Indexes Gain For Second Day, Close Near Highs: KLA, Bank of New York Mellon, Hubbell In Focus

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0:40Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Thursday, April 9th. It's Alyssa Coram here. And a follow-up to the follow-through. Strong gains for the major indexes today after that powerful move Wednesday. Exactly what the bulls want to see. Joining me now to break down the market action and more is my colleague, Ken Shreve. Ken, always a pleasure to see you. What do you have for us today, Ken? Yeah, I got three stocks to go over today. And like you said, Allie, good follow-up action after that bullish session on Wednesday. So I want to take a look at a semiconductor stock in the chip equipment group.

1:19It's going to be KLA Corporation. and I want to take a look at the world's oldest bank. Have any idea what that might be, Allie?

1:29Ken Shreve:I know you'll tell us. I know it's... Okay, it's going to be the world's oldest bank. It's going to be Bank of New York Mellon, ticker symbol BK. And finally, a company called Hubble, H-U-B-B, and it's not a telescope company. We'll talk about Hubble. Some good trivia for us today. I feel like those could have been some Jeopardy questions there. There you go. All right. Well, let's take a look at the major indexes. The NASDAQ today up 0.8%, a strong close here. Meanwhile, the S &P 500 up 0.6 % on the day, accelerating gains as well after that powerful move. The Dow 0DJIA on our charts up 0.7 % on the day, getting above the 50-day line.

2:17Ken Shreve:and the Russell 2000 small cap index up some 7 tenths of a percent on the day as well. So with the kind of power that we had on Wednesday, that then made today a pretty big test. Were we going to fade and start filling the gap or were we going to add to the gains and hold up? And it looks like we had sort of a best case scenario here today, Ken. What are you seeing in the charts? Yeah. Well, I thought it was a really interesting start to the day because I got up and I saw oil prices up like 5%. And I said, uh-oh, this is not looking good. And yet I saw a fairly muted response by the market. And I knew we had inflation data coming out at 8.30 a.m.

3:09Eastern time. And, you know, the market really hasn't been moving a whole lot on inflation data. I know we had a couple of hot readings on wholesale prices, but, you know, oil prices were up sharply. Small caps were under pressure the most. But, you know, losses in the S &P 500, NASDAQ 100, the Dow, they were down maybe two-tenths of a percent, three-tenths of a percent. So losses in the broad market were very, very mild, even though oil prices were very, very high. And then the inflation data came out, and core inflation was once again elevated. It was basically as expected. Core year over year was up 3%.

3:50According to a con a day, that was about a tenth hotter than expected. Other estimates had it at 3 % in line. Market shrugged it off. So we opened modestly lower. And then the market turned higher because there were reports that Israel is apparently ready to have direct talks with Lebanon. And then, you know, we just started to turn higher and then we started to see more technical breakouts and we started to see, you know, just the same sort of individual stock action that we saw.

4:28obsession, you know, for the market. And we talked about, you know, sort of the price action that we didn't want to see after the follow through day yesterday. And, you know, it ended up being a nice, a nice solid obsession with more, you know, good action among individual growth stocks below the surface. And, you know, you mentioned, you know, the indexes just moving above, you know, key averages again. So, you know, things, things looked pretty good today.

4:56Ken Shreve:Yeah, absolutely. I mean, I think we would have taken a two-tenth of a percent decline, right? So that pre-market action, not all surprising when you put that in the context of the gains that we've seen in recent sessions. So very impressive exactly what we'd like to see. And then let's take a closer look here at the levels now that we are watching. Of course, we have that low from Wednesday, the follow through day low. You also have that 50 day moving average to the downside and the 200 day. That's another key level that we want to stay above. On the upside, Ken, it looks like we're the next level to watch for the NASDAQ.

5:42Ken Shreve:roughly 23 ,000. What are some levels for the S &P 500 that are notable here for traders? I mean, it looks like now who would have thought a couple days ago we would be in shouting distance of prior all-time highs. Let me go here to the SPY just to see sort of where we are versus those prior highs. we're 2.6 % below the highs. So pretty nice recovery here. Yeah, absolutely. Absolutely. And so, you know, S &P 500, obviously at this point, you know, that 50-day moving average is really going to be a nice support level to watch. So as the S &P, it's probably going to, you know, it's going to come in at some point.

