Indexes Rebound And Take Back Some Of Friday’s Losses; General Motors, Citigroup, XPO In Focus

0:00Study and play.

0:02Rachel Fox:Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the Unreal College Deal. Everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox Game Pass Ultimate with a custom color Xbox wireless controller. Learn more at windows.com slash student offer. While supplies last, ends June 30th. Terms at aka.ms slash college PC.

0:39Good afternoon, everyone, and welcome to Stock Market Today for Monday, June 8th. It's Rachel Fox here, and today we saw the major indexes bounce back and reclaim some of Friday's major losses, but stocks did par gains into the last hour of trading. Here with me to help break down All you need to know about today's market action is IBD Head of Market Research, Justin Nielsen. Justin, what is on tap for us today?

1:05Rachel Fox:Yeah, it's slim pickings out there. Not something I necessarily want to stick my neck out too much on, but I do want to be aware of rotation. So we're going to look at some potential rotation plays, including General Motors, Citigroup and XPO in the logistics area. OK, very good. We will definitely get to those. And also, I think some ETFs as well. So we'll check all of that out. But before we do, I'll just give you a little rundown on the major indexes. We saw the S &P 500 shed some earlier gains, but still close up 0.3%. The NASDAQ held a gain of 0.9 % after being up over 1 % earlier. The Dow turned negative, falling about 0.1%.

1:45And the Russell 2000 held a gain of 0.9%. So with all of that, let's go ahead and take a look at The index is here. So, yeah, we saw we saw the NASDAQ really outperform, but we did see it shed gains into the close with some key economic data still ahead this week. Justin, give me your thoughts on the action here today.

2:11Rachel Fox:Yeah, well, certainly when you have a break like we did on Friday, that's a that's a good time to take stock, reassess and, you know, definitely, definitely be on the lookout for defensive, defensive action that you can take. At the end of the day, look, I got hit hard on Friday. I was on vacation, was at the zoo. I had alerts coming to me, but I couldn't get into my accounts to do more selling. you know, at when I left for the zoo, things were looking like we could get a bounce at the 21 day moving average line. And then on the drive, they just all fall apart. So what I was doing today was I was kind of taking advantage of the bounce to do some selling that I didn't get a chance to do on Friday.

2:53Rachel Fox:And so I kind of look at that as a gift. Now, I still have some exposure because I don't necessarily think that this is it for this rally. But when you have a break like we saw on Friday, usually that does require some time to heal. So one of the things that, you know, we're looking at right now today, inside day, I'm not thrilled with how it closed, to be honest. I mean, this was basically a 19 % closing range for the NASDAQ composite, 30 % closing range for the Qs, 15 % for the S &P 500, 10 % and 13 % for the Dow Jones Industrial Average and the Russell, you know, 2000. So well in the bottom quartile of the closing range for these stocks today or these indexes today.

3:40Rachel Fox:So, you know, and we have to look at that 21 day moving average line, which we were holding above that so nicely for so long, really. I mean, it was over, I think, 35 days. So now that slice through it on Friday, I'm looking at that 21 day moving average line as potential resistance, at least on the short term. And at the very least, before I start getting comfortable, I want to start looking and seeing which indexes can get above Friday's high first. Even today, I'm looking at stocks that were able to do that. And there's a whole host of areas that were interesting to me, like SMH, for instance.

4:20Rachel Fox:I still do have a position in SMH. I got rid of my SOXL, which is the leveraged version of the chip ETF. But, you know, this was, you know, this was the SMH, the SOXX, which are the non-leveraged versions of this. Those were pushing to above Friday's high. So there was a lot of strength in the semis today. Again, not a great close, but also not a disaster in the upper part of the range for, you know, when you look at Friday's action. So that's what I'm looking at. I'm looking at those Friday highs as a starting point to say, okay, are we in for some more pain or at least, the very least, what I could see is a move down to the 50-day moving average line or sideways action in the indexes that could see that 50-day moving average line catch up to them.

