Choppy Market Persists; Palo Alto Networks, Ligand Pharma, NetApp Lead

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0:42Good afternoon, everyone. Welcome to Stock Market Today from Monday, September 28th. I am your host here, Rachel Fox. And joining me for today's show, we have IBD Head of Market Research, Justin Nielsen, helping me break down what we saw in the markets today with things closing lower after some follow-through strength on Friday. So, Justin, what stocks are on tap for us today?

1:05Rachel Fox:Yeah, we'll take a look at a few stocks in different areas, including Palo Alto Networks and Ligon Pharmaceuticals, and we'll end with NetApp. All of these were actually leading on what was a pretty tough day in the market. Yeah, there were definitely some pockets of strength here and there, but a difficult day overall. We'll get to those stocks in just a minute here, but I will first give you a quick rundown on how we closed for today. We saw the S &P close off intraday lows, but it still closed down pretty rough, down 0.8%. We saw the NASDAQ close down 0.9%. The Dow Jones lost 0.6%. The Russell 2000 was also down 0.6%.

1:47For equal-weighted indexes. We saw RSP, equal weight for the S &P 500, down about 0.7%, and we saw the equal weighted NASDAQ 100 QQQE close down 0.9%. So tough day. I'm going to go ahead and share my screen here, Justin, and we can take a look at the indexes together. Last week, there was a nice weekly gain for the NASDAQ. We saw some follow through strength on Friday after a nice reversal there on Thursday. But it's still a struggling market with higher rates and weakening breadth. So market seems resilient, but then today was a little bit difficult. So what are your thoughts on the action here?

2:34Rachel Fox:Yeah, it's the chop fest continues. I mean, that's the basic bottom line here. You know, you can take a look at what's been going on recently. And yeah, while it was awesome that we got that big move on Monday, went to a closing high that day and then actually made an all time high in the NASDAQ composite on Tuesday, it certainly doesn't feel that way. Right. There's a lot of stocks that are making new lows. There's a lot of stocks that just are struggling. There's a lot of stocks that are below their 50 day moving average line. So it just doesn't feel like the market is really representing what's happening in a lot of individual stocks.

3:12Rachel Fox:And you can kind of see that disconnect with MAGS. If you look at the Magnificent Seven, this is the Roundhill Magnificent Seven ETF, MAGS. You know, again, that kind of popped out of this base. But then if you look at XMAG, which is the other 493 stocks in the S &P 500, well, that looks like a downtrend to me. It doesn't look nearly as encouraging. So again, there's a big disconnect at what's happening in the markets. And just as another note, let's go ahead and go back to the NASDAQ composite. Think about the choppiness that we've seen kind of over the last, you know, well, gosh, months now, really starting on June 5th, and hasn't really been that great since.

3:57Rachel Fox:On the one hand, I'm looking at, hey, this popped out of kind of a base on Monday and it looks like we are right there at the pivot. So it's not doing anything wrong, but it's not getting the follow-up strength that we've been craving so much. And one more thing I wanna look at, let's go ahead and go to a 15-minute chart if you don't mind, Rachel, because I think that just kind of shows a little bit more of what we've been seeing. This is what we've been seeing on a daily basis. I mean, there's the Monday gap up that you see on the left-hand side of the chart. And it's just a lot of what we've been seeing in the market this whole time.

4:37Rachel Fox:It comes up, it goes down, it comes up, it goes down, just doesn't make progress, but doesn't get bad enough to where you're like, oh, this is definitely a downtrend. And to be honest, those are the most dangerous markets of all. This is where you start getting in just as things are starting to look great. And that's where they kind of pull the rug out from under you. And by the time you say, oh, I got to start getting a little bit more defensive because all my stocks are coming in and I want to protect my capital. Well, that's when things turn around. And so you end up in this buy high, sell low situation.