6:28So from this point, we're going to want to see, you know, lower volume behind the declines. I mentioned during yesterday's show, when you get a follow through day, we know, you know, one, two, three, maybe four days after that follow through day, we really don't want to see higher volume declines. You know, if we see heavy volume distribution one, two, three days after a follow through day, it really raises the likelihood that the follow through day is probably going to fail. It just raises the likelihood of that happening. It doesn't mean it's doomed to fail. It just raises the probability. So if we can get a lower volume decline going forward, that'll be just fine.

7:12So that's what we'll be looking for when the market does decide to come in. And right now, S &P 500 is the charts. I'm at home on my laptop, and so the price level is a little difficult for me to see. So a little better. So it looks like the S &P just moved above a round number today. So at this point, some sideways movement from here. We'll just watch how the S &P is eventually going to digest its gains from here. Obviously, even more follow-through would be nice to see, but eventually it's going to pause. And when it pauses, the best technical action will be just to see a breather in light volume.

7:57If it's going to decline, we'd just like to see that decline in light volume. And that's picture perfect price action. But the reasons to be most encouraged at this point is that, you know, during yesterday's sixth day follow through for the S &P 500, there were a lot of stocks participating. There were plenty of stocks breaking out of bases, which is a critical element that you want to see during a follow-through day. And there was follow-on activity like that today. So that was another feather in this uptrends cap. So, so far, so good. I think there are reasons to be optimistic. But, you know, we are early in this two-week ceasefire.

8:47We know that the Strait of Hormuz is not exactly flowing at this point. The flow of tankers is not exactly where we want it to be. In fact, there's not much happening at this point. It's still early, and we're likely going to see some volatility in the oil market and some volatile headlines going forward in coming days. So hopefully the market is going to take it in stride, but very encouraged by the action in individual stocks and the action in the indexes so far.

9:24Ken Shreve:Totally agree. I'll take a quick look at the Dow and the Russell, then we'll have you take a look at some ETFs here, Ken. The Dow today closing above its 50-day line, also that round number at 48 ,000. And taking a look at the Russell 2000 small cap index here, we now have two days with the low above the 50-day line and above$2 ,600. Back to the Dow. Just real quick on the Dow. I thought the Dow's price action was particularly noteworthy. One, because we did see it get a little bit of resistance at the 50-day yesterday. So it did make a noteworthy move today above that 50-day moving average. It did close above the line today, correct?

10:11Ken Shreve:Yes, it did. Yes. Okay. And then inside the Dow today, we did add another stock to the leaderboard model portfolio today. We did add Caterpillar, which is a Dow component. And we can pull up Caterpillar really quick. Another excellent move in Caterpillar today, a stock, a Dow component that is an example of a technical breakout, a stock breaking out to all-time highs. Volume is starting to pick up the pace. This is the type of price action that we want to see in individual stocks when the market is starting to resume an uptrend here. So great price action in the Dow, great price action in a lot of individual names in the Dow, including Caterpillar today.

10:56Great example of a technical breakout today.

10:59Ken Shreve:Great. I'm glad you brought that up, Ken. Let's talk about some notable action in the sectors. Here's a look at XLU, the utilities, up eight-tenths of a percent today. And taking a look at the weekly chart, you know, intraday got very close to a prior high. So I'm going to change the scaling here so folks can see what we're looking at. Ken, thoughts on utilities? Yeah, it was kind of interesting. You know, our senior market strategist, Mike Webster, talking with news editor Ed Carson saying, what's going on with the utilities? Seeing utilities and the market surge growth 250 breaking out today.

11:37What's going on? But they were outperforming. I'm looking at EIX in the market surge growth 250 today. I mean, this was a utility breaking out. I mean, a beautiful breakout for Edison International today. So the utility is typically a defensive area of the market known for their nice dividend yields. But, yeah, XLU was just one of the better performing ETFs among the S &P 500 sectors today. So Edison was a nice mover today. But, you know, people just wanting, you know, maybe not into individual stocks. XLU looked like a buy signal today in the ETF space today, you know, coming up the right side and just kind of passing that high from several weeks ago.

12:25So it looks, yeah, kind of breaking out over a little trend line here today. So, yeah, just a nice performing sector inside the S &P 500 today. And, yeah, it looks pretty good. So, you know, a lot of different industry groups participating here. So you're getting good price performance among the utilities, and you're also getting some decent yield as well. So that's the best of both worlds.

