Dow Lags, Techs Hold Up Despite Earnings Carnage: SITM, LGND, LFST In Focus

0:10Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Thursday, August 6th. It's Alissa Coram here along with Ken Shreve. And a down date for the market, but the tech sector surprisingly not faring too bad, Ken, despite all the earnings carnage out there. Yeah, I have to say, seeing a lot of ugly decliners in the NASDAQ 100 on earnings today, Ali. But all in all, not too bad a performance for the NASDAQ 100 and the NASDAQ composite today. So we'll talk about that. And three stocks to watch today is going to be, one is going to be side time in the semiconductor sector. Nice gap up on earnings.

0:54The stock came off highs today and then strengthened late, but nice move above the 50-day moving average for side time. Also, take a look at Ligand. We've talked about Ligand, L-G-N-D before. That was a nice earnings mover today. And then a new name that I had not even heard of before today, but a nice earnings report, L-F-S-T, Lifestance. This is in the hospital group and look forward to talking about that one, too.

1:26Ken Shreve:Sounds good. And then we do have a few more high profile earnings out after the close, if you can believe it. So we'll try to get through some of those as well. But first, let's take a closer look at the major indexes. Here's the S &P 500 down about two tenths of a percent on the day. As you mentioned, Ken, the NASDAQ composite holding up nicely here down less than one-tenth of a percent. The Dow did lag on the day, but it's been accelerating quite a bit. But today, blue chips down about eight to nine-tenths of a percent. And the Russell 2000 small cap index pulling in a little bit here again today down about a half a percent.

2:10Ken Shreve:So your thoughts on where things stand after the follow-through day type action that we saw earlier this week? Is this still a normal pullback at this point? Looks like it to me. I know that our senior market strategist, Webby, he's just looking at that high from a couple of days ago, that really bullish move over the, you know, 700 level for, you know, VOO. We want to just do, we want to see that hold, that low, you know, hold for as long as possible. But, you know, that four-day move for VOO, there was, you know, some nice volume at shot higher. And now we've just got a two-day decline here in very, very quiet trading volume.

3:00So it's just kind of a nice orderly little pullback here. not giving up much ground. So it looks like a mild pullback here and nothing really alarming. We don't like to see distribution days. We don't like to see violent pullbacks. We don't like to see distribution, at least signs of institutional selling. So the pullback looks good so far. And this big breakout that we saw in VOO and the S &P 500 still looks pretty strong here.

3:35Ken Shreve:It does. All right. Well, let's talk about the tech heavy index, the NASDAQ composite. Not really budging today, so that's great. We're still holding above that low that you mentioned, that gap up low from Tuesday. day, also above the marked high area of 26 ,316. But getting close to that level, we also have below us the 50 day and 26 ,000. But your read on what we're seeing here, I guess if we do see an orderly digestion at this point or a pause, that would be considered constructive after that powerful move off lows. This looks as compelling as the S &P 500, maybe even more so to me because the NASDAQ is the index where we really got a really good shakeout, like I mentioned yesterday.

4:33This was a meaningful pullback in the index. The S &P really didn't come far off its high at all. NASDAQ composite came in a little more than 10 % off its high. I mean, this was a nice pullback in the NASDAQ composite. The rally off lows was powerful. There was a breakout over that 26 ,000 level. And this two-day pullback has been very orderly as well. I mean, this was a powerful four-day gain for the NASDAQ, and it really hasn't given up much ground at all. And again, to see the composite barely down at all today, We had some very, very high-profile earnings reports in the NASDAQ this morning, a couple of big memory and storage stocks, Western Digital and SanDisk.

5:25These stocks were able to close off lows today, but Western Digital still down 13 % on the day. Sandisk also closed off lows. That was still, what, a 6 % or 7 % decline for that stock. And both of these stocks have suffered a lot of technical damage here and are still far off highs. And to see the NASDAQ performed like it did, it shows you that there were stocks out there that were performing well that somehow buoyed the index and prevented it from falling really sharply today. And looking in the NASDAQ 100 today, there was a lot of carnage outside of Western Digital and SanDisk as well on the earnings front.

6:22There were some harsh, you know, software sell-offs, AppLovin, APP is a name that we had been, you know, following. I mean, some really nasty earnings downdrafts here. So I thought the NASDAQ's performance today and the NASDAQ 100, zero, and the queues were equally impressive as well. Yeah.

