Indexes Recover A Bit From Harsh Sell-Off; Imax, XPO, United Airlines In Focus

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0:33Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Thursday, February 26th. It's Alyssa Coram here and a post-NVIDIA earnings slump hitting the market. We did close off lows and joining me now to discuss all that and more is my colleague, Ken Shreve. Ken, give us a preview of what we are going to be discussing today.

0:56Alissa Coram:Well, it could have been worse. Let's say it could have been worse. It was a really rough start, but like you mentioned, Ali, we did close off lows. So found a couple of stocks in the transportation sector I think are worth talking about. And one bona fide breakout that looked really good and held well all day. So let's take a look at movie theater chain IMAX. And then two stocks in the transportation sector, logistics firm XPO. And then one of the better performing airlines lately, United, UAL.

1:29Ken Shreve:Sounds like a plan. We'll get to those stocks, but first let's take a closer look at the major indexes. So the NASDAQ today, the laggard down 1.2%, but we did close off lows. So we will mention that. The S &P 500, meanwhile, down about a half a percent on today's session. So a lot less damaged looking here right at key levels. The Dow on the day finishing essentially flat, just slightly in positive territory, looking okay there. And the Russell 2000 up about six tenths of a percent on the day. We can take a look at the IWM ETF for that, looking in a solid position here. So what do you make of the action, Ken?

2:16Ken Shreve:Just when we started to see some glimmers of a rotation back into the broader technology sector, into software names. You have this NVIDIA earnings report come in, and it seems like that definitely weighed on the broader AI trade today and the NASDAQ.

2:38Alissa Coram:Yeah, well, I mean, there were some positives to be gleaned. And again, the NASDAQ was down, let's see, I had the NASDAQ down 2.1 % on an intraday basis, and it looks like the closing loss was 1.2%. So we'll take that. NASDAQ did find some support at the 21-day moving average. And believe it or not, I see breadth slightly positive today. So that was pretty surprising. And we also had positive breadth on the NYSE as well, even though the S &P 500 ended lower. And we are going to get distribution days for both the NASDAQ and the S &P 500 today. So we'll add distribution days for the count for both the NASDAQ and the S &P 500, but encouraged by a nice close off lows for the NASDAQ.

3:36Alissa Coram:Now, for the S &P 500, that was a nice close off lows as well. Pretty bullish session for the S &P 500 yesterday with that nice retaking of the 50-day moving average. S &P 500 was also down sharply earlier in the session. It wasn't down nearly as much as the NASDAQ. I think the intraday loss for the S &P 500, I had it here down 1.2 % on an intraday basis. But it did, you know, manage to close even further off its low than the NASDAQ and, you know, managed to close looks like right at maybe even a little above its 50-day moving average. So, you know, like I said, it could have been a lot worse.

4:24Alissa Coram:I think we're probably going to get slightly higher volume on the NYSE. I haven't seen a final volume figure yet on the New York Stock Exchange. But volume was, excuse me, breath was actually positive on the NYSE as well today. So positive breath on a down day for the market. We'll take that as well. But the real, you know, the real disappointment, the only stock that really didn't fight off lows today at all was NVIDIA. NVIDIA, despite another, you know, really nice earnings report, volume was very, very heavy. Closed near lows. Looks like it stopped right at its 50-day moving average. I don't know if it closed right at it or maybe even a little below it.

5:08Alissa Coram:But kind of disappointing to really see no buyers at all come in and, you know, offer to, you know, support the stock and lift the stock off lows like they did with the NASDAQ today. So, you know, it's a little perplexing with NVIDIA. You know, this is a stock that you just look at the numbers. I mean, over the past two quarters, you have earnings and revenue. They keep accelerating their rate of growth, which, you know, normally when you're a growth stock and you're delivering accelerating growth, the market normally applauds that. And usually stocks grow into their multiples and you get multiple expansion.

5:53Alissa Coram:But, you know, NVIDIA seems to be contracting their multiples. So it's just a little perplexing. The growth is really good. We have a little tiny position on leaderboard, and we were hoping it's about a 2.5 % position. So we were disappointing to see the market's reaction to see another quarter of accelerating top line and bottom line growth. But we'll see how the stock trades from here. But it was another great quarter, and it was disappointing. But at least we got a nice close off lows for the market today. But I think it's still a vulnerable market for sure.

6:34Ken Shreve:And this is a great segue here from NVIDIA to taking a look at the broader chip sector down about 3.3 % today. That is the VanEck Semiconductor ETF SMH, which we've been tracking very closely. It's still holding above those shorter term support levels. But to see this sector take that kind of a hit on a day like today, not surprising given what we saw with NVIDIA. But is that a warning sign here, Ken, for a sector that has been performing so strongly?

7:11Alissa Coram:Well, a lot of the selling in tech today was just a lot of your top performing groups, not surprisingly. not surprisingly. So, you know, not surprisingly, you see some profit taking hit some of your best performing areas of the market. So the SMH, not surprisingly, you saw volume very heavy in a lot of the semiconductor selling today. So obviously volume very heavy in NVIDIA, a lot of your leading chip equipment stocks, you know, ASML is a stock that we have on leaderboard, relatively new, holding for us in the leaderboard model portfolio. We were encouraged to see the stock, even though a 4 % decline in higher volume is never fun to see.

