Dow Hits High As Market Extends Rebound; GE Vernova, Cadence Design, Alcoa In Focus

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0:16Ed Carson:Good afternoon, everyone, and welcome to Stock Market Today for Friday, May 22nd. It's Alissa Coram here. And stocks extending their bounce today, closing off highs but still in positive territory. Joining me now to discuss the action today and a look at what went down for the week is my colleague, Ed Carson. Ed, great to see you. Great to see you, Allie. I want to take a look at GE, Vernova, Cadence Design, and Alcoa, among other stocks. Great. We'll take a look at those. But first, as always, a closer look at the major indexes. The Nasdaq Composite up two-tenths of a percent on the day. That was the weakest gain on the day.

0:56Ed Carson:The S &P 500 was up four-tenths of a percent. The Dow up six-tenths of a percent. And small caps led the day with the Russell 2000 up about three-quarters of a percent by the close. So, Ed, tell us about the action. We had an interesting week unfold. Yeah, I mean, the market started off extending a pullback and is something that Mike Webster, you know, will say. Like, you know, often you have like you make two, three, you know, or say a day pullback is normal in something, a situation like this. And, hey, that's exactly what we got. It doesn't always have to fall according to plan, but it certainly did this time.

1:37And a lot of this had to do with oil. Like if you look at oil, oil had spiked up and then it came down. So there's always a catalyst. So it's not like, well, there's a reason why, but there's reasons why these happen. USO came up, the 10-year treasury yield, which was following oil for the most part, that hit a one-year high. The 30-year hit a 19-year high. So you can see why. And honestly, when you consider those factors, the market held up pretty well. I mean, you know, the yields were really running up. Oil had done another spike. And yet here we are chugging along and just pulling back. I mean, we can talk about individual stocks, some high ACR stocks that had big losses, but that's a pretty modest drop.

2:14NASDAQ, S &P just dropped over their 10-day line. You know, I think the others were touching their 21-day or just undercutting it for the small cap. So hard to get to, you know, it wasn't that big of a deal. The Dow hit a record high today. So we came back. I mean, those things came off. It's sort of like that sort of like holding down a balloon. The market just sort of took off. And once oil came and yields came back down, and that was, it worked out really well because a lot of stocks came down to their 21-day lines. A few handles were formed, a lot of buying opportunities. Some of them were blinking.

2:52You missed them. Some of them you had a little more time and some of them are still setting up. So this is why we like pullbacks. Of course, we like pullbacks after the fact. I mean, let's be honest. Nobody enjoys it during the pullback. But yeah, so yeah, I think it was a positive week. I think, you know, yeah, everybody kind of depends on individual stocks, but there was an opportunity to add to names and other things. You know, I understand if people did some offensive selling or they had to sell because there were some losses that they took on recent buys. But there, you know, that can happen, but there were opportunities to reload or even, you know, even beyond that with a pretty bullish week overall.

3:35Ed Carson:Ed froze for me. I don't know if it's me or him. Rachel, maybe you can. And let's see here.

3:48hey i've been here i gotta say everybody else looks frozen to me but i guess i wasn't who's

3:51Ed Carson:frozen here we go i'm back ed i think it was me okay i'm sorry to leave you hanging there i'm sorry i thought it was me so i didn't talk enough but yeah i think it was ultimately a pretty bullish week the nasdaq lagged but a lot of things that was nvidia nvidia and google i mean And those are the two biggest mega, those are 10, that's basically 10 trillion in market cap, those two companies. So, you know, just those couple of companies lagging down, having solid losses, NVIDIA having a negative reaction to earnings. So we didn't get a bounce back. But the market overall did very well. The NASDAQ still rose.

4:30If you look at QQ, QE, that hit a new high. It was hitting new highs pretty early on. I mean, that was hitting new highs on Wednesday. That was just like, what are you waiting for? We're going. RSP, you know, a very broad look at things, that hit a new high today. So RSP, QQE, the Dow, all the new highs, the S &P, NASDAQ, and Russell are almost there. A lot of strength and a lot of good action in the leading stocks ultimately after pulling back to start the week.

4:59Ed Carson:Right. And I think heading into this week, we were talking about how powerful of a move that we've had. It was only a matter of time, right, before we got some sort of test. And we got it. And like you said, some individual high-octane stocks were really difficult to hold, I think, in this pullback. But overall, very constructive over the last couple of trading sessions to see what we had unfold. We even got a little bit of an undercut early in the week from that reversal low. That's something that we've been keeping the stock market today and brought our IBD audience aware of as a level. So perhaps a little bit of a shake out there.

