Indexes Fall Modestly As Hot Stocks Skid. Astera Labs, Quanta Services, Broadcom In Focus.

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0:42Good afternoon, everyone, and welcome to Stock Market Today for Wednesday, September 24th. My name is Ken Shreve, and on today's show, we'll go over what happened in the stock market today. Today, we had modest losses for the major stock indexes, but a lot of selling, more selling in AI-related stocks below the surface. So we'll bring Ed Carson, our news editor, on to talk about that. But as usual, he's got three stocks to watch for today. Ed, good afternoon. Good afternoon. I want to take a look at Astera Labs, Qantas Services, and Broadcom. All right. Let's do that. All right, Ed, well, I mentioned modest losses for the major stock indexes.

1:24Taking a look at the NASDAQ composite, I have to say a pretty respectable performance today. Looks like we got slightly lower volume, but again, a lot of selling below the surface, but pretty good performance as the NASDAQ holds support at the 10-day moving average here. Yeah, I think all the major indexes found support of the 10-day line and bounced off of that, or close to the 10-day line bounced off of that. And even the Russell found support there. So it was like, yeah, it was not, look at the indexes, and you're not going, oh, that's fine. In fact, you could say it's constructive because, you know, maybe we're getting a little extended on the NASDAQ.

1:57And so just maybe just a little. And so coming back just a little is maybe just to take a little air out of the balloon, kind of as it were. But, yeah, so things were underneath the surface. But look at the indexes. They're fine. The uptrend is still solidly in place. Yeah, so don't be too quick to rush for the exits here. If you've got some AI stocks and you've got some big gains, probably nothing wrong with trimming back some of those big winners, particularly in the AI space. You mentioned the Russell 2000. Most of the major stock indexes were down by about the same amount. Russell 2000 did lag down about nine tenths of a percent, but stopped right near the 10-day moving average, just like the rest of the indexes here.

2:44Let's take a look at RSP. I saw breadth was negative for most of the day by less than two to one negative on both exchanges. But RSP still, you know, fighting a good fight here, trading right near its short-term support levels. It was down mostly in line with the market cap weighted S &P today. QQEW, this is the equal weighted version of the NASDAQ 100, trading very, very tightly after gapping up close to the 140 level, still holding near highs. And bond yields, Ed, they were up a little bit today. Market still feeling pretty comfortable about two more rate cuts before the end of the year by the Federal Reserve.

3:32Is that right? That's right. That isn't necessarily a guarantee that we'll have the 10-year Treasury yield come down. I mean, the 10-year, one thing is that the 10-year had come down a lot anyway. And last year, when the Fed cut rates, the long end actually rose. But right at these levels, I don't think it's really bothering the stock market either. If you saw a big rise from here, maybe some pressure on stocks. But after the big drop in yields, I don't think that there's that much concern yet. Yeah, bond yields could move this Friday. We've got the latest personal income and spending report. Inside of that report, we're going to get one of the Fed's preferred inflation gauges, the Personal Consumption Expenditures Index.

4:13That's been hovering in the high twos, about 2.9%, I believe. So the Fed still wants to see that inflation reading come down closer to 2%. So we'll see that new data on Friday, and it could move the bond market. We'll see. Ed, we've been talking a lot about the outperformance of growth stocks, and FFTY is one of our proxies for the health of leading growth stocks. While the major stock indexes held support at their 10-day lines, innovator IBD50. Lost support looks like it could be poised for a test of that 21-day line now. Yeah. And even this doesn't look too bad. It's just going through the 10-day line, still above the 21-day line.

4:56There definitely were stocks that saw some bigger losses, but you don't want to overstate that. I mean, so you just have to be cognizant that the market seems to be in a mindset of maybe some of the really extended stocks. I mean, and the FFTY wasn't that extended, but we're talking about stocks that were 10%, 20%, 30 % above their 10-day lines. Some of those were in particular were hard hit. But yeah, it's just something to watch. But yeah, but still, this has gone on such a strong run. You know, our senior market strategist, Mike Webster, often talks about the 21-day line in relation to the NASDAQ and the S &P 500, very key support level to watch.

5:34But Ed, for leading growth stocks, that 21-day line has emerged as a pretty important support level as well. Yeah, absolutely. And there's definitely Some violated that, but not FFTY. And aside from one little spot there a month ago, really has really respected the 21-day line almost the entire rally. Yeah, the only real bad break of the 21-day line that comes to mind today, and we're going to talk about ALAB in just a second, but yeah, that's on our agenda here. So FFTY holding well. Take a look at SMH. This is the semiconductor VanEck semiconductor ETF. This is still showing a ton of strength as well.

