Indexes Fall With AI Stocks Pressured. GE Vernova, Oklo, Palantir In Focus.

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0:16Good afternoon, everyone, and welcome to Stock Market Today for Wednesday, October 22nd. My name is Ken Shreve. I'm a senior markets writer with IBD. Kind of a rough day for stocks, but kind of feels like it could have been worse here. We had the NASDAQ down about 1%, hard to believe only a five-tenths of a percent decline for the S &P 500. But another day where leading growth stocks got hit with some serious profit-taking. To help me talk about this, let's bring on our news editor, Ed Carson, who has found three stocks to watch for today. Good afternoon, Ed. Good afternoon. Three stocks that showed different action, but all sort of in the AI space.

1:02GE Vernova, Oclo, and Palantir. Okay. Well, that sounds good. Let's go ahead and take a look at a chart of the NASDAQ composite here. And we will see that the NASDAQ composite, like I said, it was down a lot more, but it made a very nice stand here, Ed, at the 21-day moving average, down about nine-tenths of a percent. close off lows. This is what we wanted to see the NASDAQ do. Yeah. And so I would say like, you know, the market is, by looking at the indexes, that looks fine overall. I mean, you know, don't like to have big drops intraday and it's choppy, but it looks fine. It's a little bit like somebody who looks like they're in decent shape outwardly.

1:46And then you get the blood test, the leading stocks more like the blood test. And you're like, hey, that cholesterol level is a little high, isn't it? You know, it's just not saying it's like, you know, death door, but it's just sort of, you know, there's a reason why when we say to check out the markets health, you look at the major indexes and the leading stocks, and I think the leading stocks are weaker. But the indexes, yeah, they did pretty well. It was nice to see them bounce off the 21-day line, the NASDAQ and the S &P 500. Well, let's just cycle through the rest of them here. S &P 500 only down about six-tenths of a percent, also making a stand at a very crucial support level here, these short-term moving averages.

2:24Maybe not surprisingly, as profit-taking hit leading growth stocks again, we did have money flowing into blue-chip stocks. Dow Jones did end lower by 7 tenths of a percent, but saw four or five names up at least 1 percent. Investors moving into quality. And then the Russell 2000, not surprisingly, that took the hardest hit, but did close off lows, could be ready to test that 50-day moving average and the 2400 level here. So taking a look at market breadth, the equal weighted RSP, you know, not too bad here, down a half a percent, pretty much in line with the S &P 500. And then QQEW, which is the equal weighted version of the NASDAQ 100, that was down mostly in line with the composite.

3:26Ed, how about just maybe a little color on some leading growth stocks? Let's take a look at ARKK. This is Cathie Wood's ETF down 3.6 % today. We also had Innovator IBD50. Both of these are kind of growth stock proxies, FFTY. Good support at the 50-day moving average here. Still down 3.1%, but encouraged, Ed, to see it close off lows here. Yeah, it's encouraging to see it come in there, but it's also had some big losses. And it's just sort of like, I can imagine it's like if you're an investor and you have these things and sometimes, oops, you'll buy sell at the low and they rebound, but you sort of have to take issues.

4:06I can imagine exposure grinding lower just because individual names, either these huge winners are slashing gains or recent buys are failing or small gains are turning into almost losses that you would pare down things and new buys haven't really worked. So I would imagine a lot of investors, given, you know, just look at these gyrations, your exposure is probably going to come down, even if that's not your plan. Just because of the way individual stocks are. So, yeah, really important to hold here. Don't want to see any more bending. It'll start breaking. We were about 60 percent invested headed into today in the leaderboard model portfolio and ended the day just under just under 40 percent invested.

4:47It had to do some more trimming. But let's take a look at IGV. This is kind of a proxy software ETF. Still not looking too bad here, holding above the 50-day moving average. Gold, I saw gold stocks start to come back late in the session. Obviously, a really tough day of selling. Yesterday, GLD, which is another holding in the leaderboard model portfolio, down sharply yesterday. But Ed, pretty impressive performance here, reversing slightly higher after touching the 21-day line. Yeah, and I think GDX, the miners one, which is, it tends to rise more and up and down more, it found support at the 50-day line.

