Hormuz Troubles Help Oil Lead; Murphy USA, DINO, Humana In Focus

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0:51Good afternoon, everyone. Welcome to Stock Market Today for Monday, July 13th. It's Rachel Fox here. And today we saw the major indexes open, lower and continue to sell off throughout the trading day after some negative geopolitical news. Here to help me break down all you need to know about today's market action is head of market research, IBD head of market research, Justin Nielsen. Justin, what is on tap for us today?

1:15Rachel Fox:Yeah, we'll talk a little bit about some of the oil beneficiaries here. Specifically, we'll look at some retainer refiners and retail. So we'll go with Murphy USA on the retail side, gas stations, a bunch of those and how they're benefiting. Also, H.F. Sinclair, also known as Dino, because you get all those green dinosaurs that you see over there on their gas stations. But it's really their refining business. And then we'll also talk about an insurance company, Humana. Very good. We will get to all of those names shortly here. But first, I'm going to give a quick rundown on how the index is closed.

1:51We saw the S &P 500 down around 0.8%. The NASDAQ-led declines with a loss of roughly 1.6%. The Dow Jones was down 0.3%, and the Russell closed down 0.9%. Also worth noting, the equal-weighted S &P 500 index, RSP, was only down around 0.1%. So worth noting there. I'm going to go ahead and share my charts here, Justin. Let's get into it. I'm going to pull up the NASDAQ here, which closed below some key moving averages here today. As I mentioned, the indexes were down. President Trump said that the U.S. will restart a blockade of Iran in the Strait of Hormuz following the fresh strikes. Oil stocks saw really great strength across the board, but the index is all weakened into the close.

2:46So Justin, what are your takeaways from today's action with everything going on?

2:52Rachel Fox:Yeah, and it was tricky, right? Because we started the day down and at a certain point it did look like we were getting support and things were stabilizing, but then it just couldn't hold. And then we saw undercuts of the lows and just that slow drift down lower. Now, one of the things that Mike and I were talking about on Friday, especially if you look at the S &P 500 was it's it was a decent looking setup here. You know, it looked like we crossed. I love the line that you have there, Rachel. It looked like we were crossing above a downtrend line and, you know, potentially set set up on Thursday to go higher.

3:30Rachel Fox:Friday, you got that kind of follow up and the move above the line. And, you know, the S &P 500 looks a little bit better than the tech heavy Nasdaq composite, but it's still not a great look. to have that kind of crossover happen, and then it can't hold. And that's what I fear right now, is we're just kind of in a choppy environment, a little reminiscent of what we saw between October and February, where you just didn't trend very well above the moving average lines. And that can make it very difficult for a trend-following system like ours to make any money. So that just means that we have to be a lot lighter, maybe smaller position sizes and a little bit less aggressive with our entries and more careful.

4:18Rachel Fox:But as always, one of the things that doesn't change is that we do keep our losses under control. We always want to make sure that we don't let those get out of hand. And so this is especially important that you're really kind of getting good entries so that you're not taking larger losses than you should, especially because headlines offer a lot of gap down risk. And we don't really want to be caught with those. Back to the NASDAQ. The NASDAQ was kind of on the verge of crossing above its trend line. It never did. And here we are back below the 50-day moving average line, back below our 21-day moving average line.

4:59Rachel Fox:It just is an area that can't hold. As you mentioned, I think it's very interesting how much better RSP looks, the equal weighted S &P 500. Same stocks as the S &P 500, but this has been trending a little bit better. Not a great day today in terms of where it closed, but much better than the NASDAQ and S &P 500 because those big market cap heavy stocks, the mega cap, the magnificent seven, just don't have the same weight in RSP as they do in those other indexes. And so not having that large weight and especially a lot of those magnificent seven are very tech oriented. That's helping the RSP outperform to a degree.

5:42Rachel Fox:So very tricky market. It's, I think, very OK to be scaled back. I personally am at about, you know, between 60 and 70 percent invested and I'm OK with that. I'm not going to fully participate if we do really just rip from here. I'll have to play some catch up. But I've got a large cash position to either deploy, if that happens, in maybe some new stocks, and to help cushion the blow if we come in more. Hi, Ryan Reynolds here for Mint Mobile. Are you looking for a beach read this summer? May I suggest your big wireless bill? It's got suspense, mystery, a slightly flat emotional arc, and a shocking twist where you realize you've been overpaying the entire time.