5:10Rachel Fox:And I don't know, I'm no economist, but that's not the way you're supposed to win in the stock market. Yeah, no, you're definitely right about that. You know, we have this line in the sand here of this gap up area from last Monday. You know, we're at 80 to 100 % recommended market exposure here. So what happens if we do breach this level? Then what does portfolio management sort of look like for you? Well, and remember, right now we're analyzing the indexes. At the end of the day, you really have to make a lot of decisions based on your individual stocks. There have been times where the indexes look great, but my stock picking has been off.

5:49Rachel Fox:And so I'm in the wrong stocks and I can't just lean on, well, the indexes are doing great, but I'm not. So I'm going to keep on leaning heavy into my investment percentage. If my stocks are triggering stop losses, I'm cutting them. If they're not working, I'm not adding to them and I might be reducing them. So while we do spend a lot of time analyzing the market indexes at the end of the day, our portfolios are often made of stocks. And if your stocks aren't doing great, that's something that you do have to consider. And the reality is, again, a lot of stocks aren't doing great. When we take a look at the Russell 2000, that's in a solid downtrend, not looking great at all.

6:29Rachel Fox:That's zero RUS for the ticker symbol there or RUT. We can use either one of those. But yeah, there's nothing good about that. That's a solid downtrend. Those are kind of the markets that are easy to stay out of because you don't want to be playing in that type of market. And RSP, as you mentioned, the equal weighted S &P 500, you know, that looks very similar. So if your average stock in the S &P 500, if this is what it looks like, it's very hard to say, yeah, you know, you're going to be you're going to be excited about this market. However, again, there are these pockets of strength that are working.

7:09Rachel Fox:You know, some people say, you know, there's a bull market somewhere. And that's certainly the case here. But those pockets of strength haven't been easy either. So you just have to be very careful. And let's go ahead and also just kind of compare this RSP, the equal weighted S &P 500, to the S &P 500 itself at XSPX. That is not bad, but it's, again, like the NASDAQ composite. it's just not getting the follow-up strength that we'd like to see. So in terms of sell signals, not really coming up with sell signals, but it's just almost like a lack of buy signals and follow-up strength that really has us a little bit on edge in terms of whether or not we really want to lean more into this market.

7:53Yeah, and it's tricky because there are areas that do look appealing. For example, Bug, which is a cybersecurity ETF that we wanted to talk about, had a really strong day today. A lot of stocks in this group have been looking great. There was the AI scares last week that sort of prompted this move here. And it had a great day today, a nice bounce off the 21-day line.

8:18Rachel Fox:Yeah. And keep in mind, some of these AI scares are continuing. There was another pause for OpenAI as one of its agents went to Little Rogue and broke out the sandbox that was supposed to contain it. You know, they found out, but it's one of those things where some of the controls that were supposed to shut that down didn't really come in until it was a little bit more obvious. So, yeah, cybersecurity is going to remain a big thing. I do have a position in bug. It was nice to see that while this did start week, this very quickly, if you go ahead and go back to the intraday chart, you can kind of see how this was pretty quickly writing itself and finished at highs, an upside reversal and getting support back on the daily chart, getting support right kind of at that pivot for the base that's in BUG.

9:12Rachel Fox:So a lot of those stocks also looking very strong. When you talk about what is leading the market, cybersecurity is definitely one of those areas that has continued to come on strong. And even today, that's where a lot of strength was. Things that were closing higher than they're open, making progress and even closing up for the day in a lot of cases. So not a bad look for a bug. And again, I do have a position. Yeah, and we will be looking at some stocks from that group in just a minute, Palo Alto, as you brought up at the beginning. But before we do that, let's check in on gold, which had a particularly bad day today, closing down almost 4%, really just undercutting these moving averages here, the 50-day line.

9:58It's been kind of underneath the 21-day line and underneath the 200-day line for quite a minute now. Tell us what you make of this action here.