5:47Ed Carson:Some stocks warranted, like you said, either offensive selling or exiting depending on where you got in. And I think that's for me, it was a good reminder of why it really is key to shift when you first start seeing those signals of power in the market, because those were the easier stocks for me to hold on to and weather this pullback versus more recent buys. So we'll have to see what stocks set up in the coming days and weeks as this digestion continues to take place. And then in terms of where we go from here, what are you thinking? Because if you look at things like the QQQE, the RSP, the Dow at highs, it does seem like we are seeing some pretty broad-based strength here.

6:37Ed Carson:It's not just a handful of tech leaders at this point. So I think on the downside, now this week's low is a key level. And probably by the time, if we did come down to test that, that's probably around where the 21-day line might be. But you could also see the 21-day catch up to the current action even more, depending on how long we trade in a sideways range. You know, the high from today with the little bit of the stalling-esque action that we had on the NASDAQ, a level to watch. And then, of course, the high from last week. So those are all levels that we're watching. And why not add in a round number there?

7:23Ed Carson:We'll also watch 26 ,000. There's a lot of things to look at. You're right. A lot of things can happen. We could keep on going on or maybe we pause here, go sideways or test the lows, recent lows. And even that would be fine. I think it's like if we decisively broke the 21-day line, I think that's where you'd start being a little more concerned where even, you know, that's where you start because certainly the recent buys would probably be struggling. I mean, some will not. I mean, there were some that went so strong. But, you know, the recent buys from this week would be struggling, maybe some others.

7:53And you just have to be wondering what's going on. Obviously, we're still a news-driven market in the sense of how much we're relying on oil prices and treasury yields. But yeah, I think, look, we're in a good spot in the sense that there's some room for the market to go down a little bit, you know, before I think we'd really be in trouble. We had a test. We passed it. We can always fail next week. Or there's always another test. There's always another test. But I think things are in pretty good position. This is why you take it day by day. It looks pretty good right now. It's disappointing to see that fade.

8:26But where we were earlier in the week, that's a nice three-day bounce. I mean, yeah, today you would have liked more. But, you know, given where we were on Tuesday, pretty nice. And there was still some good action out there in stocks.

8:38Ed Carson:Yeah. All right. Well, in terms of sectors and themes to watch, Ed, what stands out in your mind from this week? You know, it was really, again, it was pretty AI-led a lot of it, I feel. I mean, I feel like a lot of it, the downside and the upside. I feel like a lot of the names that were breaking out were doing that. I mean, and even some things that aren't, oh, some metal plays, oh, these things, a lot of them are still tied to AI in some way, it feels like. Everything seems to be tied to AI. And so that's still the theme. Memory, boy, that's the thing. This is where you talk about. There were some big drops and they came really back.

9:17I mean, so this is when we talk about, yeah, there's some losses, you know, but boy, this came firing back. So that was really the big theme. I mean, I'm looking at others, thinking about other sectors like XLI, XLF, XBI. I mean, they're all sort of, well, maybe not XLF, but like something like a bank thing, like KBE or something. You know, there's things that are out there. XBI is doing a little better, as I recall. But, you know, it's still, for the most part, when you're thinking about really making a move over the last few weeks, it's just generally been the AI. These other things are sort of waiting in the wings.

9:55They're like, you know, the backup quarterback, they're wondering, when am I ever going to get the start coach? It's like they're not, you know, they haven't been benched, but you're not putting them out on the field. Let's, you know, for the most part. And so that's, that is one thing to note. It's like, I think by default, even if you didn't intend to, probably most people's portfolios are pretty heavily exposed to AI and chips. And that's just, there is that danger. And I think that's why earlier in the week, there was probably more of an issue because people's portfolios were having big drops.

10:24Even individually, you might have said, OK, this is OK. This is OK. But when everything is down 10 percent over two or three days, it's like, that's not as much. That's a little more painful. So I'd like to see more diversity. But where would I go? You know, things are coming down. So TJX was nice. There were some discounters, but others were not. You know, so you have to pick and choose. Oh, you know, TJX maybe is setting up, but its RS line doesn't look good. and Walmart tumbled. So what, you know, it's like picking out something out of your food that you want to eat and you don't want to eat anything else.

10:57It's like, well, where do you go? You know, so that's something tricky. I don't know. What did you see in terms of sectors and themes out there?

11:05Ed Carson:Well, something that's more speculative, but I think good to point out from the week is the quantum space. Oh, yes. There was news there. This is an ETF. So this is a pretty good looking ETF here, the QTUM ETF. I would need to look at the top holdings to see what exactly is in there and what the weightings are. But this has definitely come on in a huge way since the follow-through day. I know some of the ones that we've talked about, you know, mentioned on IABD Live are, again, more speculative and have been really beaten down like a Rigetti RGTI. I bet you There's probably some – I'll look at the holdings.

