Indexes Consolidate Gains After Fed’s Jackson Hole Symposium; Skywest, StoneCo, AutoNation In Focus

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0:25Good afternoon, everyone, and welcome to Stock Market Today for Monday, August 25th. It's Alexis Garcia here, and indexes consolidated their gains after a powerful rally on Friday. This, of course, followed Jerome Powell's seemingly dovish turn on interest rates. And here with me to help break down all you need to know about today's market action is IBD Markets Research Director Justin Nielsen. So, Justin, what's on the docket for us today?

0:56Alexis Garcia:Well, we will, of course, talk a little bit about the markets, but we'll all talk about some stocks that are holding up pretty well, including SkyWest, which joined leaderboard today. I do have a position in that one. StoneCo and also AutoNation. Well, as you said, I'll slap them up and you slam them down, Justin. But first, let's check on in with the major indexes. The S &P 500 down about four-tenths of a percent today. The Dow down about eight-tenths of a percent. The Nasdaq down about two-tenths of a percent. And small caps, which have really been leading the way here, down almost eight-tenths of a percent today, Justin.

1:32So while I get my screen share up, what are your thoughts with the current market action? We saw a really nice rally on Friday. So what are your thoughts on today's market moves?

1:43Alexis Garcia:Yeah, so I mean, we're really kind of still in this, I think we have to wait and see approach. Will the rotation catch on or will we rotate right back to all those things that were leading this whole rally? So certainly one of the things that we're going to be having to keep an eye on, of course, is the interest rate sensitive stocks. And so we saw a big move on a lot of these interest rate sensitive stocks on Friday. And look, while while the indexes were coming in today, they weren't losing those gains. They still retain the majority of those gains. Most of the indexes were really still in the upper half of the range of Friday.

2:24Alexis Garcia:So that's not necessarily a disaster. That's just kind of consolidating, digest, digesting the gains. And that's actually constructive action. As you mentioned, the Russell 2000, if we pull up IWM, that was probably the hardest hit. But you look at that big move. I mean, IWM, the Russell 2000 was up almost 4 % on Friday. So for it to give up a percent, that's still putting it in the upper quartile of that range. So not something that's particularly concerning to me. I do have a position in the triple leveraged IWM, and that's TNA as the triple leveraged version. But, you know, that's where I'm at.

3:04Alexis Garcia:And again, I'm not, you know, I don't like losing that much money, but it's one of those things where I'm still well up on my position. And so I can give it a little bit of room. We should probably take a look at zero TNX because, of course, as you mentioned, a lot of this came from dovish comments by Powell. You saw a big drop in the 10-year Treasury yield on Friday. Today, we're just kind of hanging out. It's an inside day from that big widespread that we saw on Friday. So I think there's a little bit more of waiting to see what happens here. I think you have to be ready to go in either direction.

3:42Alexis Garcia:But we have the potential here to really see a shift in where the stocks are. And we have to be ready for that. And Justin, as you mentioned, not only digesting PAL comments, but we also have NVIDIA earnings on the horizon Wednesday after the close. How do you see that factoring in for some potential market moves this week? Well, here again, it depends on what the leadership goes to. If it's a rotation more to some of the stocks that we saw really having a strong day on Friday, it might be a big nothing burger at the end of the day. But look, NVIDIA is so important, not just because of what they say, but it's also kind of the tone that it sets for a lot of other, either their vendors or people that rely on their chips.

4:30Alexis Garcia:You know, so that says a lot about AI space in general. So certainly something that I think is going to be well worth watching. And look, you know, as much as NVIDIA was coming in a little bit last week, it really got that upside reversal back above the 21-day moving average line. And if you go to the weekly chart real quick, you can see that NVIDIA, it's 2.5 % off its high. So this is not something that is going through a major correction at all. This is getting support right there at the 10-week moving average line. So still certainly worth watching. And again, not just for it by itself, but what it kind of says for the chip space and the AI space.