5:32So nice both instances. Yeah, absolutely. Nuclear stocks got absolutely blasted today. Let's take a look at the BANEC uranium and nuclear ETF. Only down 2%, maybe masking a little bit. I know we're going to take a look at Oclo. But, you know, down for, what's this, five days in a row, still holding above the 50-day. Surprised to only see it down 2 % because some of the worst performers in the market surge, growth to 50 today, were some of these nuclear stocks. Yeah, it wasn't quite as sweeping as some other days. But these losses are building up. It's, again, I would say, let's say radiation exposure.

6:13How much can you have each day? and that's what's going on here. So yeah, a little bit of concern. Let's take a look at, had a round of pretty decent earnings reports before the open here. GE Vernova used to be a stock in the leaderboard portfolio. We had trimmed this back ahead of earnings because it was just starting to lag the market and initially rose on earnings. but reversed lower here. And so a stock that was looking a little tired ahead of earnings, but some sellers in there today. I'm Laura Thurow, Managing Director with Baird Private Wealth Management. For so many of us, life is busy.

7:00Between balancing family, career, and community, finding the time and focus to keep your financial plans on track can be a challenge. At Baird, we understand. Our financial advisors will partner with you to create a plan that's uniquely yours. One that gives you peace of mind and confidence so you can focus on what matters most. Discover the Baird difference at rwbaird.com slash wsj. Yeah, I mean, it was a pretty ugly reversal. Nice that it came back, but this is a stock that's already had a number of losses. And so it would have been hard if you had held it, held it, held it, not to sell it, you know, at some point, because it was really showing a lot of strain.

7:37And even if it hasn't, it's below, it hit resistance at 50 to line. You know, since that action, it's fallen quite a bit over the last week or so. I mean, it just has. And I think this and, you know, and another name, Vistra, which also, not Vistra, Vertiv. It's easy to do. Yeah, reverse lower. You know, totally different field. But just adding to that concern about AI stocks, again, the earnings were fine and Vertiv guided higher. So I'm not going to say anything yet about that. But it's just sort of like there's pressure building on a variety of AI stocks. and GE Vernova, though it's an energy stock, clearly is getting that AI lift.

8:12We'll see. It may all be unfounded because next week we'll get all the big hyperscalers. And maybe they're saying we're going to double our capital spending, you know, from what they already are. And everybody goes hooray and you're a fool for selling. Ha ha ha. But investors have to deal with what the market and what stocks are doing now. Google, Meta, Amazon, Apple all do next week. So we're really going to kick into earnings season hard next week. All right. Let's take a look at a nuclear, maybe a little more speculative name. You can see it's not generating any revenue yet. But here's some of this destruction in the market surge growth to 50 Oclo down 14 percent after a pretty big decline yesterday, Ed.

8:59Yeah, I think at this point, look, anybody who was carried had a big part of this run up. That's a decisive break of the 21-day line. So if you bought it anywhere in the last few months, I think you would want to be taking partial profits at the very least. I don't know where this is off its highs, but you can just eyeball it. It's probably down at least a third. If you go on a weekly, you can see what it was versus the 52-week high. Yeah, 38%. And just really at about seven or eight days. At some point, you have to wait. Now, you know, there's a lot of names in this speculative, the nuclear, the quantum, which also can be seen as AI in some way.

9:34I mean, some of these stocks, they have no revenue. It's sort of like, how much conviction can you have in this? And it's not just that. How many, how much conviction can institutional investors, to the extent that they have it, are they going to hold on to this as opposed to some other, you know, another name that we're going to look at shortly? So I just, you know, as much as powerful it is on the way up, you can see how fast it's coming down. And, you know, it's just, you know, it'll be years before this may have revenue. I mean, years. And, you know, just, yeah. It is interesting because that's not normally a pond that institutional investors will fish in these super speculative areas that don't have any earnings.

10:11See, Okla is still bleeding a lot of red ink and no revenue, no revenue yet. But you look at the fund ownership data, seeing some pretty decent increases in fund sponsorship here. So Oclo, again, if you've had a nice gain in this today, you know, I mean, if you bought it around 60 here, maybe you can wait and see what a test of the 10-week looks like. But certainly trimming the position back makes a lot of sense after this almost vertical violation type price action. Final stock is going to be Palantir. And Palantir, we've been kind of waiting for it to break out. It's just been biding time above the 50-day moving average.