6:26Rachel Fox:Fortunately, though, Mint's story is better. Every plan,$15 a month, even unlimited. That's it. Happy ending. Zero tears. Give it a try at mintmobile.com slash switch. Upfront payment of$45 for three months,$90 for six months, or$180 for 12-month plan required. $15 per month equivalent. Taxes and fees extra. Initial plan term only greater than 50 gigabytes. May slow when network is busy. See terms. And Justin, where are your lines in the sand in terms of determining what you'll do next? Are you looking at Friday's high, Thursday's low kind of thing, even though we pretty much, you know, are hitting Thursday's low at today's close.

6:57But where are you looking at for lines in the sand in terms of telling you where the market might be heading?

7:04Rachel Fox:Yeah, definitely Thursday's low is an area that I did want it to hold. Wednesday's low, even more so, right, because that was the start on the Nasdaq composite of this upside reversal. And if you just go ahead and actually let's draw the line the other way. Let's go to the left, because a lot of times when you see these lines, you'll kind of notice that there's other areas around that same level where it hit support. And I'm kind of seeing that all the way back in May, where it kind of came down not quite to that level, but you do see it kind of holding in that area. So that's, I think, an important level.

7:43Rachel Fox:And then beyond that, we're really looking at that 25 ,000 level that we hit just a couple, you know, a few weeks ago. So that's what I'm looking for on the downside. On the upside, I agree with you, Rachel. We really have to kind of get above Friday's high. And even that, I'm not going full out because we've just seen too many times where it doesn't hold. So it's going to have to do a little bit more to prove itself to me. but that will at least get me incrementally adding. Absolutely. That makes sense. Well, let's go ahead and take a peek at one of the winners, the winning areas from today's market, oil, which we're going to look at a couple names here, XLE gapping up, coming up right to that 50-day line.

8:32This is a key juncture for XLE. Yeah.

8:36Rachel Fox:And look, a lot of times when something is gapping up to the 50-day moving average line, I'm always a little hesitant to go with that. And look, we have the headline risk, of course. You could easily see something this week saying, oh, you know what, everything's fine now. And then oil, you know, comes crashing back down and resumes the downtrend that it was in. But I think this is an inflection point. This is an area of interest because a lot of people look at the 50-day moving average line, not just us, and how XLE handles itself right there will be very interesting. So you can see that the relative strength on this has been rather poor as the market went up.

9:16Rachel Fox:This kind of hasn't participated in a lot of the April-May rally that we saw. And even in June, when the market was coming down, this was still in a solid downtrend. So yes, maybe that's turned. But again, there's going to be a lot of headlines that are affecting this. But certainly worth noting, again, when you see this action, it doesn't necessarily mean you're going to act on it. But you do want to be aware of it, and especially when you get to these inflection points like XLE is at the 50-day moving average line. Now, this is one where ExxonMobil, XOM, and Chevron CVX are the two biggest members of that, and XLE is market cap weighted.

9:57Rachel Fox:So those two by themselves are about 40 % of the XLE. But let's go ahead and look at RSPG. Since we looked at the equal weighted of the S &P 500, RSPG looks very similar. This is the equal weighted of that energy sector. So not looking at Exxon Mobil and Chevron as having that outsized position, but treating everything equal, it looks pretty much the same right there at its 50 day moving average line. So again, I think it's not just Exxon and Chevron that's dictating what's going on here. It's the entire space. Yeah, absolutely. We are definitely seeing a lot of names with some impressive gains today.

10:37And we will check in on those to those stocks in just a moment here. Let's check in on a couple other areas of the market first. We saw DRAM making, I think, a pretty significant move here today, undercutting the 50-day line, undercutting recent lows, down over 9%. This is rough and strong volume as well. Yeah.

10:59Rachel Fox:So what I really care about there is that 50 day moving average line getting lost. And this is also, you know, you kind of were making a stand there, right? You were making a stand just last week at that 50 day moving average line. And the fact that you undercut those lows, as well as the 50 day line gapping below that, that's all bad news. Now, this is especially bad because you know that there's a lot of people that probably were late to this trade. You know, they're kind of saying, oh, you know what? I missed Sandisk's, the Microns, the Western Digitals, the Seagates. And I wanted that exposure to some of those Korean stocks that I can't trade on U.S.