12:48Ken Shreve:There you go. Are you a Hannah Montana fan there, Ken? No, I'm just kidding.

12:56Ken Shreve:I never watched that, but you know, the 20th anniversary or something lately. Best of both worlds. All right. I digress. Speaking of the follow-up that we wanted to see here, Ken, let's check in on the chips because we know that the chip sector had a big day on Wednesday with SMH up a whopping 5.8 percent and outperformance again here today with SMH up 1.8 percent. Now at new highs. Yeah, anytime you're seeing the NASDAQ index doing well and you're seeing the NASDAQ 100 doing well, you want to see the chip stocks really, you know, packing a lot of punch. And you're clearly, you know, seeing that not only the chip equipment stocks, but the chip makers, You know, Intel is breaking out to new highs.

13:49I mean, this is a really good sign for the market, I think, just seeing Intel acting so well. AMD, not so much, but just to see SMH breaking out to new highs. I mean, look at Intel. I mean, it's just unbelievable. But to see SMH, you know, acting so well and to see the broad-based strength in the chip equipment stocks. Obviously, the chip equipment stocks have been doing so well because they're big gear suppliers, equipment suppliers to the memory and the data storage stocks like the SanDiscs and the Microns and the Western Digitals. They've just been all moving as one big group. So we're going to look at one in just a little bit.

14:28So just very encouraged to see the chip sector doing so well. And, you know, SMH is, you know, probably at a point here where it's going to start to pause and pull back. And again, just like we want to see in the major indexes, we'll watch to see if SMH is going to just gently, gently pause here and pull back. I don't know if it's going to completely fill this gap. People say, well, ETFs always, stocks, ETFs always fill gaps. They don't always fill gaps. And I would be surprised if it did. I mean, it would really take a nasty market pullback for this to happen here. But we'll look for a low-volume pullback here.

15:08But it's gone up a lot, so wouldn't be surprised to see a pullback. We'll just watch for low volume if it happens.

15:37Ken Shreve:You can really feel the respect in this battle. Pick a meal to pick a side. And participate in McDonald's while supplies last. Well, for now, some very impressive strength and outperformance. And a great segue to what you mentioned, Ken, in the semi-equipment group, KLA. A breakout here with a blue dot. The gain today, 3.3%, putting the weekly gain as of now with one session to go on the week at nearly 14%. So some leadership here in the chip sector looking good. Yeah, really, really big weekly gain so far. We've got one more day left to go in the week and just a really, really solid gain so far for KLA.

16:27A really nice estimate next year for KLA and a stock that's still technically in a buy zone here. So, again, maybe it's going to pause here, but you could start a small position here. Again, it's come up a lot, so you could just kind of watch and see if it's going to take a little breather here. but technically still in the 5 % buy zone and really still in the early stages of breaking out of this long consolidation that started when it started pulling back from that high from several weeks ago. But if you look at the weekly chart here, you can still see it's in the early stages of kind of breaking out into all-time highs here.

17:11So either way, if you want to start a position here, maybe you can just take a little nibble and then wait for a pullback and you can buy a little more. But all three stocks that we're talking about today, starting with KLA, all have blue dots on their relative strength lines. So they're all up near highs with relative strength line near highs. So they're all industry group leaders and KLA is certainly a group leader.

17:37Ken Shreve:Well, Ken, something that you've mentioned in recent episodes and something that I think is worth bringing up today is the fact that we do have earnings season right ahead of us. It looks like KLA reports in two weeks. And I think that's just something that folks need to keep in mind. And I think when you do have the strength of a fresh market rally with a follow through day, if it is, you know, to be said that at times the big money is made early on in a new market rally, perhaps 14 days, and this is calendar days, not trading days, could be enough time to get that profit cushion ahead of the report.

18:23Ken Shreve:So just something to keep in mind. I mean, like you said, if you're managing risk, you can see what your profit cushion is like in 13 calendar days before the report and then go from there. Yeah, yeah. That's something to keep in mind. Like I said, the earnings season is really going to ramp up in earnest next week. We had Delta really kick things off this week, but we'll really, financials dominating the reports next week. Taiwan Semi, ASML and the chip space reporting next week, along with Netflix. So it'll get busy. And like you say, KLA 14 calendar days. And after next week, it's just going to be real busy over the next few weeks.

