Dow Leads The Way In Flat Session: Iren, Credo Technology, Vertiv 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 27th. It's Alyssa Coram here and the Dow leading the way in a pretty flat session. We've got some high octane names that we want to check in on. And joining me now to do just that is my colleague, Ken Shreve. Ken, what do you have for us today? A record closing high for the Dow, Ali, but you're right. Very, very quiet day for stocks, but we'll take a 200-point gain for the Dow Jones. Three stocks to go over today. Let's talk about Credo Technology, C-R-D-O. Also want to take a look at data center operator I-R-E-N. And also in the data center space, Vertiv, V-R-T, which is coming down to its 10-week moving average.

1:22Ken Shreve:All right. We'll do that. Sounds like a plan. And first, let's take a closer look at those major indexes on this flat day. Here's the Nasdaq composite up just fractionally on the session, so holding near highs. Meanwhile, the S &P 500 up fractionally as well, holding near highs. The Dow in the driver's seat today with the biggest gain up four tenths of a percent or so, backing off a little bit there. Let's take a look at the composite. So we've got a couple of closes in a row here right at highs for the Dow. And then the Russell 2000 was just fractionally lower on the day right at highs. I guess not every day can be a super exciting point or percentage gain, Ken.

2:10Ken Shreve:But there's not a whole lot to complain about when you're at highs. No, it's just still a strong market that we've been talking about. We've got, what is this, five up days in a row for the NASDAQ. And we tried to go down today, and then we just ended up closing mostly unchanged and just holding gains really tight and holding up near highs. We had semiconductor stocks tried to sell off today. We had the Philadelphia Semiconductor Index was down a little more than 1%. We had the Semiconductor ETF, SMH, that reversed lower, but only down a little over 1 % and had some big, big declining Semiconductor stocks.

3:05Qualcomm had a pretty bad day on the NASDAQ 100. That was down maybe 6%, I think, on the day. but really didn't spill over into the NASDAQ too much. It was basically just a flat performance. So even though semiconductor stocks lagged today, they had been on a big tear. I mean, Qualcomm was up for several days in a row and semiconductor stocks have been leading the market, but pretty tame pullback for the chip stocks and really didn't spill over into the NASDAQ hardly at all today.

3:40Ken Shreve:Yeah. Okay. Any other thoughts, Ken, on the major indexes here, your thoughts on the outperformance from the Dow? Well, we had five stocks in the Dow up at least 2%, so had some nice performance for some of the consumer discretionary names today. Amazon had a great day in the Dow. I know the guys on Swing Traders saw some nice technical action in Amazon. We were looking at that name today, but nice move above the 10-day moving average for Amazon today. Boeing, Home Depot, Nike, all nice gainers in the Dow Jones today. So they had five names in the blue chip index up at least 2 % today, but that was the standout index today.

4:33The rest of the market basically unchanged. But, you know, when you've been in such a strong rally, a flat and unchanged, you know, performance is actually, you know, pretty, pretty strong considering where we've where we've come from.

4:48Ken Shreve:Yeah. All right. Well, what would your short term outlook then be given where we're at here? What are some of the levels that you're keeping an eye on, Ken? Well, I think for the S &P 500, if we do pull back, we'll kind of see what a test of the 10-day moving average is. I think the story for this market, again, is just the fact that institutions are just not willing to sell stock here. You've got so many leading stocks that are holding on to gains. We're going to talk about Credo in just a little bit. But, you know, the market is just really unwilling to give back gains. We had another, you know, big drop in oil prices.

5:32And the market, for one reason or another, is very, very optimistic about a resolution to this U.S. and Iran conflict. I mentioned on IBD Live, I'm not entirely optimistic myself. I just see, you know, gas prices very elevated and I'm not sure what the case for lower gas prices is going to be with, you know, the U.S. negotiating with the IRGC, that hardline group in Iran. So we'll see if we can get some relief at the pump. USO, you know, big drop through the 50-day moving average. So there's some optimism that there could be some relief at the pump and there could be some movement, maybe an agreement between Iran and the US.