10:58Pretty decent close. Down 3.3%, but a pretty decent close, Ed. Yeah. So this was, you know, again, it's been it's just one day away from breaking lower or breaking out. It's sort of one of those situations. And so you can do a class, you know, nice to find support, the 50 day line. You just don't know if it's going to hold. Again, we could rebound right away. So it's just one of those things. It just it's this is where AI stocks are under strain. But this chart isn't broken. It isn't broken. It could break, but it's also not great. and where it is if you bought the breakout and that's if you somehow held on to all these ups and downs yeah uh let's say that's a recent thing i mean longer term investors whatever i mean you know that's fine you know i don't want to people who bought a long time ago all these little wibbles and wobbles aren't that much uh you know you could go a lot further but it's just something that we have to watch out for and we're going to see a lot of things come out the next week and it's just this is where a lot of things are leading stocks are either coming down like Oclo or breaking a little bit like GEV or they're doing this, they're hanging on, but they're not something that you're gaining on, you know?

12:08And so that's the situation with a lot of leading stocks right now. And it's just, that's just not a great environment. There's not a great edge right now in general, but nice to see this hold. And we'll just have to see. It's still a question about whether this one holds and moves up or moves down. Yeah, Palantir, again, another leaderboard stock here was added on these two days right here that I marked. And then we just kind of held on and said, oh, maybe it's going to try to get going, try to get going. Early in the session today, we trimmed it back to a quarter position and just to see how that test of the 50-day plays out.

12:47So keeping on a short leash at this time. I just wanted to just make one more comment about the NASDAQ composite here. Again, with this higher volume drop, almost like a vertical violation type price action, this was a couple of Fridays ago, and it came in pretty heavy volume. So we're not at a point where distribution days are starting to cluster on the NASDAQ composite. We're just looking at higher volume declines basically since this day here. So it's not even 10 days, but you've had a few. I mean, this is going to be an unequivocal distribution day for the NASDAQ. Yesterday, volume was higher, but it really hardly moved at all.

13:34So again, normally a violent drop like this takes a little time to resolve. So maybe some back and forth chop. But right now, it makes sense to have fairly light exposure, especially if you're in some of these top-rated growth stocks. So any final words, Ed? Are we ready to wrap up here? Well, let's take a look at a few things that are moving after hours. Oh, that's right. I knew I had to ask you something. Yeah, there's a few big names. Tesla, of course. It was a shocker, and I don't know why, because I was thinking that they were going to blow out views. But they missed views on EPS. They beat on revenue.

14:12I'm not exactly sure what it was because it looked like emission credits were fine. I mean, they were down a little bit, but they could have been down a lot more. Cash was up. So it's mixed signals there. It's all going to come down to the call anyway. So, I mean, that comes around 530 Eastern. So I don't want to make too much of it anyway, because there's sort of a one off quarter anyway. But IBM, I don't know what happened. Is that 530 Eastern or 530 Pacific? 5.30 Eastern. Eastern time. Eastern, yeah. Gotcha. And IBM is down quite a bit. This had been doing relatively well, you know, but I thought they beat views, but I don't, and, you know, it looked like it was setting up, but Cure's earnings, it's not, it's not doing well.

14:54LAM Research, that's doing pretty well. That LRCX, that's doing, you know, that chip equipment maker, you know, I've been sort of pausing. That one, that one's looking good. And SAP is a software maker that's come off highs, but it's one of the first software makers that's out. So it's nice to see that. It's not doing well. So it's not nice to see that. But it's it's just gives you a sense of how things are. So those are some names. There's a lot more because we're really in the getting the heart of earnings season. But definitely things moving, moving out there after hours. All right. Well, thank you very much for that earnings color.

15:32And yeah, Tesla not moving a whole lot. So it was acting pretty well headed into the report. So we'll see where Tesla opens tomorrow. And that's going to do it for today. Ed, as always, I appreciate your insight. Thank you very much. All right. That's going to do it for today, folks. Thank you for bearing with me yesterday, having some issues with the charts. but I think I do have that resolved. So we appreciate you watching today. Tricky market right now. A good idea to play some defense tomorrow. I think it's going to be Ed and Lexi doing the Stock Market Today video right after the close. And Rachel Fox will be in the host seat tomorrow morning for IBD Live.

16:21If you haven't checked out our hour and a half stock market show every morning, Just go to investors.com forward slash IBD live to get more information. Thanks again for watching and we'll see you back here tomorrow. Have a great afternoon, everyone.

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