10:07Rachel Fox:It's not good, right? And you can kind of trace some of this back to DXY. That's the dollar, U.S. dollar index. So look, when you have a stronger dollar that is going to sometimes have an effect on gold, we should also take a look at zero TNX. That is also a 10-year treasury yield that has been going up quite a bit. And that's something that does tend to be poor for markets. So the bottom line is it's amazing given the backdrop of what's been going on with the dollar, with rates, with Iran, everything else, oil prices. It's amazing that the stock market is held in as well as it has. you can look at that as a sign of resilience for the market, but you can also say, well, at some point is the market just not going to be able to hold on anymore as we get incrementally higher in those areas and that pressure keeps on increasing.

11:06Rachel Fox:So that's, I think, the big question here, whether that resilience can continue or if some of that pressure can come off as, you know, Some of these things come down, whether it's a straight of Hormuz opening, whether it's, you know, kind of some inflation measures making, you know, progress so it doesn't feel like the Fed and rates have to continue higher to slow down the economy. There's a lot of cross currents here, and that makes the sailing a little bit tougher. Yeah. Well, and another cross current, another thing that's been tricky for stocks has been energy. um xlp which is a you know benchmark for uh for that sector of the market it's you know closed did slightly better than the indexes it closed up 0.1 percent uh but it's you know coming down to support here at the 50 day line uh you know this index or this etf kind of broke out for a minute here but uh pulling back in recent weeks yeah so even even the things that you don't want to go up.

12:05Rachel Fox:You know, I don't think anyone here really is excited to have oil go up more or gas prices for that matter. But this is something that you have to be aware of. It's not breaking down either. And so is it one of those things where we're just have to going to get used to these higher prices for longer? So while it's good, it's not going up anymore. It's not going down, really. It's getting kind of support. And that could be problematic for, again, inflation, for index strength. And it can trickle down to the economy, too, because that just means, you know, higher prices for transporting goods, higher prices for all sorts of things, leisure, planes, trains, automobiles, you know, everything's kind of affected.

12:49Rachel Fox:And so it's certainly worth watching. And again, it's just, as you said, Rachel, one more cross current to be watching and one more thing that's making this market difficult to navigate. Well, let's pivot here and let's check in on chips. SMH, which is semiconductor ETF on a daily chart. You can see it very clearly. It's getting sort of support or resistance. I don't know, right around the 600 level, maybe forming a handle. But yeah, it's not really budging either way just yet. Yeah, Rachel, I love that line. Support or resistance. I'm not sure. I don't know. It's tight. You know, that's the good part.

13:30Rachel Fox:Right. But it's one of those things where when you get tight action like that, you kind of expect it to break one way or the other. So that's the question. Is it going to break above resistance or is it going to break below that support? And with that type of action, it wouldn't really take much for it to go either way and maybe entice people to the upside or entice people to the downside and do more selling if it kind of loses that support area. So a very, again, mixed message here. The tight action, again, something that I like, but it's very hard to get too excited until we really see that break of resistance.

14:05Rachel Fox:And again, it's not just the break of resistance that we need here. We need that follow up strength. And that's something that's been sorely lacking. Yeah, absolutely. All right. One final ETF for you, Justin. XLV, which is healthcare. This one trying to get above a downtrend here, a downward sloping trend line in this flat base, getting support right where you want to see it get support. We saw decent strength, definitely outperformance here up 0.3 % today. Why is this one important? When you're ready to take AI further, faster, your infrastructure should be ready, too. Spectrum Business delivers the network and the tools to help you expand at the rate innovation demands.

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14:52Rachel Fox:Well, it's a mixed bag because a lot of times you look at XLV and the healthcare industry, that's what this is. And you sometimes think of that as more of a defensive side of things. Now, there are a lot of things that are kind of going for healthcare. Look, we've got an aging population, the baby boomers. There are thousands and thousands that are turning 65 every day, retirees entering the retirement era, and that's happening. And so there's also a lot of health care that is getting, you know, that's involved with getting older. So you have some of these medical stocks that have looked very strong in a lot of different areas, not to mention that AI is also having a big impact on some of the improvements that are going on with these medical stocks, the biomed, biotech, you know, what can they do with AI to speed up the process of figuring out new and innovative breakthroughs in technology in the medical space that prolongs our lives, just amazing things that are in the works.