11:40Rachel Fox:exchanges. But, of course, now that SK Hynix is traded on U.S. exchanges, it's different now. But look, a lot of people probably got into this late and they are going to be in a little bit of panic mode because, look, already this is 30 percent off its high. You know, it doesn't look that bad because of where it came from. But for anyone that got in late, that that can be kind of a disaster. So be very careful with these stocks. And just to point out one, Sandisk, Sandisk was looking interesting today. We were talking about this on IBD Live, and it looked like it was bouncing at the 50-day moving average line at one point.

12:18Rachel Fox:It looked like it was getting that support, and, you know, it just couldn't hold it. So you have to, I think, be very careful with a lot of these names. And look, it's okay if you want to try them, but go small and make sure that you've got that exit strategy firmly in place before you even try the trade. You've got to know where your exit is if you're going to be trying to get cute here. Yeah, especially within 11 percent 21 day ATR stocks that you want to have real strong risk management rules in place before you before you dive into that. You can find yourselves down seven, eight percent very quickly on these high ATR stocks.

12:58Rachel Fox:You know, I would say within a day, but it's sometimes within hours. Right. Yeah, absolutely. Let's take a look at another area, kind of cousin area, SMH. which also kind of undercutting the 50-day line here, critical juncture, but still above last week's lows. Yeah, and I like how, again, we seem to be getting that support at the 50-day moving average line. And so while it's not great that we lost that today, you know, it's not like, oh, this is necessarily completely broken, but it's on the ropes. Let's go ahead and take a look at the weekly chart on this one as well. and you know this is this is it was looking like it was getting that support at the 10-week moving average line looking like an upside reversal and it just again hasn't broken below yesterday last week's lows but the fact that it's it's back below that 10-week moving average line does concern me last week's lows are absolutely the the critical spot and especially if you got into this you know, last week, I think you got to be taking your loss if it undercuts that.

14:08Rachel Fox:Now, if you've got more of a gain on this, you know, maybe you have some extra cushion, you can handle it differently. But at the same time, you want to be very aware, not just of where you're going to make sure that you're not losing capital, but also where you want to make sure that you're retaining the bulk of your profits. This is only down 12, you know, 12.8 % off its high right now. But you don't want to see all your hard-fought gains that happened over months get destroyed in, you know, just such a short period of time. So have your exit strategy even when you are profitable on a trade.

14:42Yeah, it sounds like it's maybe a time to be taking at least something off the table and then watching last week's lows if you are in this one.

14:50Rachel Fox:Well, especially when you have something that has held a line, a moving average line, in this case, the 10-week moving average line, for this whole time, when it does lose it, that is kind of telling you, hey, the character is changing here. And you can either choose to ignore it or you can do something about it. And it doesn't mean you have to panic necessarily. And this is why weekends are great when the screens aren't buzzing and flashing at you to kind of make some decisions and say, okay, where is my level? And then stick to it, you know, it's unless you have a very solid reason not to. It's very important to trade your plan, plan your trade and do that over and over, rinse and repeat.

15:34Yeah. And it is only Monday. So, yeah, who knows? This could change. This chart could look different by the end of the week.

15:41Rachel Fox:Absolutely. And again, we're going to be looking at last week's highs to see, hey, can this really start turning things around for the semiconductor space? Yeah. All right. Let's go ahead and move over to another space. Let's take a look at JETS, which is not quite as bad as SMH or definitely not DRAM. But we are losing the 21-day line here a little bit. It's a little slippage. Well, and I think the concern here, and of course, it makes sense. Look, oil, oil goes up, jets is going to go down typically, right? Because all these airlines do rely on very, very expensive costs for oil and what they have to, what they have to, you know, spend on that.

16:29Rachel Fox:So you raise that and it's going to squeeze their margins. And I think the main point here is that we have to be careful of some of these rotation plays, some of these things that more recently broke out. We just have to, again, make sure that we're being very aware of where our exit strategy is. Right now, this is, you know, coming back down to that 3133 level. It's right there, right at that 3133, which was kind of the resistance level before. before we got above it. We didn't like really soar, but at the same time, we kind of want to see it hold here. And if it doesn't, again, have your exit strategy.