8:00Alissa Coram:But after four up days in a row, it did come down. And it was basically just a test of that green support level there, the 21-day moving average, a close off lows. So technically, it didn't do anything wrong at all, found support where it should. So, you know, some selling in the chip equipment group, some of your fiber optic stocks, some of the biggest winners in 2025. You know, they were some losers today, some of your contract manufacturers. So, you know, not surprising to see some profit taking in some of the biggest winners. But again, we've got to close off lows in some of your big winners in the chip equipment group.

8:37Alissa Coram:And again, encouraging to see the NASDAQ close off lows, but it's going to end up being another distribution day. And we are, you know, we are dealing with a NASDAQ that has been under distribution for a little while here and, you know, clearly struggling underneath that 50-day moving average and still on a downtrend here. So the longer it stays underneath the 50-day line and if it keeps trying to get above it and keeps getting turned away, that's just a sign that the index is a little tired here and may have a little more consolidating to do. Right.

9:09Ken Shreve:Totally agree, Ken. And let's also quickly highlight two other ETFs before we move on to the three stocks that we want to feature today. So IGV, this is the software sector ETF, and it had a good day today. So a little bit of the rotation, maybe out of chips, back into the beaten down software sector, up 2.1 % today, taking a look at a weekly chart. this week undercutting its lows from last April and trying to find some sort of bottom here, Ken. It feels a little early, but that is where we saw the strength today and where we've seen the strength the last couple of days.

9:57Alissa Coram:A lot of people calling for a bottom and, you know, maybe, maybe, maybe not. But looking at the volume here is what people are looking at. especially in the weekly volume here. When you look at the weekly chart for IGV, you can see that big, big weekly volume. We're not even done for the one more day to go for the week, but you can see how big the weekly volume is so far in IGV. So this is making a case that IGV has possibly bottomed. If you go back to the daily chart, you can see the three up days in a row have come in, you know, exceptionally heavy volume as well. So yeah, it's making a case it has bottomed, but there has been quite a bit of selling to the downside.

10:45Alissa Coram:And you can see that when you get heavy volume selling like that, it is often a long road back. And, you know, you've got names like Salesforce and Snowflake and just so many stocks that have just been crushed. And, you know, Salesforce is, you know, trying to bottom. Snowflake is trying to bottom, but a lot of overhead supply for these stocks to work through. So, you know, technical damage like this normally takes some time to recover. So I'd be careful trying to make money in the software sector at this point. It's a good sector to keep an eye on, but a lot of technical damage there is probably going to take some time to recover even a little more.

11:27Ken Shreve:Yeah. I mean, there's a bunch of different ways to make money in the market, but there's a reason why with stocks and ETFs, we like focusing on moves that are above rising moving averages. Having that trend in your favor is very helpful for your odds of success. And that's what we'll continue to focus on by and large here in terms of where we're buying. But we have to call out this kind of rotation that we're seeing, at least on a temporary basis. So it would be nice to see that continue. Only time will tell.

12:04Alissa Coram:Yeah, yeah, no doubt.

12:06Ken Shreve:Okay, let's take a look at KRE. This is the regional banking ETF. What do you make of the action here, Ken, and this setup?

12:14Alissa Coram:Yeah, well, we actually added a financial to the model portfolio today. And, you know, We're seeing some rotation into the financials. The best out of the S &P's 11 sectors, the best performing sector today was XLF. So the financials did see some money flows today. And the regional banking ETF here recently broke out of this really long consolidation. And now it's pulling back to the 50-day moving average and two up days in a row and finding some support here. So we're encouraged overall by some of the action that we're seeing in the financial sector. Again, we did add a financial name to the regional bank to the model portfolio today.

13:04Alissa Coram:That's showing some good action at the 10-week moving average. Still fairly lightly invested, right around the mid-60%, maybe just a little bit under 70 % invested at this point. So, you know, KKRE outperformed today, as did the XLF ETF. And I think financials are still outperforming here. And as tech stocks look a little bit vulnerable, I think the financials are an area worth paying attention to. So still seeing some financials pop up here and there in some of our growth screens like the IBD50 and market surge growth 250. So an area to keep an eye on. Model portfolios are no longer one size fits all.

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14:12Okay.

14:13Ken Shreve:Let's now take a look at IMAX, Ken. And I think the intraday chart, at least in the early going, there was some drama, just like, you know, our favorite silver screen flicks here that we can see on the IMAX screens. But it was able to quickly recover a very strong day here, up 14 percent. Powerful breakout.

14:41Alissa Coram:I have not been to an IMAX theater. Have you been to one yourself?

14:46Ken Shreve:It's been ages. but I have.

14:48Alissa Coram:You have. It's been a while, yeah. I have not been to an IMAX theater myself. I know some people that have, and they say it's kind of a neat experience, quite immersive. They cost a little money to go to, but at a time where people say, well, the movie theater experience, you know, people aren't just going to the movie theater that much. IMAX is really, if you look at the earnings that they just delivered for the fourth quarter, really impressive numbers. Earnings up 115%. The revenue was up 35%. Just really a classic breakout here from, I don't know, this was like a 10, 11, 12 week consolidation, something like this.