6:26but we'll have to see a lot of volatile headlines coming out of that area. So we'll see. But lower oil prices, the market likes to see. But that 10-year Treasury yield didn't really move a whole lot today. The oil prices and bond yields have been kind of moving in tandem. But that 10-year yield traded all the way down to 4.45 % today, closed up at about 4.48%. So bond yields have been falling. Oil prices have been falling. That's provided a good bid for stocks. So we have an optimistic market. We've got to hope we get more and more progress on the Iran-U.S. front.

7:11Ken Shreve:Yes, that would be very helpful. And you mentioned the strength in Amazon. Here's a look at the consumer discretionary sector ETFXLY outperforming on the day. Yeah, I think Amazon gets a pretty heavy weighting in XLY. I think it's up close to a... Tesla does as well. Tesla and Amazon are pretty heavily weighted. I know one of them is about a 20 % weighting in that ETF. So yeah, Tesla is interesting, but XLY gave a little buy signal today. That was definitely seeing some money flow into XLY. So that looked viable today. And so that's in a nice little technical setup. So, and yeah, why don't you look at Tesla as well, because that one is kind of as the SpaceX IPO gets ready to come public next month in June, I believe.

8:13You know, Tesla is setting up and a cup with handle base going here. So we'll see if Tesla's maybe getting ready to try to break out here, getting close to that 450 level. So still seeing some interesting setups in this market here. Maybe Tesla could get ready to get going here. But again, another top holding of XLY, which had a nice day today.

8:38Ken Shreve:Yeah. All right. Well, you mentioned Credo. So let's go there. A high octane name, the 21-day average true range here, 9.4%. We saw a recent move above 200. I believe that's new high territory, and it's holding at new highs with earnings coming up in a matter of days, Ken. Yes, yes. So Credo, you know, it's interesting next week, pretty, pretty quiet in terms of earnings. But Credo does report earnings Monday after the close. So this is going to be an important earnings report. Credo, they compete pretty directly with Astera Labs, A-Lab. They also compete a little bit with Broadcom and also Marvell.

9:30We'll look at Marvell. They report earnings after the close today. But Credo is high-speed, low-power connectivity solutions in AI infrastructure data centers. What I like about Credo is just a good example of how strong this market is and how strong the tech stocks and NASDAQ. You look at the run this stock has made from 150 to over 200, several up days in a row, five up days in a row. And here again, the stock tried to go down today, and it just really didn't give up any ground. So for those out there wondering, you know, what kind of market are we in? How strong is this market? This is just an example of a really, really strong stock.

10:18The fundamentals are outstanding at Credo. The growth story here is well documented. You've got the triple digit earnings and revenue. new. So the stock's price strength is, you know, understandable because the fundamentals are so compelling. So I just like, you know, the stock has made such a strong move and it's just still holding really, really strong up near high. So I think it's going to be an important earnings report on Monday. We are going to see, you know, strong growth again. So we'll see what the company has to say Monday, but I'm just really impressed with the stock's relative strength and how it's been holding gains.

11:02And I thought that the stock's performance today, even though it was down, I think, a couple of percentage points, just a really strong day. And we'll see what they have to say Monday after the close. But I think it's still an important stock in this market in terms of AI and data centers, a real fast-growing company. and we'll see what they have to say Monday. But good price action today on a down day for the stock.

11:32Ken Shreve:Okay, so with just a handful of trading sessions before the earnings report, how do you handle something like this, Ken? Obviously, in hindsight, that bounce off of the 50-day or 10-week would have been a great time to get in this one or even more recently when it crossed the 200 level. What do you do with this now? with earnings so close? Well, it's not too late since they report after the close. You could take a look at an option trade sometime on Monday. I can tell you right now, it's probably going to be a pricey. The premium is probably going to be a little pricey on this one just because it tends to move a lot around earnings.

12:17But it could be worth a shot. So you could take a look at maybe the strike price around$2.20,$2.25 and see where the premium is trading. If you can get a 4 % to 5 % risk trade, it could be worth a shot. And then if you don't want to try an option trade, just take a look at the earnings report and just watch and see how the stock trades. It is trading very, very well. So I think obviously the market is expecting a good number. So just a good one to watch and see what the earnings response is. So again, the options market could present an opportunity here. But again, you can just kind of watch the stock and see what the earnings report looks like and watch how the stock responds to earnings.