5:15Rachel Fox:So those, I think, are the most likely scenarios, but I want to be ready in case we do cross above those Friday highs for a potential resuming of this rally. Yeah, absolutely. We always have to have our if then state, you know, if it goes above Friday's high, then this or if we drop below, at least on the NASDAQ, this floor of support here, then we might see a move to the 50 day line. We'll have to see. You know, we also talked about RSP, which is the equal weighted S &P 500, underperforming here, closing down 0.1%. Yeah, that was a little disappointing. Friday's action. Again, I think when you look at Friday, as much devastation as there was in a lot of indexes slicing their 21 day moving average lines, RSP held up pretty good.

6:07Rachel Fox:And so that kind of was telling me, well, you know, maybe this is very targeted selling in the leaders, AI, the heat that we've been talking about so much over the last few weeks. Maybe this was something where the rotation was going to take hold. So I'm a little disheartened that the RSP did not do as well. You know, this is the equal weighted S &P 500. So a little bit more of that breadth play. Not to say that there wasn't some strength out there in some of these other areas outside of AI, but this was a little disappointing. And, And, you know, to the same extent, the Russell 2000 was looking very interesting.

6:44Rachel Fox:So if we pull up IWM, you know, that was looking interesting. You know, it's looked interesting a number of times where it seems like it's ready to go and it just doesn't get very far before it turns around. But, you know, again, this is like the others. An inside day, really have to look at, you know, it doesn't have that much in order to get back, close back above its 21-day moving average line, unlike the others where it was potentially getting resistance at the 21 moving average, this is kind of like right there at the line. So you could easily see this kind of overtake that line. But again, I'm going to look at that Friday high as where I'm thinking, okay, it's time to re-engage with a little bit more exposure.

7:30Yeah, absolutely. So that is our key point pretty much on all of these major indexes. and ETFs as well. Let's go ahead and take a look at ZeroTNX climbing here again today.

7:44Rachel Fox:Well, and again, a lot of people were putting the Friday disaster on the heels of the jobs report, right? A stronger than expected jobs report. You would think, well, gosh, that seems like good news to have a strong labor market. But that does kind of say, oh, this is maybe where the Fed gets a little bit more hawkish. So those chances of increases in the Fed funds rate, you know, you certainly saw that in a lot of the yields going up. So they had been coming down. We had been seeing some really strong action, especially in the Russell 2000, which is a little bit more sensitive to the 10-year Treasury yield.

8:24Rachel Fox:And, you know, today was, again, I mean, this did not look like a pause here for the yields. So the market was doing OK despite the strength in the yields. But again, at the end of the day, this closed at the highs and the markets closed at their lows. Yeah. Well, one area that is closed near its highs, IYT Transportation. We're looking at a stock in this area in just a minute here. Closed off of its highs, but still three positive days trading in a buy zone here from a flat base. this could be an area to pay attention to if there is a rotation. Yeah. So I'm not liking the multiple days here where it's been up, but closing kind of weak, a little bit wedgy here, but certainly worth noting an area of strength.

9:18Rachel Fox:And there's a number of stocks, especially in the trucking area. Trucking ended up going to number two in our industry group ranks, which you might be like, well, where did that come from? But something like a ARC best ARCB is in this space, the transportation truck. And I mean, look at that. It's what pullback, what correction, you know, what anything. This has just been going straight up day after day and a lot stronger in terms of the look here as opposed to IYT. You know, so you've got a whole host of stocks in this area. That's just one in the trucking space, but there's a lot of the transportation that's looking pretty decent.

9:58Yeah. Well, another area that is looking pretty decent, we saw chips rebound today, not quite above Friday highs. But as you mentioned, seeing getting back above 21 day line and seeing the 10 day line here as a bit of resistance. What do you make of this?

10:17Rachel Fox:Yeah. So, I mean, I think, again, very, very positive action. And as you look under the surface on some of the big movers in this space, you know, Intel, of course, you know, that was that was a big mover today. Well above Friday's Friday's high, getting back above the 21 day moving average line. AMAT, A-M-A-T. This one was also, you know, closed above Friday high. And by the way, when I say above Friday high, I prefer a close above Friday high, not just a touch and then, you know, a pull back in. So the fact that AMAT was able to close so well and above Friday's high, and this is just one of many, KLAC, LRCX, there's a whole host of stocks in the semiconductor space that did close above Friday's high.