17:09Rachel Fox:One more area that I do want to take a look at, let's also look at KIE since we're going to look at an insurance company a little bit later. This is a rotation play that looks very different, right? This broke out. It did pull back, but this got support kind of, is that your 10 day or is it an eight EMA? This is 10. A 10-day. Okay, so it, you know, came just down to the 10-day moving average line, and we were getting a bounce on that today. This was looking very different from everything else that we've looked at, you know, in terms of the indexes and all that weakness in tech. This looks very different.

17:44Rachel Fox:Now, maybe a little bit more on the defensive side, right? When people kind of lose their appetite for tech, they tend to go towards things that are a little bit more boring, like insurance, beverages, things like that. But it's nice to see that not everything that is in this rotation play scenario is breaking down. Some things are holding up a little bit better. But again, when it's insurance, that does give you the concern that, you know, is it people looking for places to hide? Sure. Yeah. One other area that is, I would say, holding up pretty well would be KRE. You know, we are going to get earnings season.

18:22A second quarter earnings season will kick off tomorrow with earnings from JP Morgan, I think Goldman Sachs and several others. So this will be a very important area. This is the regional banking ETF, but still holding up pretty well. Yeah.

18:38Rachel Fox:And as I was going through some of my screens, there's certainly a lot of names here in the regional banking space. But, you know, the banks don't look too bad either. KBWB is what I usually use for that. And although it was down today, you know, it wasn't down by much. And that is still trending and holding up above its 21 day moving average line. So, again, not something I want to step in front of with the earnings, you know, so many important earnings coming out in the next couple of weeks. But I'm certainly trying to be aware of what's holding up best, what's working and what's just not not giving up yet.

19:15Rachel Fox:So, again, if I do need to kind of rotate myself, I want to be aware of what areas I would want to rotate into. But it's also OK, again, while all this back and forth action is going on, this choppiness, it's also OK to be sitting on a lot of cash. Yeah, absolutely. KRE tightening up here. We've got a three weeks tight after a breakout from a cup with Handel. Yeah, holding up amid amid the selling off. So something to keep an eye on for sure. Let's move over to let's look at our stocks for today. Let's kick it off with Murphy USA. As you mentioned, retail. So this is a gas station. You may have seen them.

19:57I know we see them here on the West Coast. This one moved above a short-term resistance level here, getting above the 600 level. This looks pretty good here. Yeah. And again, the the main issue is the headline risk.

20:13Rachel Fox:Right. But there's also a concept. I was reading a blog from Fred. That's the Federal Reserve Economic Data. They have a lot of interesting things that they put out. And for for gas stations on the retail side, one of the things they talk a lot about is in this blog that I was reading was rockets and feathers. So what typically happens is when when oil shoots up, right, a lot of the gas stations will raise their prices and they will go up like rockets. And when they come down, they come down like feathers. You know, so think about and this is probably something that you can, you know, experientially verify.

20:57Rachel Fox:You just know that, oh, gosh, you know, it seems like they come up much faster and they go down much slower. And so what that means a lot of times is that these companies, you know, that are engaged in that activity will see improving margins. And Murphy USA has certainly had a lot of upgrades recently. And again, the chart just looks very different from the indexes themselves. Something different is going on here. I like that 600 level that it was able to punch through. Now it's a matter of seeing, hey, can we hold above that? because the last couple of times it tried to punch through there, it couldn't hold it.

21:34Rachel Fox:But again, I think a lot of that will depend on these headlines. As as things get resolved, a lot of times the expectation is, OK, well, it might it might come down like a feather, but eventually it will. And the market is a forward looking mechanism. But certainly I think it's worth just being aware of what's happening when you're looking at the stocks that did well on a given day. And one of the ways I do that is I'll look and see on a day like today when most things were closing near their lows, what things were closing near their highs. And Murphy USA stood out in that regard. And so I just want to be aware.

22:12Rachel Fox:What's what's the story behind that? And this is where, again, Google, you know, Gemini, AI can really help you kind of dig dig a little bit deeper. You know, I don't always trust what I read there, but if it can, you know, point you in the direction, again, it pointed me in the direction of those, that Fred blog. And now I'm like, okay, I've got a reputable source, the Federal Reserve and their economic data, you know, telling me what's, what's going on here with these, with these companies. And it can, you know, I can kind of make sense of it. So very interesting look there. Not sure if it's going to continue, but again, I'm at least wanting to be aware of it.