13:12But again, still could be in the early stages of a move here. Still a very compelling growth story, too.

13:20Ken Shreve:This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. Listen at schwab.com slash Washington Wise. Yeah, no doubt. All right. One to watch with earnings due next week. Next on our list to check in on is IREN. I-R-E-N. A nice week taking shape here, Ken. up 20 % already in this shortened trading week. Yes, yes. And this is a data, excuse me, I have such an itch on my eye.

14:08This is a data center operator. They still have a little bit of a Bitcoin mining business, but this is a company that has really turned its focus to AI infrastructure, cloud services, and really they're a data center operator. And the news today that fueled this breakout, this is a 65, 61 buy point. So the stock was buyable today. This was a pivot, still well within the 5 % buy zone here. And what fueled the move today is that they signed a$1.6 billion deal with Dell. Now, Dell has a bunch of AI hardware that runs on NVIDIA chips. chip. So Dell's AI servers, they run on a lot of NVIDIA hardware.

15:03So IRON bought$1.6 billion worth of Dell gear that is going into IRON's data centers in Texas. So that is what fueled the gain for IRON stock today. And this is, you know, stock was just a classic breakout. Now, this is a wide and loose base. You can see that it was a pretty steep pullback when it corrected from 63 down to the 30 level. So it's not a perfect base by any means, but volume was very heavy today when it broke out past that 65 pivot. We thought it was worth a shot on leaderboard today. So we started a little small position just above 67 when it started to break out. So we took a little shot here.

15:53Again, not a perfect technical setup, but like how the relative strength line was pushing into new high ground and really like the fundamentals here. This is a company that has signed some really big data center AI infrastructure deals with Microsoft. They've also signed a big deal with NVIDIA as well. So seeing a lot of these data center operators really starting to outperform is a nice, nice group of them. But IREN is a nice performer in this group. So we took a shot today. And again, the number of base breakouts, they've really been kind of in short supply. We saw a lot of them when the S &P 500 followed through back in April, on April 8th.

16:41But the crop of base breakouts has really been kind of slowing down. But IRON delivered one today, got a good breakout over a buy point. So we took a shot. All right. Let's move on over to VRT, testing support at the 50-day, 10-week line area. That's been a level of support for this stock in its move over the last couple of months, Ken.

17:09Ken Shreve:So kind of a make or break time for the stock. Will it continue to hold that support? And if it does, could that be a potential buying opportunity? Yeah, this is the second visit to the 50-day moving average. And you can see the first time it came down to the 50-day line, it found support. And that turned out to be a good entry point. So this is a stock that is testing the 50-day line for the second time now. So what's interesting here is this is a company that provides cooling services for data centers. So this is a company where a group, Pure Modine, M-O-D, reported very, very strong earnings.

17:57This one had a downside reversal today, but kind of a similar service. They're not tracked in the same industry group, but they both provide cooling services for data centers. Obviously, Vertiv has been a big leader. So what I would like to see Vertiv do, if we go to the weekly chart here and you look at the first test that this stock made at the 10-week moving average, that is what a good test looks like. You can see those two blue up weeks when it came down and touched the 10-week line. You can see the current test that is going on. You see a couple of down weeks there. We'd really like to just see the stock bounce.

18:41So we want to see just a nice blue up week during this current test here. What I see now is two down weeks, including the current week where the stock is trading lower this week. So hopefully by the end of this week, we're going to see a nice support week, a nice blue up week where it is kind of bouncing and finding support. So it looks like it's still a test going on to me. So hopefully we'll just see a nice blue up week and a nice test like we saw several weeks ago when it found support. So I would be reticent on buying too early here. To me, it's a test of the 10-week line that's still going on.