11:09Rachel Fox:So, again, this is a space where we've had a lot of attention put on it and the chip space in particular. And again, I do have a position in both SMH and SOXX. But there are a number of stocks that really held up pretty well here. And the ETFs as a whole were also, you know, very interesting, again, especially given the hit to tech on Friday. Yeah, absolutely. Well, one area that did not have such luck, IGV, so software, really coming off of highs in the most recent days, but getting support at the 21-day line. So at least there's that. Right. I love the way you put it. Yeah. So at least there's that.

11:53Rachel Fox:Looking on the bright side. And look, I don't like that this was something where we were looking at this getting above the 200-day moving average line. And for me, I want to see it hold the 200-day moving average line once it gets above that. Cyber, CIBR, I think has been looking stronger in the software space. You know, you saw that this got above the 200-day moving average line and has continued. This is still above the 21-day moving average line. So even though this came in like IGV did, it just has a better look to it, in my opinion. So this is the kind of thing I'm looking for, the things that if you are looking for these turnaround situations, I'm looking for the things that can get above their 200 day moving average line and stay above that line.

12:38Rachel Fox:And I think cyber fits the bill. The cybersecurity ETF fits the bill a lot better than IGV right now. Yeah, absolutely. All right, Justin, let's go ahead and take a look at some of our stocks for today, starting with. Oh, you know what? One more I forgot to mention. Let's just take a quick look at IBIT just because the crypto plays have just gotten whacked. Right. And so on Friday, we saw this kind of undercut a lot of support areas. This was an area of strength today. It did get above the Friday highs. Friday highs. And even in the crypto space, one of the ETFs that I've been tracking, WGMI, you know, was also, you know, a little bit a little bit stronger today.

13:20Rachel Fox:So really recovering nicely. This has a few things like IREN, which is still kind of listed in the crypto space, but has really moved over to data centers. So, you know, while I'm not about to go try and bottom fish and pick up crypto or Bitcoin right now. I did think it was interesting that a lot of these data center plays or crypto plays that were former crypto plays that are now turning to data centers were as strong as they were today. WULF might be another one in that space to just take a quick look at. Okay, now let's get to stocks. Yeah, no, it's a good point. It's a good point to note everything that's really getting above those Friday highs, even in things like iBit, which has been struggling for a minute here.

14:07For a while, yeah. Yeah, good to know the strength. All right. Yes, let's go ahead and take a look at General Motors. GM looks like it's forming some kind of a handle here. It had a pretty solid day today. Relative strength-wise, this one looks strong.

14:25Rachel Fox:Zootopia 2 has come home to Disney+. Let's go! Get ready for a new case. We're going to crack this case and prove we're good partners of all time. New friends. You are Gary the Snake. And your last name? The Snake. Dream Team. New Habitats. Zootopia has a secret reptile population. You can watch the record-breaking phenomenon at home. You're clearly working it. Zootopia 2, now available on Disney Plus Rated PG. Yeah, so it hasn't, you know, the relative strength hasn't been that great, right? This has been kind of on a downtrend because this was basing while the market was really taking off. But if you kind of draw a line on the RS line, you can kind of see that this is potentially breaking that downtrend.

15:11Rachel Fox:So, again, if I'm going to be looking for rotation, I am going to expect that some of these relative strength lines are going to be poor. Some of these relative strength ratings are going to be poor. But I'm going to be looking at things that are potentially breaking the trend and setting up. I absolutely agree with you, Rachel. I think this has a nice little handle formation that it's got here. So you can either look at the line that Rachel just drew kind of at the top of that handle, the highs of that handle, or you could even do a little bit of a downtrend, you know, where it's kind of just bumping its head up, depending on how you draw the line, you know, so either going through it today or bumping its head up.

15:48Rachel Fox:But I kind of I kind of like the steeper one that you drew, Rachel, that makes this potentially actionable today. Mm hmm. Yes. Crossing above it here today with a two percent gain. I would be watching. Yeah. Either area would be would be good to watch. All right. And look, with a lot of these ideas, it doesn't mean you have to go out and buy them right now. I think it's, you know, I raised a lot of cash between Friday and today, and I'm not in the mood to really do a lot of buying. But I am watching these potential rotation plays to say, hey, do I need a zig over here when the market's zagging or not?