6:45Ken Shreve:All right. Well, talk to me about the Dow and what's going on there. Yeah, the Dow, I mean, that was up multiple days in a row, and it had a nice day of outperformance yesterday. Closed near its low after a nice pop, and there were quite a few stocks in the Dow that were down today. I noticed that the three biggest decliners were Boeing, Salesforce, and Honeywell. Honeywell. So CRM, you know, was down, all these stocks were down about 3 % or so. So Boeing, Salesforce, Honeywell, Goldman Sachs had a rough day. So just a lot of selling in blue chips. I didn't, there weren't really, you know, specific earnings reports that were driving the weakness.

7:33I think that the Dow had just been, you know, the Dow had been up for multiple, you know, multiple days in a row, and it was the leading index yesterday. So probably just some profit taking here. But Goldman Sachs trying to get above the 50-day moving average, that is giving up that line today. So kind of broad-based weakness in blue chips today. Again, didn't see any headlines. But if we go back to the Dow, just looking at the index, it was, like I said, up for, what was that, one, two, three, well, five days in a row. So, you know, digesting gains, but you look at the volume in DIA today was a pretty quiet volume, at least in the DIA ETF today after several up days in a row.

8:22Ken Shreve:So, you know, not too bad. Yeah. And something that we typically talk about more for the S &P 500 or NASDAQ is the extension versus the 50-day line. When you start seeing that get a little elevated, maybe expect some sort of pullback. So by the close of yesterday's session, we were about 4.6 % above that level, a little bit more intraday. And around the previous pullback, it was about the same extension. So maybe a 5 % level, you could maybe start to see, hey, historically, or at least in the recent past, that's kind of an area where from a technical standpoint, you tend to see a little bit of a pullback.

9:08Ken Shreve:Also, just the short-term incline, right? The pace at which it bounced off of the 50-day pretty rapid there. So, that rate of ascent is not typically something that you see as sustainable. Yeah, exactly. And this was probably more extended from the 50-day than any of the other indexes at this point. So, yeah. But when you just look at all the components of the Dow today, There were several, actually several stocks in the indexes that were down, you know, at least 2 % today. So, and again, no real specific news. It wasn't like there were a bunch of earnings reports in the Dow today. Just a lot of stocks that have been performing well and maybe just some plain old vanilla profit taking in some of these names.

9:56But, yeah.

9:58Ken Shreve:All right. And then a quick look at small caps and also we can check out the 10-year. Yeah, 10-year yield saw a nice rally there, but that bounced after three down days in a row. 10-year yield stopped at that 21-day moving average and found some support. We had some jobs data today. Well, we had jobless claims and then a big jobs report tomorrow. But I know yesterday we had the private payrolls that were weaker than expected, and we do have jobs data tomorrow. So I'm not sure that's going to be a market mover or not. You know, the jobs report, jobs picture has been big surprises to the market recently.

10:44I think the Fed has been pretty happy with job growth and the unemployment rate. It's been, you know, fairly low at around 4.2%. So I don't know if the market is going to move much, if it's a big surprise or a big disappointment. It's just been kind of a Goldilocks report for several months in a row, really. So the job market is kind of steady as she goes and haven't seen really any big surprises to the upside or the downside, just kind of steady employment. So we'll see how it goes. And a little rally in that 10-year yield today, but still in an uptrend here. So the market's still acting pretty well, even though that 10-year yield has been kind of trending higher here.

11:29All right.

11:31Ken Shreve:Let's take a look at some stocks. You mentioned the earnings from Sightime, an explosive move here, retaking that key 50-day line and then some. Shares up 27 % earnings growth here in the triple digits once again and seeing more acceleration on the revenue side the first quarter of triple digit growth at least in quite a while here, Ken. I'll go to the weekly chart just to show you sort of the rate of top line growth over the last couple of quarters going back, you know, a year. Basically, we've had 45 percent, 66 to 88 to now 127 percent top line growth with yet again another quarter of triple digit bottom line growth.

12:21Ken Shreve:So investors liking the report. Yes. And, you know, when we had that follow-through day for the S &P 500 back in April, and we were talking about all these stocks breaking out of bases, look at CyTime. You know, that was one of the first stocks out of the gate. And this is when we first discovered CyTime. No one had really heard of CyTime. It's in the chip group. And who had ever heard of precision timing solutions? in the semiconductor field. There's not many companies that do it. And what are precision timing solutions all about? Well, in timing solutions, you know, this is a company that basically has built a better mousetrap because timing solutions used to be all about quartz crystals.

13:13And what PsyTime is doing now is they're all about silicon-based precision timing solutions. And these timing solutions are now found in data centers. And so now this company is seeing huge growth because inside of data centers, these timing solutions control all of the data flow that is going on inside the data center. And that's what CyTime is doing. So this was a great breakout during the follow-through day. And then it came down and corrected pretty sharply. But the earnings in the second quarter fueled a really great gap up today through the 50-day moving average. and the growth was just exceptional.

