Indexes Lose Ground As Breadth Deteriorates: Medpace, Oracle, Tesla In Focus

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0:40Justin Nielsen:good afternoon everyone and welcome to stock market today for monday august 11th it's alissa quorum here and stocks lost a little bit of ground today as we saw breath deteriorate as always we've got some stocks to cover and joining me now to do just that is my colleague justin nielsen And Justin, what do you have for us today?

0:59Alissa Coram:Yeah, it was a very interesting day, but we've got some stocks that are looking interesting still despite some breadth issues. And so we'll take a look at MedPace and Oracle. I have a position in both of those, very small, but then also figured that people might be interested in Tesla. So we'll have to take a look at that and how to handle it.

1:16Justin Nielsen:Yep, sounds like a plan. We'll get to those stocks. But first, let's take a closer look at the major indexes, starting with the NASDAQ composite. reversing off of a fresh high today, finishing down by about three tenths of a percent. Meanwhile, the S &P 500 down a quarter of a percent today didn't get quite to new high territory. Meanwhile, the Dow down a little less than a half a percent today, right around that 44 ,000 level, some resistance at the 21 day line and the Russell 2000 small cap index down about two tenths of a percent on the day. Also some resistance there at the 21 day. We'll also take a look at our breadth measures.

1:56Justin Nielsen:There might be a little theme there with some resistance. But first, let's take a look at the NASDAQ composite reversing lower here after hitting a high. Is this becoming a theme, Justin, that we're seeing happen a little bit more lately?

2:11Alissa Coram:Yeah, it's not our first downside reversal that we've seen. Now, look, if you compare it to the downside reversal that we had about a week ago, a couple things are different. I mean, it has a similar look. We had a fresh high closed at the lower part of the range in the lower quartile. What's different? A much smaller spread. So we had a much bigger gain on that previous Thursday. And then look, no matter what, you do expect a little bit of weakness to happen after a downside reversal. Now, Friday, last Friday, we got it in big, in a big way. And I mean, a week ago from Friday. Yeah, two Fridays ago.

2:47Alissa Coram:Yeah, we got that in a big way with that test of the 21 day moving average line, the first break of the 21 day moving average line in, in quite a while after 65 days. So now we've got a downside reversal. You would expect some weakness here, but it's not necessarily a, Oh, panic mode. One of the good things that was happening previously was we had a nice little trending above that 21 day moving average line. So not only did we get our low above it, But we actually got a number of days where the low stayed above it. It's not just enough to get above it. We want it to stay above it. And that's what it is continuing to do.

3:23Alissa Coram:But again, tomorrow, expect a little bit of weakness, not necessarily something that you have to destroy all your positions over, but just be aware. OK, what did I have kind of new that I might have to get rid of early? Where can I take some profits? And what stocks am I really believing are my A stocks that I have conviction in that I want to hold a little bit longer? Yeah.

3:46Justin Nielsen:And it'll be interesting to see how this week's action unfolds, because I would say last week was a lot stronger than we would have expected given the previous week's weakness. We shook that off pretty quickly. So all in all, back above the 21 day line for now. but a little bit of a character change still, it seems, that maybe could signal we could be in for some sideways action, a little chop here, a little digestion that could be in the cards. But I know you and Mike Webster, our senior market strategist, always like to say you got to trade the market that you have, not the one that you think you're going to have.

4:27Alissa Coram:Absolutely. It's just fine to have expectations, but you can't just put all of your chips on the expectation. You have to, again, make adjustments. David Keller was on the podcast last weekend, last week. And one of the things I liked that he said was, you know, it's, it's the difference between your crystal ball and your windsock, you know, with the windsock as a pilot, you're, you're looking at what's happening, where the wind is shifting, and you're making those small adjustments all along the way. And And so while we have the expectation for some weakness, and look, I was expecting more weakness after that break, either more weakness or at least some back and forth.

5:04Alissa Coram:I was not expecting that strength that we saw last week and the quick recovery. But in looking at a lot of the precedents, when you have a long period of time where you're trending above that 21-day moving average line, and then you break it for the first time, sometimes there is a little bit of a character change for a little while. Sometimes you come out of it. Sometimes you don't. So we're kind of in this no man's land a little bit. And so you have to tread cautiously. And that means, look, risk management is always top of mind, but maybe it's a little bit more tippy top of mind right now.

5:36Justin Nielsen:Exactly. And we do have earnings season cooling off a little bit, but we have some economic data coming out this week, like the CPI report, which could be market moving. You never know, depending on how the market wants to react to that economic data. Yeah.