19:03So keep that in mind. And any new positions that you initiate, probably a good idea to keep positions small if you're going to start a position within a couple of weeks before reporting. I will say, though, it is nice as we approach earnings season to be in the early stages of a confirmed uptrend as opposed to being in a market that's in a correction and rife with distribution.

19:34Ken Shreve:Totally agree. Yeah. Okay. Let's go over to TiggerBK. This is Bank of New York Mellon, another blue dot stock, as you mentioned, and a breakout here or on the verge of a breakout. Ken, that's quite a few up days in a row here on the right side of the base. So a lot of strength, a lot of buying in this bank name. A lot of our growth screens, whether it's the IBD 50 or the market surge growth 250 stock spotlight they really are being dominated at this point by financial stocks they really are and it's i think it's very very compelling now bank of new york mill and i mentioned this is the the america's oldest bank 55 trillion dollars in uh in assets and this bank was actually founded by alexander hamilton back in 1786 so very i mean just a storied storied bank.

20:33Dividend yield, a little less than 2%. But, you know, big move off lows here. Let's take a look at the weekly chart here. You have so many banks setting up here. Maybe we can zoom in a little bit, show that cut base a little. Yeah, there we go. Yeah, nice little cut base. It's right up at the top of this cut base. They report a week from today. So this one is, This is right around the corner. But you have so many banks out there that are at the top of basis here. There's a lot of optimism that the banks are going to be coming out with good numbers. We're certainly going to have a good idea by the end of next week what the numbers are looking like.

21:16What I like a lot about Bank of New York Mellon is that Fidelity Contra Fund is a big owner here, has been a big owner for a long time. uh this has been a five star morning star rated uh fun for a long long time and uh one of the better funds out there so you know for a financial stock uh this is uh an excellent candidate here you can see the the prior uptrend the stock was on before it started forming its its latest base here so this is a a stock that has shown an ability to trend it formed a similar cup cup shape base before it went on its latest uptrend. So we'll see. We'll see if this latest base can yield a breakout.

21:59I think its earnings report last week is going to have a lot to do with it. But, you know, a highly rated stock in our database with a very, very consistent track record of earnings and revenue. So one of many financials that look quite nice right now. All right.

22:18Ken Shreve:Poised for a move higher, potentially. We'll have to see what that earnings report is like, as you mentioned. Yeah. Okay. And yes, you see the multiple up days in a row. And David Ryan talks about this a lot on IBD Live. And I'm very conscious of it myself. You know, you just see a stock that's up five, six, seven, eight days in a row. You want to be careful not to chase. So even though this is approaching a breakout, and it could even tomorrow with the market acting as healthy as it is, it really could just run right through the left side of this, you know, base and break out. I'd be careful chasing it after so many updates in a row.

22:58It's eventually going to pull back. And if it pulls back, just watch for light volume. And I'd just be careful chasing it here. Might just want to wait for a pullback, maybe just wait for earnings and then pick your spot. But I want to pay attention to strong price performance like this for sure.

23:16Ken Shreve:Well said. Couldn't agree more. Okay, let's end with a look at Hubble, H-U-B-B, on the right side of its base. Two strong days in a row, up four days in a row here, Ken, and for the week, up 8.2%. So another one for the watch list. We've got earnings coming up in 19 days here. Yep, data center, infrastructure, you know, just another stock that is benefiting. fitting used to be a boring business electrical equipment grounding systems and then all of a sudden the data centers come and this stock is just right in the sweet spot of uh of growth again so they do infrastructure components and the you know the just the the the growth and data centers has just been a big a new growth driver for the for the company here so yet another stock with a relative strength line in new high ground before the stock so it's just right on the cusp of a breakout here.

24:16You can see this was a stock that gapped up yesterday on the follow-through day. So this is a stock that has some power, again, right on the cusp of a breakout. Nice uptrend before this base started to form good, healthy, relative strength line. And can't see that the composite rating I know is high for Hubble and it's in a strong industry group as well. Lots of strong price performers as well. So Hubble on the verge of a breakout, Ali. So a good one to keep an eye on as well.

24:52Ken Shreve:Hubble on the bubble? Hubble right on the bubble. All right. Well, thanks so much, Ken. We really appreciate it. As always, thanks for sharing your insights today. and thanks everyone for tuning in that is it from us for today but we will be back with more tomorrow morning on iabd live investors.com slash iabd live for all the details we'll see there starting 10 minutes before the opening bell