13:57The earnings up more than almost 400 % and the triple-digit top-line growth. This is a$14 billion company. We're not talking a speculative market cap less than a billion here. $14 billion market cap, it's almost$700 stock. So we put this back on the leaderboard watch list today. We'd like to get it back on the leaders list. And so we'll watch and see how the stock trades from here. But great close for the stock today. And I think this one has the potential to be a leader. Like I said, it's kind of a niche market, this precision timing solutions and great growth trajectory here. So back on the earnings report, put it back on our radar because obviously the numbers speak for themselves and the stock's performance today obviously being accumulated here.

14:56So I think it has a chance to continue to do well. So we're back on our radar and we're going to put it on the watch list today. So we'll see how this base shapes up here.

15:06Ken Shreve:Sounds good. Okay, over to LGND in the medical sector. This is a profitable biotech name. This one broke out in the early to mid-June timeframe and quickly ran up more than 30 % past the buy point. I would say a pretty orderly pullback here, Ken, over the last couple of weeks. A disappointing finish today, I would say, for the earnings move, reversing lower but finishing down just fractionally. taking a step back to the weekly chart. I think that the weekly is still in good shape. It's an up week here of about 4 % for the week and bouncing off of the 10-week line. Yeah, I was putting my notes together maybe five minutes before the close and this was up near its high.

15:55And it was like maybe five minutes left of some sellers came into the stock. But I chose the stock because they reported excellent earnings. So So, you know, some sellers came into the stock during the final five minutes of trading. But the numbers you can see for the second quarter were very, very solid here. And the stock had a good day all day. It was up nicely all day and making a really good test of the 10-week moving average. So it's a top-rated stock in our database. And it's in the profitable biotech group because it's been a longtime moneymaker. And again, Ligand is a company that collects royalties.

16:40So what they do is they fund biotechs, companies that have drugs in Phase II, Phase III studies. They'll fund these companies, and then they'll collect royalties. If the drug gets FDA approval, they'll collect royalties from the companies. And Ligand also, they have, they license proprietary, they have drug technology that they also license to companies as well. So kind of a different type of biotech here, but they've been making money a long time doing what they're doing here. So we'll see if support eventually plays out here at the 10-week moving average. And you can see it's stock that's been trending higher for quite some time.

17:27But look at the recent quarters of very, very consistent growth here. Look in the third quarter, looks like a bit of an anomaly here. The earnings and sales are going to decline for one quarter, and then growth is going to pick back up. So there's some sort of an anomaly going on in the third quarter. But very, very steady record of growth here, and the fundamental metrics really, really shape up here. So solid, solid company. And I'm not sure what was up with that final few minutes of trading, but stock did ultimately reverse lower. But you can see the nice accumulation phase during that last breakout.

18:05Those little black specks had the ants going and, you know, fairly, fairly orderly pullback close to the 50 day moving average. And so we'll see how it shapes up here. But long term, strong performer and a great earnings report. Yep.

18:19Ken Shreve:One to watch. Now pivoting to LFST. This is LifeStance Health Group, also in the medical sector, but this in the hospital group. The earnings gained today up 2.8 percent. Another medical stock with an impressive June performance and an orderly pullback throughout July and getting a boost off of the 10-week line here as well. great triple digit earnings growth for this company too. Yeah,$10 stock,$10.50 stock too. Not super speculative here. It is a mid-cap market cap of just over$4 billion and it does trade about three, just under three and a half million shares a day. And it's got pretty good fund sponsorship too.

19:07You know, 350, 400 mutual funds have a position here and just turned profitable last year. So Lifestance is a company, kind of sort of a hybrid model here. They are basically mental health services. They do in-person and also telehealth, you know, mental health services. And, you know, just an interesting company here. Just turned profitable last year and look at the earnings growth. If they reported earnings, you've got triple-digit earnings growth and nice top-line growth as well. So kind of a newer company here. And, you know, again, not a company that has formed a series of bases here. Still looks like it could be in the early stages of a move here.

20:00And normally we don't look at lower-priced stocks here. But this one does seem to be, you know, again, a mid-cap stock institutional quality. I mean, it does have reasonable fund ownership, but the fundamentals look pretty solid here. And, you know, again, NAMM I'm not familiar with, but the earnings report was pretty solid. And relative strength line is looking up near high, is looking pretty positive as well. All right.