6:18Yeah, not any weakness here. It is interesting because there are some names that were down and, you know, like Micron and I think NVIDIA was down somewhat, but still held up very well. So a lot of strength here. Yep, no doubt about it. IGV. This is our enterprise software ETF. Looks to be close to a test of the 10-day moving average. And then a big day for Alibaba. This is a stock that I do own personally, gapping up on aggressive AI spending plans. And that helped K-Web, which is a popular China ETF, still showing a lot of strength here back above the 10-day moving average. That was up 2.4 % today.

7:05So I assume a lot of that has to do with Alibaba. That's a big holding in K-Web along with Tencent Holdings, T-C-E-H-Y. Think all wealth managers are the same? Fisher Investments is clearly different. As a fiduciary, Fisher always does what's best for its clients. They don't sell commission-based investment products or make commissions on trades. Their fees are structured so they do better, When clients do better, that might be why many of their clients come from other wealth managers. Visit FisherInvestments.com for more. Investing in securities involves the risk of loss. Hi. All right. Well, let's take a look at A-Lab because I pulled this up just a second ago because it is a stock that did fall sharply below the 21-day line after some selling yesterday.

7:55But I'll tell you, the three declines before today, actually pretty orderly. The stock did give up a lot of ground, but it managed to close off lows most of those days. Came down to the 200 level today and found support, at least for now, at that round number. Yeah, and so this is where it's not broken. I mean, it's damaged, but it's not broken by any means. I mean, if it got below the 50-day line significantly, then you'd have to be worried. and heavy volume on a couple of these days. It just may, this is why it's tricky with winning stocks. This is now 22 % off its highs from just a few days ago.

8:35But it's done, you know, it's done some of those things before. Do you hold it, you know, or do you say, do you take partial profits on the way up? Do you take partial profits on the way down? If you wait till you go all the way to the 50-week line, 10-week line, you can lose a lot. You could also, that could also be where it finds support. So that could be devastating when you, It comes down 30 percent. You finally give up. And now because you haven't sold anything, you sell it all. And then it rebounds. And so not only do you lose out on the gains, but you feel mentally that could be the even bigger damage.

9:03So, again, this is just where it's really tricky. And, you know, there's not a right or wrong answer. Well, there are probably some wrong answers, but there's a number of right answers on how to sell these things. And it's just you just have to find your own style. But this is just definitely one of those situations where investors might have wanted to cut some exposure. I'm assuming that they bought it around the 101 area. If you bought around the 200 level, I think you definitely would have wanted to be taking some at least some profits. But, yeah, so I don't know how you feel about it, but it's definitely something that investors have to be thinking about with some of these extended stocks.

9:42Well, you mentioned this breakout over the 100 level. So people, and again, if you bought here or if you bought the stock, I mean, a really nice gain when the stock moved over the 200 level as well. But I agree. I mean, if you bought properly down near 100, there's some people that may just want to give the stock a chance to test the 50-day moving average with a nicely profitable position. There are others that bought early that may decide to trim back. And same with the people that bought over 200 here. although the people at 200 may be being more aggressive on the profit-taking here. So, yeah, not a broken stock.

10:24It's been a monster. We're dealing with a lot of extended stocks out there in the market right now, so it's really important how a lot of these names are going to act around their short-term moving averages. Very few tests of the 50-day line going on right now for a lot of leading stocks. Most of them are kind of near the 10-days and 21-day line. Just to make another point, just to make one more point is that it's one thing if you have this stock, okay, and it's a 10 % position and it goes down 10%. It's like that sucks, but, you know, it's down, okay? It's one position. But if you have a whole bunch of stocks that have been – and presumably they've been big winners because these extended stocks.

11:01But you don't want to be in a situation where your portfolio is falling 5 % in a day and then maybe again, especially in a pullback because gross stocks are going to lead any pullback. So you don't want to be in a situation where things start cascading. So, again, you have to be thinking not just about your individual stock, but how exposed are you to these high beta names? And, again, you have to find out what works for you. Everybody has different styles and psychological responses to big gains and losses. But I just want to think is that put in perspective what are your whole portfolio, not just individual names.