19:24If it bounces and we get a nice blue up week and it makes a compelling case for support, I think it would be much more interesting. So still a test going on here, but this has been a big leader in the power equipment group, no doubt about it. It's a stock market leader with great fundamentals. So we'll see how the test ends up going here. I wouldn't be surprised to see it find support. So we'll see what the stock looks like at the end of the week here, and we'll see if it ends up bouncing.

19:56Ken Shreve:Okay. Ken, we have a couple of after-hours movers to look at. We do. A few. A few big ones. All right. So Salesforce, big company, big downtrend, not a big move, down about 2.6%. So a laggard stock, not an impressive response. But Snowflake, on the other hand, look at this. It's been beaten down too, but at least it's tried to establish a little bit of a rally off the lows. Up 30 % on a beat on earnings. I'm also seeing a headline. It's planning to spend$6 billion on Amazon Cloud. Let's check out Amazon again, which we looked at at the beginning. I don't know if it's moving on this news. Just seeing a fractional move there at the moment.

20:53Ken Shreve:But Snowflake, a major earnings reaction there. Yeah, Snowflake trading at 228 and after hours. So this is going to be a gap above the 200-day moving average. That's a pretty incredible move by Snowflake. This one has come nicely off lows, much, much better than CRM has. Yeah, CRM has really been – both have been really hit hard by – caught in that nasty software sell-off. But Snowflake has made much more progress coming off lows than CRM. So credit to Snowflake. That is a big, big after-hours move, up 29%. Go to the weekly chart and see what the short position here, if that was heavily short at stock.

21:45Not really. It doesn't look like the short position was all that high in Snowflake. So pretty impressive move.

21:53Ken Shreve:It is. Absolutely. And there was one more to take a look at. I'm not sure if it's quite as exciting, but I guess we'll find out. And that's HPQ. Now, up 1.5%. I guess they all can't all be 30 % movers. Up a little bit. It's in the top-ranked industry group in the market, which is interesting. This is in the same industry group as Dell and NetApp. Yeah, so this is interesting. HP made a very bullish move above its 200-day moving average. This was, I think, was that on Monday or Friday? Yeah, but this moved on Friday when Dell moved. And we have NTAP reporting earnings tomorrow. And that moved the same day that HPQ and Dell moved.

22:56So this industry group has been red hot. One more earnings report, MRVL in the chip group. MRVL. And that one is up, yeah, up a little bit.

23:11Ken Shreve:6%. Yeah, this was another chip stock that got hit pretty good today. But again, a huge, huge winner in the Fabless group, chip design group. So that one's making a nice, trying to recover from a 4.5 % decline today. This has been a big, big, big winner. Fundamental, fundamental giant. So it looks like that's a nice response in after hours. All right. Well, there's a little look at some earnings movers. We are past the bulk of earnings, but still some notable reports to discuss. Yes, yes. And pretty, pretty quiet, pretty quiet tomorrow. We do have Dell. I mentioned Dell is reporting tomorrow. So that'll be a, that'll be a big one.

24:00Yeah. So we can go over that one because you and I will be on tomorrow too.

24:03Ken Shreve:We will. We have to go over that one. Good stuff. Thank you, Ken. We appreciate it. See you tomorrow. Thanks, everyone, for tuning in. That's it from us for today, but it is Wednesday. So catch Justin Nielsen on the Investing with IEBD podcast today, live at 5 p.m. Eastern on our YouTube channel. This week's guest is Jim Ropel, founder of the Ropel Report and hedge fund manager who for many years has followed the IEBD methodology. We'll get a good dose of optimism from Jim as well as an update on where he sees the market headed in the short term and the stocks that he is paying attention to and why.

24:46Ken Shreve:So for that, make sure you check out the podcast. the Thursday crew on IABD Live. We'll see you in the morning, starting at 10 minutes before the opening bell. Investors.com slash IABD Live for that. We'll see you there. And then Ken and I will see you back here tomorrow after the close.

25:30Ken Shreve:We'll see you next time. you uncover new opportunities with up-to-the-minute market news and insights. Binkerswim is available on desktop, web, and mobile to meet you where you are. It's built by the trading obsessed to help you trade brilliantly. Learn more at schwab.com slash trading.