15:31Alissa Coram:Stock closed right at the top of the buy zone. So it's probably a little bit stretched here, but I just wanted to call out a really, really solid earnings report from IMAX. We like to see strong fundamentals like this. So probably a good one to keep on the watch list just because of the quality of the latest earnings report. And maybe keep it on the watch list and see how it trades from here. Maybe it pulls back in light volume and just kind of holds in this 5 % buy zone. But anytime volume comes into a stock like this and you see the numbers that you do, you've got a good solid relative strength line with that blue dot, meaning that it's a relative strength line in new high ground as the stock is breaking out of a base or breaking out of consolidation.

16:15Alissa Coram:Got pretty good annual earnings estimates here. So I just wanted to call out a really solid breakout in the market surge, growth 250 today. And probably don't want to chase it up here, but good solid earnings report and just keep it on the watch list and maybe it pulls back more into a more palatable buy range from that buy point right around 40, get an opportunity to get in at a more reasonable entry price. But nice earnings from IMAX.

16:46Ken Shreve:Indeed. Moving on to XPO Logistics, this group is ranked number 35 out of the 197 groups that we track. The earnings growth wasn't strong like IMAX that we saw, but the report, investors liked it, Ken, a couple of weeks ago. It had been running up heading into that report. Now we are getting those little ants on the chart. So that indicates a powerful move from not only a price perspective, but a volume perspective as well, and a significant number of up days versus very few down days during an advance. That's when you get those little ants. So what are you seeing here, Ken?

17:31Alissa Coram:Yeah, well, the last two stocks we're going to talk about are in the transportation sector. And the transportation sector is a big one in our database. You've got airlines, you've got trucks, you've got logistics companies like XPO. You've got just a lot of different subgroups in the transportation sector. But the common bond among all these groups is that they're leading the market. In fact, if you want to just look at IYT, this is sort of the transportation ETS, and you can see how well this has been performing lately. It was up 2.2 % today in a down market. So we're really seeing broad-based strength in the transport sector.

18:14Alissa Coram:So if you look back at XPO, yeah, and another common bond among the transports is that, you know, generally speaking, you're not seeing 20, 30, 40 % growth among a lot of companies in the transport area, but you are seeing companies that are talking about pretty good business prospects for 2026 and 2027. You see XPO's earnings prospects for this year and next, you know, 20 % growth on the bottom line, 29 % growth for 2027. So you look at the weekly chart and look at their earnings going forward, you can see that the bottom line growth is expected to kick in in coming quarters. The top line growth is expected to pick up the pace a little bit.

19:00Alissa Coram:What I like similar to XPO is just that huge earnings move a few weeks ago where the stock made that big, big weekly gain. And it's just holding gains here. So it's really showing a lot of strength and support. Again, really tight action up near highs like this is just a way the stock is really showing good support among institutions. Tells me that it's possible that we'll see an alternate entry into this stock. Return on equity of 26 % tells me that this is a pretty well-run company. So another stock that we can put on the watch list here and just see, watch it move sideways right near this 200 level.

19:39Alissa Coram:Maybe get another way into this stock. I think the transportation sector is an area that we should be looking at here. And again, just like the way it's holding tight near 200. Again, the ants is just kind of reminding us that this is a stock that is under accumulation. Transportation sector looks really strong here.

20:01Ken Shreve:Well, you make a compelling case there, Ken. Elsewhere in transportation, let's go to United Airlines. A day of notable outperformance here, up 3.2%, working on a little cup with handle. So maybe some traders a little bit more aggressive might have nibbled shares today, but setting up ahead of a potential breakout.

20:27Alissa Coram:And again, you know, kind of a similar situation. United Airlines, you look back over the past few quarters, you know, you're not seeing a company showing explosive earnings, the top line growth, single digit. But, you know, the annual earnings starting to pick up the pace this year and next, the stock was up 3 % today, you know, and it's just kind of sitting right below that 120 level, just below that 118.94 pivot. United Airlines, not all the major carriers are in great technical shape here. United Airlines is probably one of the better run airlines, at least from an operational standpoint. And from the stock perspective, it's got a relative strength line that's up near high.

21:10So this is one of the better looking setups in the group.

21:14Alissa Coram:And I think it's just one worth watching with that relative strength line near highs and just below a buy point here. So another stock that is, again, expected to starting to turn the corner fundamentally this year and next. And one of my favorite airline stocks. stocks. Again, not every stock in the group looks this good. Some are lagging, but United Airlines looks to be one of the better performers here and just like the way it looks. And another, again, the transportation sector, just a lot of different subgroups in this area, but a lot of transport stocks looking strong here. And as the NASDAQ looks a little vulnerable And you're seeing, again, chip stocks, contract manufacturers, fiber optics, a lot of increased volatility in some of these higher multiple, higher PE stocks.

22:15Alissa Coram:Some other areas of the market, you're seeing these money flows. And so I think the transportation sector, it's been working for a while, but it still could have legs, I think, this year.