11:48I think the holdings are pretty not very quantum-y, as I recall. But IBM is a more established company because the Trump administration is going to invest in a lot of these startups, but also IBM. Now, IBM is still below the 200-day line, and so there's three things you just don't know. Some of these things, like Intel, really took off. I think that's partly because there's so much demand for chip-making that beyond the Trump deal, that may have helped get the wheel going, but there's a lot of reasons. Whereas the rare earth companies, you know, that hasn't done as well. So the Trump investments haven't necessarily always paid off, you know, or along with that, there's boosts or there's up and downs.

12:24Let's put it that way. Intel has been up and up and up. But so that's an issue is like, will this last, you know, after that money is there? It's not that much money for IBM, ultimately, it may be it's a fair amount of money for the startups, I mean, that kind of thing, like a Rigetti, which, you know, but so we'll see. I don't know what you do with that. That was really nice to see those movies, but I don't know where you go from here. You could have bought it off of one of these things, but yeah, very, very, very speculative, obviously. I mean, I actually owned this last year. I can't believe I made a really, that was one of my big winners last year.

12:59Ed Carson:There's a time and a place, It was above rising moving averages, right? It was. It was. It needs a little bit more repair. I'd like a bottoming base. But I don't know if a stock like this, and that would almost require a pullback, because it feels like this sector like this is just going to go flying up or flying down. But I'd like to see some kind of base here. That's usually how I go. I mean, I get it that somebody may make a lot of money off of it, but it's just hard. I don't know where I don't really feel comfortable right here. But, yeah, that was a big mover. And to your point about the holdings for that QTUM ETF, Intel is the biggest holding there.

13:38Ed Carson:And it looks a lot like Intel, but it's only 2.7 percent of the weighting. So it does have it's pretty spread out. You know, some ETFs, it's like you have three stocks and that's 30 to 50 percent of the weighting of the ETF. So at least it is a little bit more spread out. but you have it's not the pure plays it's not to your point so you've got intel micron stm in there a couple of international names nokia tower semi arm marvel amd coherent a lot of the stocks that we've been talking about a lab lamb research lattice teradyne uh just to name a few but yeah you can go look at the top holdings there so no wonder this etf has been doing so well ed Yeah.

14:27IGV is another thing. Software continued to rebound. And there's certain stocks in that, like some of the cybersecurity names have really moved out. Some of them are extended. And a lot of others are still, like IGV, sort of trying to get above their 200-day line. So it'll be interesting to see how that develops because there doesn't seem to be many that are actionable right now. Good call out there.

14:50Ed Carson:I just quickly want to mention, we talked about this on last Friday's SMT, so a quick follow there. So the swing trader team setting, you know, these lows here right around that breakout to highs as levels to watch on the downside. And it had a great week, the CIBR ETF. Twilio might be one name in the software space that, I mean, that sort of faltered, you know. So it's like, oh, it's a little disappointing. But you could see that one set up. I mean, you could, I mean, that's not in position here. It's coming down to the 21-day line after a big move. But a lot of things are not in position. Mm-hmm.

15:25Ed Carson:Yeah, maybe it just needs a little bit more time for an actual base versus, you know, some of these little structures that have been really tricky to buy out to highs. But we did get some opportunities this week in some other areas, like you said, for the pullbacks to the 21 day and some bounces, that kind of thing. So we will keep an eye on that. And then before we get to the three stocks that you wanted to focus on, Ed, another example of some of the tricky action this week, a name like Sterling Infrastructure, which blasted higher on earnings not all too long ago. This was a really tricky stock this week.

16:09Ed Carson:Let's take a look at the weekly chart here. Yeah, down almost 14 % for the week. And it still could go on to form a nice looking base. But in the short term, you know, for those who were trying to buy it out to highs after that little pause, definitely got a sell signal this week. Yeah. And I can understand, like, I know David Ryan, who, you know, he says he's not a huge fan of big volatility. And he was seeing more volatility. So I think he got out or nearly out of this position. He made a big gain off of it. And there's nothing wrong with banking a big gain. And it was an ugly sell-off. I mean, that was a big loss.

16:49And you don't know how that's going to go. That wasn't orderly at all. Some names had a little more orderly. And maybe in the long run, those look orderly. But yeah, we don't know if it'll do that or if this is just pausing and then it'll break down some more. So yeah, it's, but, you know, so it just, this is why, you know, again, in hindsight, sometimes it was easy to do that. But in the moment, you don't always know how things are going to go. But you're right. This was a good example of a pretty violent sell-off to start the week.