5:12And Justin, since we're on NVIDIA, I know you have Kathleen Donnelly on this week on the podcast. Really interested to hear what she has to say about her position in this and how she's handling it with earnings coming up. But let's just quickly round this out with the S &P 500. We can give that a quick look. Any thoughts here on the action and how that's measuring up to what you've been saying about the market?

5:37Alexis Garcia:Yeah, let's go ahead and start with the daily chart. It's certainly, again, this had a strong day on Friday. Not as much as the Russell 2000, but hey, it was still very decent. And it's retaining the bulk of those gains still. But let's take a look at RSP as well, which is the equal weighted S &P 500. The breadth on Friday was incredible. You know, again, it wasn't just the big cap, mega cap companies really distorting the index strength. This was really broad based and RSP had a really strong day on Friday. Lost a little bit of ground today. But again, we're right there kind of at that halfway point for for RSP, the equal weighted S &P 500.

6:22Alexis Garcia:So I think I think these look OK. Let's also just because we talked about the mega caps, let's take a quick look at FNGS, which is the bang bang plus. And that really kind of is showing, hey, look, it might not have been the best performer on Friday, but it was still a very solid gain. And that's not giving up much at all today, just two tenths of a percent. So it's certainly, I think, too early to count the mega caps out at this point. All right. Well, let's take a look at some sector ETFs, starting with IBIT, Bitcoin on the move today, Justin, and not in a great way. This went down just about 5 % today.

7:04So talk to me about what's going on there and how you see this chart.

7:09Alexis Garcia:Yeah, a little disappointed, actually, because this had a very strong move on Friday, along with a lot of other things. But you saw that support right there at the 50-day moving average line. And, yeah, it looked good. Of course, over the weekend, they had – actually, I think it was Kit Norton that wrote about this, or maybe it was Harrison. But a really good article about a little mini flash crash here in Bitcoin over the weekend as a lot of sellers came in. A big whale of a seller selling about$2 billion worth, I think 24 ,000 Bitcoin. So that was certainly putting some pressure on. Does it mean that the Bitcoin play is over?

7:48Alexis Garcia:Not necessarily, but it is disappointing. Whenever you see a reversal like that in a strong day, when you start undercutting the recent lows, that's something that you just want to be aware of. And it's also worth noting, let's just take a quick look at ETHA, Ethereum. I do have a position in this ETF myself. It came down really sharply as well. But this one has been showing a little bit more strength lately, starting from, you know, this move that it had right around 25 or a little bit above and through 30. Really strong day. I mean, this was up, what, like 15 % on Friday. So, yeah, it's lost a great deal of that gain.

8:28Alexis Garcia:But it's still holding up much, much better in terms of holding above its recent lows. So it remains to be seen, again, is this just going to be some extra volatility for now or is this something that's a little bit more concerning for the crypto space? And I'm just back on the Ibit chart here, Justin. So if you were in with this base, it's basically roundtripped that buy point. I mean, are you viewing this as a sell signal or how are you approaching this if you're holding shares of Ibit? Yeah, I think for a recent purchase, I bet it's a little tough. You can, you know, if you've got an earlier entry, then you've got the option to hold on to this.

9:10Alexis Garcia:You know, but breaks of the 50-day moving average line are concerning for me. And breaks of previous levels of support are something that concern me. So that is, I think, for a recent purchase, this is something that you're definitely going to need to be trimming back to cut your losses. All right. Well, let's take a look at the IBD growth 50 ETF. This one, again, holding those nice gains from Friday was up 3 % on Friday, a holding steady flat today. So what is this telling you about growth stocks? Well, again, growth stocks do seem to be catching a bit here. And the fact that this retained those gains didn't really give anything up, I think, is a strong showing for the growth names.

