14 days, but you can see the recent growth, third quarter, fourth quarter. It looks like the first quarter earnings and revenue is really supposed to be really solid.

19:32And growth looks excellent going forward over the next several quarters. So it looks like DICOM is in the sweet spot of growth here and a nice setup to boot. So I like the fundamentals and the technicals here. Mm-hmm.

19:48Ken Shreve:Let's also check out NBIX. This is in the biotech sector, Ken, which we spent a little bit of time talking about on IBD Live this morning. This week is shaping up to be another powerful one for neurocrime biosciences up 6 % so far this week on top of last week's powerful gain up 15.5%. So breaking out to highs here. I'm going to zoom out just to show the chart action here over a longer period. But it seems like this two-week stretch is the strongest we've seen for NBIX in quite a while. yeah so when you see a two-week move like this you know you want to you want to pay attention to so you can see the the daily and the weekly you know definitely uh it gives you two different perspectives but this is a you know a stock that that moved initially it was a nice earnings report that that started the move so this is this is one i just like to put you know biotechs like this on the on the watch list because i'm not gonna i'm not gonna chase the stock after you know a move from 120 to 160.

21:02But this is a classic example where a stock that's probably going to pause and digest these huge gains over the past two weeks. It's been a long time profitable biotech. I mean, they've been profitable for as far back as I can see. So they've got that going for them. They've got great top line and bottom line growth. mostly deal in neurological conditions, psychiatric disorders as well. They've got a big ad campaign on TV right now. They make the drug called Ingressa, which treats tardive dyskinesia, which is a condition that affects adults to have uncontrollable movements. They also have a drug that treats Huntington's disease.

21:54So very, very profitable. But I like the two-week move here. It just looks to me like a stock that's under kind of new accumulation here. So we'll just kind of watch for a little low-volume pullback, and maybe this will give us an entry in anticipation of a possible breakout out of this long consolidation. But very positive reaction to a big, big earnings increase. You can see$1.91 a share was up huge from the year ago period. Revenues were up 42%. So a company that's executing quite nicely. And again, don't want to chase it after such a strong two-week move. But we'll see if it can start to drift lower here and maybe get an alternate entry.

22:42But a high-quality name in the biotech field.

22:46Ken Shreve:And then after the close earnings from Cisco. So let's see the stock reaction here. In the early reaction after hours, we are seeing shares up 13%. Now the stock already up quite a bit, Ken, some 20 % since a breakout a couple of weeks ago, which I feel like a lot of folks started thinking, oh, you know, Cisco, underperformer after the heyday of the 90s. Well, hey, it's making a comeback here, Ken. And if you look at that, in the last two months here, Cisco, now at new all-time highs, surpassing its late 90s levels. So turning a corner here, a big corner. yeah i mean it multi-decade corner a hardware networking stock now it's a now it's a full-blown ai infrastructure stock and when you go to the daily chart i mean here's a stock that you know you would say well it sure has priced a lot of good news in ahead of earnings you know and uh And now you see, I mean, we've seen this just week after week after week, these stocks making these huge pre-earnings moves.

24:13And then they're up another double-digit percentage gain after rallying tremendously ahead of the report. So obviously Cisco has said some pretty good things about demand going forward. It's the only reason I could think the stock is up another 14 % after such a strong pre-earnings move. So we'll see what the report looks like. I'll give this a little bit of a shout out in the big picture column a little later. But we'll see what they said that was so impressive. It has to be a pretty strong outlook. But this is pretty incredible to see stocks making these after-hours moves like this. I'm sure the stock is very liquid.

24:57it. I don't think this is, I think volume is pretty heavy in after hours to see a move like this, but we'll see what they said. But we've seen percentage gains like this on earnings. It's really been the rule, you know, and not the exception to see these double digit percentage gainers in tech land. So more of the same. We'll see if this lifts tech stocks more tomorrow. Pretty impressive.

25:28Ken Shreve:Very impressive. All right. Well, thank you so much, Ken. As always, we appreciate it. And we'll see you back here tomorrow. Okay. Sounds good. Thanks. Yeah. And coming up at 5 p.m. Eastern, make sure to check out the weekly Investing with IBD podcast hosted by our very own Justin Nielsen. Joining him today are going to be Connor Bates and Ted Zhang of Revere Asset Management. They're going to be talking about their trading routines. and how they are taking profits into strength in this market. So don't miss it. Go to our YouTube channel to watch that live today at 5 p.m. Eastern. And you can also listen to the episode later tonight, wherever you get your podcasts or on demand at investors.com slash videos.

26:16Ken Shreve:And we'll see you in the morning on IBD live investors.com slash IBD live for all the details. We'll see you there. And then we'll see you right back here tomorrow after the close.

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