17:17Ed Carson:Yeah, and it depends on where you got in. Depends on your trading style and just various levels, right? It's important to have those levels on the chart to scale out. So maybe, you know, folks just got out of a piece of it on that bad break below$800. And now they're waiting for the 21-day line. But like you said, ideally, those pullbacks to the 21 day, a little bit more orderly. But yeah, this one's had a really big move in the short term. Savvy investors understand consistent growth is built on scale, resilience and trust. For more than 60 years, Medline has proven this, driven by an unrelenting commitment to their customers.

18:01Ed Carson:Today, Medline is proudly NASDAQ listed and is the largest provider of medical surgical products and supply chain solutions serving all points of care. With a focus on what health care needs next, Medline strives to make health care run better. See how Medline is woven throughout health care and learn more at Medline.com. Okay, let's go to GEV, GE Vernova. Fantastic fundamentals for this company, Ed. And I think that this setup is one to watch. It's been one to watch and one that I tried off of the 21 day. But I actually like pullbacks to the 50 day even more. So even though it shook me out, I'm not too mad about it because I think a pullback to the 50 day is better personally for a setup.

18:51Ed Carson:What do you see in the chart here? I agree. And on the weekly, it actually touched the 10 week. or if it didn't, it was so close, you can't tell. I mean, it was, so that's nice. It could really ding and run it there. I like the fact that it sort of calmed down. It's tried to fight. Yeah, it's disappointing, you know, like when you try it off of the spot and then it falls some more, but I like how it just sort of like, again, it was fighting along the way, you know, it's trying to hold a 10-day. And so, you know, it just shows you that there were people who were supporting this. There's a trend line there.

19:23You probably could have bought it again off the 21-day line today, hey, it reversed lower. But now that trend line really is crying out. You know, like that would be a nice spot. I think in another week or so, not sure there would be a base that would probably be forming. So that would be something else that could be there. So this could end up being like an early entry to a new base sort of as it, you know. Yeah, the fundamentals are tremendous. I like the fact that it's ATR, isn't it? I guess it's gone down. I thought it was five, but it's not down to 4.4. I mean, it's not super low, but when you consider some of these names that are commonplace, 8%, 9%, 10 % lately or more, this is easier.

20:01You know, if you buy it off of these kind of things, you know, if this one fell below the 50-10 week line, you'd probably know that there was something wrong. You know, it would be a signal like a decisive move below that. So, yeah, I think there's a lot of reasons to like this. One of the ones I'm definitely going to be keeping an eye on heading into next week.

20:19Ed Carson:No doubt. And, I mean, if you expect a stock to outperform the S &P 500, it's going to have to have an ATR that's a little bit more than what, 1 % to 2%, right? Yeah, generally so. I agree. But yeah, I hear you on that. So something to consider there. Moving on, let's take a look at CDNS. This is Cadence Design Systems. An outside week, upside reversal shares up 7.6%. And we do have earnings out of the way here. Group peer synopsis reports next week. But this was a powerful bounce off of the 21-day line for this stock this week. Yeah, and there's a handle there. It's not going to show up because it's in this chart, but that's a legit handle for sure.

21:11And it's not too deep given the depth of this base. It doesn't look out of line at all. I think yesterday was probably the best day to buy it, you know, because breaking the downtrend of the handle. I just sort of feel like while it was still relatively close to 21 day line, but it is nice to get above almost all that resistance that actually got to a new high intraday. It held most of the gains. You know, you can buy it. Synopsis will be important. And I think that will be a relevant report. They do tend to move off of one each other. I like how the relative strength line at least got above sort of the handle high.

21:46Again, there's been some issues with this stock. And this is a software stock. I mean, it's in chip design, but, you know, this is sort of software. I forget about this because I think of it more in the chip world. But I think there was concerns about that, that AI could take this on or China restrictions. So there's been things out there that maybe some of those concerns have faded. So I'm not sure if you should, but I'm a little bit more, you know, tolerant of weaker RS lines in sectors that have been out of favor when you have stocks that are coming up. I mean, you want the strongest RS line as possible, but sometimes the sector is just coming on.

22:23And, you know, pretty much by definition, it's going to be lagging these other sectors. So, but you might wait until after synopsis, see if it can pause, pull back, you know. But this one, you know, showing a little bit of strength that picked up in the last quarter, you know. So, well, it's supposed to show up. I think this is for the March quarter. So that's supposed to show us the March quarter, I guess. And so that's supposed to show a little bit of pickup and growth and then pick up again in the next quarter. So there's going to be a little bit of pickup and growth for the name that has in the past been a long-term leader or synopsis has been.