9:51Alexis Garcia:So again, it remains to be seen. I mean, that was a pretty sharp drop that we had in a single day last week, but the recovery has happened almost immediately. So, yeah, it's pretty good looking. And let's go ahead and go to the weekly chart. You know, you can see that at least, you know, for the year, this has been a really strong rally here since we got over the tariff, you know, the tariff tantrum, I guess. So really strong move there and remains to be seen if growth can really kind of get out of the funk it was in. And again, a lot of this was that the mega caps were so much in favor and a lot of other things, just the breadth wasn't there.

10:34Alexis Garcia:So we'll see if this breadth can hold as well. And also our producer is asking if you could zoom in the charts just a little bit. All right. I will certainly do that as we switch over to GDX. That's the van at Goldminers. Hopefully that's showing up a little bit better there. But again, we saw this nice gain of 1.5 % on Friday, holding those gains with a tenth of percent gain today. So yeah, what's happening with gold, Justin? Well, I mean, you look at GLD gold, and I mean, it's a little lackluster, to be frank. But the gold miners are looking a little bit better to me. And a lot of times that's the case, right?

11:12Alexis Garcia:They're going to go up more, and they're going to get hit more based on what happens with gold. because you can almost think of it as a leverage play. But there are a number of these that are looking very strong. And again, they really kind of started moving on Thursday, also participated on Friday. So the fact that they're holding the gains, I think, is a good sign for gold right now, at least the miners. Right. Well, let's round this out with a look at XHB. That's the Home Builders ETF. Again, nice gain on Friday of about 5%, down slightly today about 1.5%. But as you mentioned, still in this upper range of that Friday trading session.

11:52So thoughts here.

11:53Alexis Garcia:Yeah, that's what I'm looking at. I'm really looking at the things that can kind of maintain or retain the gains from Friday. Things that give them up completely, those are probably going to be the first to go on my list. Things that are undercutting lows, like we saw with IBIT. But the things that can hold up, I can give those a little bit of time and see how it plays out. Even if I'm down on them, I can give it a little bit of time because I've got my stop losses in place. A lot of times at the lows of Friday. Doesn't mean I have to wait until that period. But if these start trading in the lower part, that's going to be concerning for me, especially if they spend a lot of time below there.

12:32Alexis Garcia:But right now, with a lot of these things trading in the upper part of Friday's range, I think it's still worth giving them some time to see how this plays out.

13:02Alexis Garcia:Always find it. No messenger needed. No more running around. Get out of the data dark ages with Everpure, a new era in data management. All right. Well, let's take a look at some individual stocks, shall we? Starting with SkyWest, Justin, and pulling up the daily chart here, a nice gain of about 1.9 % today, peaking above this buy zone, a cup with handle,$119.44 buy point. So thoughts here? Yeah, it's a pretty nice looking cup with handle. The closing range, a little disappointing that it came off so much from its highs, but a lot of things came in today. And I should repeat that I do have a position in this.

13:43Alexis Garcia:This was also added to leaderboard because it's kind of your classic look. And look, the leisure space, travel, there's a lot of other stocks in this space that are looking good. If we take a broader look at JETS, J-E-T-S, that is the airline ETF. That had a very strong look on Friday, came in a little bit today. But SkyWest was showing leadership. It was actually one of the stronger stocks in that space. So that's, I think, a plus for that. I meant to get some JETS exposure. Oh, yes, very big volume on there. You know, this is a little bit on the thinner side. So you do have to be careful of that.

14:23Alexis Garcia:It's got over$30 million,$25 million volume is kind of our threshold. We really don't want to go under that too much. And this is above that. But it's still, you know, it only trades on average 340 ,000 shares a day. So a little bit on the thinner side. But as you mentioned, volume today, pretty spectacular and, you know, double its usual. All right. Well, let's look ahead to StoneCo, Justin. This went up about five-tenths of a percent today, working on breaking out of this cup with handle base with a$16 buy point. So, yeah, this is in the finance space. So credit card payments and technology for payment solutions.