11:35Yeah, it's been certainly easy to get over-concentrated in a lot of AI stocks outside of the NVIDIA trade. several stocks across many different industries participating. So I think that's good advice. Just make sure you're not overly exposed in one area because when the market does pull back, it's the growth stocks that have gone up the fastest that tend to come in the hardest. So we've got to have the sell rules out there. We've been talking about this heavy construction group of which a lot of stocks in here providing construction, specialty contracting services, Quanta services, right in the middle of this AI data center expansion.

12:19This is a nice base taking shape here, Ed. Yeah. So I moved above the 400 short-term high. There was sort of a downtrend from the top of the base. Either one of those could have been used today to enter this stock. There is a flat base here. So the top of the base is obviously the official buy point. But this has also been one that tests. It often does have the situation where it'll go up and then, you know, come back down. But that's been the nature of the market, it seems like, a lot of the time. So this was an early entry. This was our stock of the day. Yeah, this one works with a lot of electric utilities and powers expanding, being powers expanding because of AI.

12:56So it is interesting that while some AI names were definitely losers in Astera Labs, as, you know, prior to the prime example, you know, Qantas services is an AI play too, and that showed a lot of strength today. Yeah, no doubt. No doubt. We mentioned the number of stocks that really started to move after we got that powerful follow through day back in April on the NASDAQ and the S &P 500. And you can see Quanta was one of the first stocks out of the gate right here when it gapped up on earnings. And that marked the start of a nice little uptrend. So we'll see how this base shapes up here. Good day.

13:30Down session for the market. This one outperformed and it did close above that round number of 400. So impressive day and some volume behind the move as well today. Let's finish up by taking a look at Broadcom. This is a leaderboard stock and really, really a big leader has taken over the leadership baton, maybe from NVIDIA at this point. Nice orderly pullback to the 21-day line here for Broadcom. Yeah, this is so different from some other names like Astaire or Credo, which, you know, came right down there. But this one, yeah, dignified pullback all in all. I mean, it was, you know, so I found support of the 21-day line, edged higher.

14:13I mean, that's fine. This was added to swing trader because of that support, I assume. I assume that if it got above, like, yesterday's high, it would seem actionable to me, maybe more as an add-on. By the way, you could do a new position, though, you know, the market has some ups and downs. But I like this action. Again, showing another AI stock that while, yeah, some of the names really came off. This one pulled back the way you'd want it to. I mean, yeah, there was a couple of high volume days in there, but all in all, pulled back gradually, finding support right at this key level for growth stocks.

14:44Doesn't mean it's going to hold. Tomorrow, if something bad could happen, it could just fall 6%, you know? So it doesn't mean like, oh, OK, it held today. Everything's fine. Everybody rush in. But it's just something that would be one to watch. You know, this is not, you know, this has offered a couple of opportunities. But, you know, the last time an opportunity was around earnings. but it would have been hard to buy ahead of that. And so this is, in some ways, the best opportunity perhaps that's developing since moving out several, like a couple of months ago. So definitely one that people should have their radar, even if they say, I'm not going to buy it.

15:20Well, one of the big rules that IBD follows, Ed, as you well know, is we do look at the action of leading growth stocks in the market to give us an idea of how healthy the broad market is. And again, just going back to the NASDAQ and seeing this, you know, pretty orderly test right now of the 10-day moving average, even though we've seen some leading stocks come under pressure here, we haven't seen enough evidence to start aggressively raising cash here. Would you agree with that statement? Yeah, I mean, I think that maybe just take, you know, might consider taking some partial profits and definitely do not let any, don't buy extended, don't let losses build.

16:02But yeah, this is still, I think investors should still be pretty heavily invested. Maybe just take off like Arnie Gutierrez's giddy meter, just step it back, just a step back or two. But things are still going very well. Yeah, and that might mean if you were 100 % invested or 90 % invested headed into this week and you trim back some winners, maybe that knocks you down to 80%, 90%, something like that. So you still have exposure if this uptrend is going to continue to gain steam. So, all right, Ed, well, I appreciate that very much. Thanks again for your insight. It's going to be Ed and Lexi tomorrow as we get used to a slightly different stock market today schedule.

16:46So Ed and Lexi, SMT tomorrow. And Ed, again, appreciate it. Thanks a lot. All right. And that'll do it for today. So we appreciate you watching. I'm going to be in the host chair tomorrow morning for IBD Live, so be sure to join us. If you haven't already, you can go to investors.com forward slash IBD Live for more information. It's our hour and a half stock market show. Every morning gets underway just before the market open at 9.30 a.m. Eastern Time. We talk about sector trends, leading stocks, actionable stocks. So lots of good information. and hope to see you there tomorrow morning. And that'll do it for today.

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