16:26Rachel Fox:But I also know that sometimes these rotations can look good for two, three days and then the money comes right back to where it was. So not to mention that we also should mention that the SpaceX IPO is coming out this week. And so that's something where a lot of people are wondering, hey, are we going to see that suck up a lot of the air in the room, a lot of the cash in the room? So it'll be interesting to see about that. Yeah, absolutely. Another area to potentially be watching might be banks, Citigroup, another one on our list. Closed near lows today, flirting with this cup buy point here, but struggling to really take out the buy point in Friday's highs.

17:08Rachel Fox:Yeah, I really like the Thursday action. And again, that was not a necessarily great day for the market. You know, we really kind of, you know, took a beating Thursday early in the session and we closed off the lows and with an upside reversal with a lot of stocks. But this Friday just didn't look that bad. Right. It looked like a very normal ho-hum day. And so I think, you know, Thursday was actionable. Friday didn't necessarily mean that you had to do selling here. But now we could potentially be seeing a little handle form. So that's what I'm on the lookout for here. And again, this is an area, the Banks Money Center, even regional banks that have been kind of coming up lately.

17:51Rachel Fox:So yeah, we'll see if these can hold up. Yeah, we've got a base on base pattern here for Citigroup with a cup. So watching these highs here, maybe a high handle forms very close to this buy point. All right. And finally, let's go ahead and take a look at XPO, which is transportation stock in the transportation group, another cut base here, getting close to the buy point. Yeah. And here again, yes, rotation, we are seeing a little bit of a weaker relative strength overall while this was basing, but crossing a downtrend, you know, and certainly it seems like it's kind of stabilizing that relative strength line.

18:32Rachel Fox:And yeah, it's a pattern we can work off of, right? A cut pattern. You could say that there's an early entry potential if you had drawn a line there crossing a downtrend or even a horizontal line kind of from recent resistance that we kind of crossed above. But any way you slice it, it looks like this one is more on the right side and getting some buying power moving into it as opposed to what we saw over the last few days where a lot of stocks were getting hit very hard and getting a lot of distribution. Yeah, some volume coming into this one over the past few days as it rises up. Relative strength line, not at new highs, but relative strength rating, not too bad.

19:20Well, it seems like all in all, we're at a critical juncture. It seems like we should be watching for potential rotation and watching these levels to see what happens if we're going to break higher or lower from here.

19:34Rachel Fox:Yeah. And again, I think Friday's bar gives you some nice boundaries. You know, if you close above it, that's telling you something bullish. If it closes below it, that's kind of giving you something bearish. But in the meantime, I'm more in observation mode than action mode. A lot of people might be thinking, oh, well, what about shorting? I'm not into shorting right here either. I think it's, you know, it's more of a 50-50 flip in terms of what we do here. Again, I think the most likely scenario is this is something that needs a little bit of time to heal from. But that just means for me a little bit more observation, a little bit more sitting in cash for a while until I see more definitive action.

20:21Rachel Fox:You know, what is this trend going to turn into on the short term? Long term, I still think bullishness, but short term, that's a different story. And that's where the indecision is. So I'm just going to wait before I take major action. And look, if you want some bullishness, for those that don't know, the monthly market report with Jim Ropel, that's going to be on in about a half an hour after we finish here. So something where I'm sure he's going to be talking about his long term bullishness and what he's doing in the short term in terms of hedging and things like that. Yeah, absolutely. We also have our swing trader status update episode tomorrow with you and Mike.

21:02So I'm sure we'll get some great updates there as well.

21:05Rachel Fox:Well, Wednesday, a doubleheader. We've got Jack Schwager, the author of Market Wizards, who's going to be on the podcast. We're really looking forward to that because he's got a new book out. and we are going to have a market wizard actually giving a webinar. And so Mark Minervini, who was featured in the market wizards is going to be doing a webinar on market surge, which by the way, it's open access, free access this week. So all you have to do is register, no credit card needed, and you can try out the new market surge. If it's something that you have used before, it's very different. So check it out.

21:41Thank you so much for those announcements and for all of your analysis here today, Justin. I think that will wrap up our show. We'll be back with more market analysis tomorrow, starting with IBD Live. So you can head over to investors.com slash IBD Live for all of the details there. Thanks so much for watching. And we'll also see you right back here tomorrow after the close.

22:40Transcription by CastingWords Take on the week to subscribe now.