5:56Alissa Coram:I mean, I think, you know, for a while there, it seemed like economic data wasn't making things turn so much. That last jobs report maybe changed some of that and will kind of put the laser focus back on it. But I think this will be an important CPI number. A lot of expectations of what that's going to do for the Fed in September. And look, it's also we've got retail sales. We've got a lot of things that we're going to be looking at to kind of get a gauge of what is going on with the economy. Is that jobs report, is that a one-off? Is that because it was a preliminary number with a lot of data missing?

6:31Alissa Coram:Because let's face it, the data doesn't come in as quickly as it used to because people don't respond as quickly. So we need to get as many data points as we can to really kind of flesh out that picture. And so CPI is going to be one part of that. Retail sales is going to be another. And that will kind of probably inform investors to kind of start making those projections for the September Fed meeting. Yeah.

6:55Justin Nielsen:All right. Well, bored to come on that as the week progresses. Let's have you give quick thoughts on the other major indexes. Here's the S &P.

7:03Alissa Coram:S &P 500 looks very similar to the NASDAQ composite, whereas the NASDAQ composite quickly got its low above the 21-day moving average line. The S &P 500 was a little bit slower to do it, but it's done it and it has kept that low above it. But again, we've got another downside reversal here. Not as dramatic necessarily, but all of the indexes, basically, I'm looking through, and they all closed in the lower quartile. So that's something to just be aware of. And Dow Jones Industrial Average, that had been going tight here for a little bit, back and forth, right above 44 ,000. It's back below the 21-day moving average line, but still above the 50-day.

7:42Alissa Coram:So certainly weaker there. And then the Russell 2000, gosh, it's Lucy with the football, you know, taking it away again. You know, it had that, you know, break that it looked like, you know, when it got up to 22, 83, 20. It had a nice reversal at its 200-day moving average line, got back above the 21-day moving average line, but just hasn't been able to stay there. So it's hugging that line right now, not broken, but it's certainly not having the strength you would have expected from that breakout area. so still in a little bit of no man's land there as well but i think what's really interesting and this is where you have to really look at your portfolio and take your cues from what's happening in the stocks that you are in rsp you know if we take a look at the equal weighted s &p 500 that's getting turned away at the 21 day moving average line so in a little bit of a weaker spot still above the 50 day and pretty tight action here but this is the equal weighted so when you take out the mag seven, the metas, the Microsoft's, the Googles, the Apple even was, was doing pretty well last week.

8:47Alissa Coram:When you take those out, okay, what is happening with your average big cap stock? You know, these, these big players in the economy, not just for those stocks, but also for all of the customers that they have, where it kind of trickles down. That's something that is, I think, important to watch. And then look, QQEW, this is the NASDAQ 100 equal weighted, that closed below the 50 day moving average line. So we saw that kind of deterioration happen last Friday, where this went all the way through the 21 day moving average line and closed below the 50 day moving average line. Remember when I said we want them to stay above those lines once they get above them?

9:24Alissa Coram:Well, QQEW hasn't done that with the 50 day moving average line. So we'll have to be keeping a close eye on tech. The NASDAQ 100, of course, is everything except for the financial, the top 100 companies except for financial in the NASDAQ.

9:38Justin Nielsen:So with this being said, Justin, it seems like it all comes down to what you own, right? It's a stock picker's market. So if the stocks that you are in are performing well, holding up, not triggering sell signals, perhaps not a concern. But when it comes to new buys, maybe just being really selective, making sure you're going after stocks that have compelling setups, stories, fundamentals behind them, if you can get them because of this weakening breadth.

10:09Alissa Coram:Yeah. I mean, this is one of those situations where a setups are where you really want to kind of keep your focus on. Yeah.

10:18Justin Nielsen:Okay. Let's take a look at any other ETFs you want to check in on before our stocks. Yeah.

10:26Alissa Coram:Let's take a look at IBIT because, And I do have a position in this one myself. I believe you do as well. A nice move, breaking a downtrend here. Didn't close well, but still, it held above that break of the downtrend. So that was interesting. Let's also take a look at GLD. Gold, that has, you know, had a really nice week last week, but a little bit, you know, a little disappointing today with a gap down. And GDX, which is in the gold miners, you know, that did fall. quite a bit, although it did come off its low. So that's pretty impressive in that regard. And then also let's take a look at IGV.

11:06Alissa Coram:That's the software. Back below the 50-day moving average line for the first time. Look at how long it's been trending above that 50-day line and mostly above the 21-day line. And now here we are back below the 50-day moving average line, despite some strength in some big players. And then also So let's take a look at SMH, the chips, that also showing a little bit of weakness from the highs and, you know, not down too much. I mean, basically flat, but certainly off the highs. So one to watch.