15:07Alexis Garcia:StoneCo, let's just real quickly take a look at the weekly chart. This was kind of a high flyer a while ago and really hasn't done much lately. but it's carved out this nice little base here recently, only a 25 % depth on this base, 10 % handle. So it's gotten tighter. It's gotten support at that 10 week moving average line. And so going back to the daily chart, this looks pretty set up to me in terms of a chart pattern. So it's kind of breaking the downtrend of this handle. So you could either, I mean, I would say that this is actionable now, or you could be waiting until it actually crosses the traditional buy point.

15:47Alexis Garcia:which is around 16. So either way, you can start kind of buying a little bit and then follow up the position at 16. But this is looking interesting. A little bit of a turnaround situation where you're seeing those, the earnings growth come on a little bit stronger after a disappointing growth a few quarters ago. So it remains to be seen, look, this has the Brazilian exposure. And, you know, that's been a little tricky, again, with tariffs for some of these companies. But if you look at EWZ, which is a Brazilian ETF, that's kind of setting up in an interesting way as well with a strong move on Friday.

16:26All right. Well, let's round this out with a look at AutoNation. Justin, this went up about one-tenth of a percent today. And again, holding those nice gains from Friday. So thoughts here. Yeah.

16:38Alexis Garcia:So as we were talking about on the IBD Live show this morning, I went through our industry group spreadsheet and I was kind of surprised at some of these areas, whether it was retail, wholesale, automobile, some of the auto parts, some of the original equipment manufacturers that were looking pretty strong. So not the group that you'd normally think of as being like, oh, yeah, this is going to be a leading area. But AutoNation, as you said, had a very strong Friday and really retained those gains, just didn't want to give anything up today. So that's something that does get my attention. on the fundamental side, a little lackluster here.

17:13Alexis Garcia:I mean, the last quarter was pretty good, but the fundamentals, you know, a little lackluster. Again, EPS rating, not bad at 89, but I do like to see some higher revenue growth, typically in the stocks that I'm looking for. Single digit, you know, again, doesn't get me too excited, but that chart is really nice looking. This last base really got support at the top of the previous base. So that's a plus. And we did have not a pickup in volume per se in terms of being much larger than average. It was 9 % above average, which isn't bad. But it was much larger compared to the last couple weeks, let's say.

17:52Alexis Garcia:So this was probably one of the largest volume days in a few weeks. And so that does tell you something, that there was a little bit of institutional interest in this today or at least some heavy retail interest. So again, a very interesting look for this one. The fact that it was holding those gains and even stronger volume than on Friday says something to me. All right, Justin. Well, thank you so much for your analysis. And you know, Justin is our IBD host extraordinaire, especially with Ali out on maternity leave. And you just had a great podcast episode with Robin Hood's chief brokerage officer last week.

18:29As we mentioned, you have Kathy Donnelly on this week. What else do we have to look forward to?

18:34Alexis Garcia:um well gosh uh i'm trying to remember who some of our guests are on ibd live uh you know we just had leif serata that was a great charles harris this week charles harris is coming up oh yes i'm going to be uh i'm going to be uh hosting for that too charles harris of course one of the portfolio managers under uh william o 'neill uh for gosh it's been 25 years now since he became a portfolio manager i remember i used to sit next to him for a while right before he became a portfolio manager. So he's got a lot of wealth of knowledge, a lot of experience, and very humble in terms of some of the psychological tribulations that he's been through that he's very open about sharing.

19:13Alexis Garcia:So it's always great to hear his perspective on things. So definitely check that out if you haven't already with a trial to IBDLive at investors.com slash IBDLive. Well, Justin, thank you so much again, our MVP utility player here at IBD. and that's it for today. We'll be back with more market analysis tomorrow morning, starting with IBD Live. You can head on over to investors.com slash IBD Live for all the details there. And thank you so much for watching. We'll see you right back here after the close.

19:59Alexis Garcia:This podcast is brought to you by Federated Hermes. We put our investments through a ruthless vetting process because we don't like surprises and neither do our clients. Learn more at federatedhermes.com slash US. Investments are subject to risk and may lose value.