20:31Ken Shreve:And now let's take a look at some of the earnings out after the closing bell. How does that sound, Ken? Sounds good. I kind of just summarized the list, only put the good ones, hopefully. Oh, yeah, the good ones. A bit of better luck than yesterday. Yeah, starting off with a good one here, I see. Yeah, exactly. AAOI down 6%. A high flyer from the January to May timeframe, but a huge haircut fell well more than 50 % from May to just a couple of sessions ago. Really hitting resistance at the declining 50-day line a couple of sessions ago, down 6 % to 7%, Ken. Yeah, you know, it's interesting. I was just writing about Lumentum, which is reporting earnings next week.

21:23I was writing about Lumentum in my earnings preview column. So, yeah, applied Opto in the same industry group and, yeah, pretty, you know, pull back to the 200-day moving average for AAOI. You know, huge growth here, big annual earnings estimates. But, yeah, these companies and, you know, huge growth was expected for the second quarter here. But these companies, you know, even though they're reporting the strong growth, the market is saying, OK, well, we know the growth is going to be strong. We want, you know, we want big, big numbers. And then we want guidance to be even stronger than what we're expecting.

22:03So obviously, if the stock is down 6%, they're not liking something either in the guidance or in the numbers themselves. So pretty sharp pullback here. And then the rally back up to the 50-day moving average. Sometimes that 50-day line can turn into resistance. So tough early response. We'll see where it opens tomorrow.

22:25Ken Shreve:Exactly. Let's go to Cloudflare net. Okay, here we go. Up 15%. We've been covering this stock's uptrend over the last couple of months, a choppy one, albeit maybe this is just a stair stepper of an ascending base if you squint one eye and shut the other. But a 15 % gain here, Ken, after hours. So this is great for a leading software sector name. Yeah, we had Mark Minervini on last week, and this is one of a select group of stocks that he specifically pointed out when he was on a week ago last Tuesday. So this has been a longtime leader in the enterprise software group and sort of operates a content delivery network.

23:19And again, just another company with a long-term track record of very, very strong growth and a long-term track record of execution, acting very well post-breakout, not even really coming close to the 50-day moving average and just holding support at these short-term moving averages. So acting well ahead of earnings and, you know, expecting a nice quarter of growth. And, wow, 15 % gain. So obviously market likes the numbers and the outlook, I would assume here.

23:53Ken Shreve:Let's see. Sezzle, is it sizzle or fizzle? Fizzle. Wow, yeah. Down at 22%. Didn't Dave, right? Dave had a 15 % down day today on earnings, still managed to hold above that 50-day line, but it doesn't look like Sezzle will be so lucky. Yeah, they're slightly different companies because Sezzle is like a firm. They compete. Sezzle is buy now, pay later, just like a firm. And Dave is more of a kind of a fintech financial management app, not buy now, pay later. So, but yeah, I mean, they're both. Yeah, they're kind of like retail-y, kind of high-octane. Gen, you know, kind of, yeah, they're younger generation financial apps.

24:47Yeah, so, boy, that's a tough one. That's down 20, 22%. And Buy Now, Pay Later, very, very popular. I was reading, you know, Buy Now, Pay Later, definitely popular with the younger folks. But I've read that even, you know, older folks have started using Buy Now, Pay Later. So they're actually, you know, expanding to the, you know, kind of an older demographic. But, you know, so, yeah, I did find that interesting. But also hearing that Buy Now, Pay Later people are using it for groceries and all kinds of things. So, I mean, it's like, who knows? Yeah. But, yeah, so, Sezzle, this is not a good response to earnings.

25:34But this is the kind of carnage that we were seeing today, you know, on some of these earnings reports. But just, again, just an impressive performance for the market because we saw a lot of earnings drops like this today. Yeah.

25:48Ken Shreve:And especially disappointing, I would say, given the prior run-up that this stock had looked like it had the makings of a potential up-and-coming leader, right? Yeah. With that relative strength coupled with the strong fundamentals. But we can move on. Yeah. And a nice performance today, too. It was down early, closed all the way up near its highs. So being held to a high standard, you know, just a stock where expectations were very, very high. So if they met or even just slightly, slightly beat, it's just not going to be good enough. All right. Two more software stocks and then one more medical sector name, Atlassian Team Flying.

26:34Ken Shreve:So here's another software name that is showing improvement. you know, Atlassian got hit so hard in that AI-fueled software downturn that we saw, you know, heading into this spring. So, and it seems like it took a little bit longer for this one to turn around. It hasn't really been leading like some of the other software names we've been focused on. It only now has come up to a declining 200-day, but it is forming this bottoming base. So I think a powerful breakout tomorrow would put this one back on our radar. Yeah, and it's funny, Atlassian just really got hit and it turned into a real laggard in the enterprise software group.