11:36Justin Nielsen:All right. Savvy investors understand consistent growth is built on scale, resilience and trust. For more than 60 years, Medline has proven this, driven by an unrelenting commitment to their customers. Today, Medline is proudly NASDAQ listed and is the largest provider of medical surgical products and supply chain solutions serving all points of care. With a focus on what health care needs next, Medline strives to make health care run better. See how Medline is woven throughout health care and learn more at Medline.com. All right. Thank you for that overview there, Justin. Really interesting to see what's going on with software there as a sector.

12:15Justin Nielsen:There are some standouts within it, but we've talked about before, this is why we love doing top down and bottom up. What's coming through the screens on your individual stocks, but also what are you seeing on a sector level, right? Because there could be some early signs of sector rotation to be aware of there. All right, let's take a look at some stocks now, starting with Medpace, a strong mover today up 3.6%. We had the earnings report in July, the 22nd, that earnings reaction with shares up, get this, 55%. That was a pretty big move, Justin. Held the bulk of that, tightened up, and now on the move here again, clearing a trend line, so arguably actionable.

13:05Yeah.

13:06Alissa Coram:Look, when something gaps up 50%, yes, that's strong. And you're like, oh, wow, this really is something I wish I had. But what do you do with it when it gaps up 50 %? Well, for me, nothing. But if it can hold those gains, digest them, now I have a way to get in and manage my risk. And so that's what I feel like MedPace has given a chance here. We did put this on swing trader. As I mentioned, I bought a little bit of this myself, breaking a little bit of a downtrend. If we take a look at XLV, look, the healthcare area hasn't been necessarily that great. It's been, really poor in the relative strength area, but you have had these pockets of strength.

13:45Alissa Coram:XBI, for instance, the Biomed Biotechs, again, not necessarily that great, but we've had some individual stocks. You look at the Growth 250 and our IBD Live watch list, there's a lot of stocks that we have from the Biomed Biotech area, and we've been watching those very closely. But the way that this digested the gains, it gave me a way to manage my risk. If this goes below today's low or even, you know, maybe Friday's low, I can really kind of cut this off and take a small loss. But I've got a lot of opportunity for a, you know, a small risk, but high reward here. And that's, that's what I'm looking at.

14:23Justin Nielsen:Yeah. And I think it's interesting taking a look at the weekly chart. Obviously, some, some folks place more weight than others on volume. But I think it's really fascinating. Not only did you get that huge percentage gain, but this is the large, that week of earnings was the largest weekly volume. I mean, going back quite a while, Justin. So a lot of institutional buying, it seems like, coming into this and taking a look at the fundamentals. We are seeing a reacceleration of that top line growth. Clearly, traders were very impressed by the report. I'm sure it's more than just the numbers that tell the story here of the quarter that this company had, judging by the reaction that it did.

15:09Yeah.

15:10Alissa Coram:And look, let's take a look at the, if you just scroll up a little bit on the weekly chart here, you can get those numbers of the EPS growth rate of 35%. And look at that stability. So you've got a line here that's really just, you know, in a very nice stable uptrend.

15:25Justin Nielsen:Yes, it is. All right, let's go to Oracle. So So speaking of the software sector, some stocks looking better than others. Oracle, this is like what software weakness? This is looking quite strong, Justin.

15:43Alissa Coram:So a little upside reversal. We already had this on Swing Trader. We actually added to the position today. Got a support at the 21-day moving average line, upside reversal. And look, earnings aren't for a while on this. So earnings haven't happened yet, but we've got a while. So that move above 250, it is extended, but this was a chance to kind of add some shares.

16:03Justin Nielsen:Yes. And last but not least, let's talk about Tesla up 3.4 % on the day. Let's also take a look at the closing range. So 55 % well within the upper half, even though it did fade off highs. It also closed around 340, 341, which was above the 338 highs from a couple of weeks ago. July 21st and 22nd to be exact. So whether you're using a horizontal trend line clearing the highs or even a declining tops trend line, which the stock did clear on Friday, and we covered that on IABD Live, actionable, potentially, this is one where, hey, it's not the prettiest chart by far. We know that the quarterly numbers are pretty dismal here, but this is a momentum stock.

16:54Justin Nielsen:This is a story stock, Justin. So whenever it turns potentially actionable, there are a lot of traders out there who get very interested. So I think it's about time we give our thoughts on Tesla's chart here.

17:11Alissa Coram:Yeah, I mean, look, the good news is you can manage your risk on this one, right? The bad news is, as you said, the chart is not great. The fundamentals, not great. So there's a lot, you know, when we talked about sticking with the A setups, this is not one of them. You know, it has had weakness, relative strength that's been poor. But again, if you are going to be getting into this, if this is a pet stock of yours, you do have a way to manage risk here. And that's the important part. You know, any trade you get into, you need to have that exit strategy in place. So if you are going to get into Tesla, you can cut this off at the, well, pick your moving average, the 200, the 50, the 21.