15:56Rachel Fox:So it's an area that we're seeing some pretty nice movement in, in the medical space. So I think it's something to keep an eye on. despite the market weakness. This is something that we've seen kind of edge up right at that 50-day moving average line. So it's an area I'm watching. But again, you have to be careful because a lot of times that XLV is associated with a little bit more of the defensive nature. So we have to kind of keep in mind, hey, is this something where it's the growth and technology that's getting people excited about this area? Or is it because they want to exit from technology and growth, that they are trying to go into something that's a little bit more safer, a little less volatile, and a little bit more, I guess, more of a sure bet.

16:39Rachel Fox:Because again, death and taxes are two things you can rely on. And if healthcare is, you know, something that's necessary to prevent that death, that's something that we might see some more, you know, more uptrend in there. It is interesting, again, as you said, it kind of got just below the 50-day moving average line and has really started just kind of creeping up very slowly. But there's certainly a lot of individual stocks in this area. And we'll go over one of those today. Yeah, we will get to one of those in just a minute. Before we do, let's look at a computer security software stock, Palo Alto, PANW is the ticker.

17:18This one, this looks really good here. We've got an RS line blue dot ahead of the breakout, which is always a good sign. That's, you know, relative strength is really strong in this name. It closed up 4.6 % today. I had an early entry line drawn back from, you know, late August. It crossed above that. It went back below, but really reversed off of the 21-day line here. Justin, so tell me, yeah, what you make of this chart. When you're ready to take AI further, faster, your infrastructure

18:04Rachel Fox:Yeah, I'm right there with you, Rachel. I like the line that you drew. I think it was actionable last week. If you did take that, then you were probably sweating it. You know, so you very well may have gotten shaken out because this is what's been happening, right? It has that early entry, doesn't hold, comes down to the 21-day moving average line. You could have been waiting for the bounce, hoping for the bounce. But if you were like, gosh, I'm just down too much, I can't take it anymore. I could have easily seen, you know, getting shaken out this morning and then missing out on the move higher.

18:38Rachel Fox:And let's go ahead and go to the intraday chart because this was one that started very weak, but almost immediately came back. One of the things that I will often do is when I'm taking a hit in the morning, I'll look at the first five minute bar and say, OK, look, this is going to be my line in the sand. If we undercut the low of this first five minute bar or first 10 minute, first 15 minute, you take your pick. If we undercut that low, then I'm out. And then sometimes what I'll do is as we progress, I'll kind of raise that stop. And that's kind of what happened with Palo Alto that could have maybe kept you in this one to just kind of use that first five minute bar.

19:15Rachel Fox:But you got to be careful because sometimes people can freeze. Because, you know, Scott St. Clair has often mentioned how he likes to just take a little edge off with a sell at the open. And even if that ends up being a bad sell, he just at least doesn't want to freeze, you know, like a deer in the headlights. I do find that sometimes setting a hard stop, meaning I'm actually going to put that stop in with my broker, not just an alert, so that if it's one of those things where it triggers and I get busy, that I'm not like fumbling around later and saying, oh, what do I do now? So those are a couple strategies on how to handle this.

19:53Rachel Fox:But I certainly am encouraged by the way that Palo Alto closed for the day. And this is on a market where really the close wasn't that great. We had a lot of strength kind of come into the markets intraday, but not so much at the close. So the fact that Palo Alto was able to close at its highs, yeah, that's the relative strength that we really are seeking here. And as you mentioned, it has that blue dot on the relative strength line, meaning that in this base, this is something that's hitting relative strength new highs, which is also an important factor that you see in many leaders. So, again, there's a lot that just feels like some of these stocks are getting pushed down by the market.

20:31Rachel Fox:And if that market pressure lifts, you could really see some pops. So, we'll see. That$400 level looks very interesting. So, if you haven't gotten this yet, the pullback right at that level, I think, kind of gives you an area to look at. And$400, right around$400, seems to be an important level. So, we'll be watching that closely. Yeah, and it definitely seems to be fresh, new high territory for Palo Alto here. So definitely one to keep an eye on. Great technical strength. Another one that showed really great action today was Ligand Pharmaceuticals, or LGND, which is over in the profitable biotech group.

21:14We have a lot of biotechs that are not profitable, that are only revenue generating, but this one does churn a profit. It was up over 4 % today here. You know, I marked up crossing a downward sloping trend line here as an early entry, but moving nicely toward that cut by point.

21:32Rachel Fox:Yeah, so this is a really interesting one. What they do a lot of times is that they're what's known as a royalty aggregator. So they're partnering with a lot of other drug developers and they help fund and advance a lot of those, you know, multiple stage, clinical stage trials and everything. And then all they ask for in return is a piece of the profits should that be something that works. So they do get a lot of revenue from that. And it just kind of speaks to how a lot of these pharmaceutical, biomed, biotech companies are doing well. That was certainly an area of strength that I saw throughout the day, that medical space, specifically this area showing strength throughout the day.

22:15Rachel Fox:As I was looking at, you know, different things, Eaton, E-T-O-N pharmaceutical also caught my eye. One of the big behemoths, Amgen, A-M-G-N, was also something that closed very well, kind of getting above a support level. So again, Ligon Pharmaceuticals wasn't alone here. There were a lot to choose from in the space, but good action. Again, speaking to that XLV and some of the power that is happening there, Ligon, something that I think is worth watching, or you can just easily use a market surge screen to go through some of these because I think that there's a lot to choose from. I like the trend line that you put there, kind of broke above that trend line, getting above that round number of 300 with some power.

23:05Rachel Fox:So we'll see if this has some follow up and whether or not it can overtake that prior area of resistance. And just one thing I want to point out to some people that might be watching that aren't familiar with it, you see those kind of little black marks. That's not something that Rachel did on accident because she was messy. That's actually something we do on purpose. We call them the ants feature. And it just basically lets you know when something is moving in a big way with some big volume behind it in such a way that it's kind of like, hey, look, institutions are really doing something. We put a little black hash mark on there.

23:38Rachel Fox:And if you see a lot of those, it kind of just looks like a bunch of ants jumped on your screen. so I don't necessarily use that as a buy signal but I do use it as hey something special might be happening here and I often look for a base to happen after that ants uh and try and put something on my radar so that I can uh potentially get into something that had a lot of power and so that's another thing that's kind of making this very interesting to me it had that ants now it's had a base and a lot of strength today uh with some supporting uh supporting action from other cast members in the group.

24:12Rachel Fox:So something worth watching. Yeah, most definitely. All right, let's go ahead and take a look at the final stock here, which is NTAP or NetApp, which is part of the hardware group ranking four out of 145. Another group where there are definitely some really great supporting castmates doing well. This one broke out today or broke out again into the buy zone of this cup with handle base, sort of a neighboring base next to this cup, which it tried to break out of, but didn't really get the full follow through. So basing again, now in a buy zone, Justin, what do you make of this? Yeah, so this is something that kind of, we've seen a lot of strength in a lot of computer software enterprise companies.

24:57Rachel Fox:And while this is in the hardware, hardware space, it really is giving support to a lot of those enterprise software companies. So they use this, you know, and it competes with Everpure, ticker symbol P, and Dell Technologies, D-E-L-L. But they have been doing some interesting stuff lately, and that chart is very compelling. So compelling, in fact, this was something that was moved from the leaderboard watch list to one of the members of the leaders list in that model portfolio. It was also written up as IBD stock of the day. So that was by Ryan Deffenbaugh. So I strongly encourage people to kind of read that.

25:39Rachel Fox:Worth noting that there is an analyst, a conference and analyst presentation going on on Tuesday. So something to be just, you know, noting and maybe following along to see what kind of news comes out from that that might push this higher. So certainly worth watching. Again, another one when you look at the weakness in the market and how this finished at the top of its range and is making progress lately, whereas the markets are having difficulty with that follow-up strength. Yeah, we'll be interested to see if NetApp can continue its strength. And it's also worth noting that this does have some great ratings.