Indexes Strive To Keep Thanksgiving Week Gains; New IPO Suffers A Spill

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0:24David Saito-Chung:Good afternoon, everyone, and welcome to Stock Market Today for Monday, December 1st. It's Alexis Garcia here, and the major indexes trimmed early losses in today's trading tape As stocks try to maintain gains from Thanksgiving week, crypto stocks got hit as Bitcoin plummeted, extending a week's long slide for the digital coin. And here with me to help break down everything you need to know about today's market action is IBD Deputy Markets Editor David Saito Chung. Hatman, it's great to see you. I hope you had a great Thanksgiving. But what's on your plate for us today? Well said, Lexi, and thank you.

1:11I did have a great Thanksgiving. Glad you did too with your family. And I want to welcome everyone to today's SMT in which we actually have kind of a mixed platter. I'm going to start with a new IPO called BLLN, the ticker, Billion to One, BLLN. And then ESCO Technologies, ESE, delivering a little bit of a sell signal, in my view. And SanDisk, SNDK, one of the leaders in data storage.

1:42David Saito-Chung:All right. Well, we will get to those stocks, but let's just check in on how the major indexes finished the day. The S &P 500 down six-tenths of a percent. The Dow down about nine-tenths of a percent. The NASDAQ down four-tenths of a percent. And small caps getting hit by the bears here a little bit, Dave, down 1.2%. But let me go ahead and get my chart up. But while I'm doing that, talk to me about today's market action. We saw a lot of positive things last week. So how does December usually shape up here for the market? Oh, great question. And I found Monday to be a very interesting day today with more traders coming back from the long Thanksgiving holiday.

2:28For sure, we had just overall general declines. But if you look at the weekly charts of these indexes like the S &P, we had a very bullish Thanksgiving holiday week in which we retook the 10 week line. And so in the context of that strong gain, today's loss of about 0.5 % is digestible. If you go to the Russell 2000, which was, as you mentioned, Lexi, 1.2 % lower, well, that followed a tremendous weekly gain of 5.6%. Now, NASDAQ also had a beautiful Thanksgiving week, up 4.9%, I believe, for the week. So the fact that the NASDAQ pushed off its lows for the day, down only 0.3 % to 0.4%, the NASDAQ 100 down 0.3%, feels like there was some profit taking, but it wasn't profit taken en masse.

3:23So given the strength that I saw in some retail names, transportation names, and some other areas, it felt like a very reasonable decline, given that also we have raised the exposure for stock investors to a 40 % to 60 % target level.

3:48David Saito-Chung:And I know Webby and Justin last week were talking about looking at this high here from November 20th. That's the day of that really ugly downside reversal here is, you know, a level here that they like to see things get above and hopefully stay above. So we've seen that kind of happen across some of the major indexes, Dave. So, again, how would you like to kind of see this continue to maybe digest here over the next week? All right. That's a great point. That was a wild day. And fortunately, the market has, at least on the major indexes, has recovered very nicely. And all of those indexes we talked about are above the most important moving averages using the IBD growth stock methodology, which is that 50-day.

4:37Notice how the 21-day exponential is now rising again after dipping earlier in November. And so it'll be interesting to see whether we hold these recent days of gains. If we don't, then as a stock investor, I'd expect more weakness because this has been a healthy pullback.

4:59David Saito-Chung:Yeah, let's take a look at RSP then and get your thoughts on market breadth here. This one, again, down about seven-tenths of a percent today, Dave. But, you know, we're at this 190 level and, again, just trying to hold on to some of the big gains that we saw over the last week. Yeah, that's right. The RSP equal weighted S &P 500 ETF definitely deserved to catch its breath. So not surprised that we've broken that win streak. Today, the breath was definitely negative. If you look at the New York Stock Exchange, there were 1 ,800 stocks down and 1 ,000 or close to 1 ,100 stocks up. So it's really no surprise to see RSP take a little bit of a bigger hit.

5:42And if you go to QQEW, that was obviously down to when you have an even greater proportion of stocks down versus up. But as you're showing right there, Lexi, on that daily chart, the fact that we've kept so far going into Tuesday a lot of the last prior five days of gains, and we're also kind of straddling that 50-day moving average, I don't think there's any reason to be very fearful at this point. What is important, though, to understand, too, is that we do have earnings news. I think Credo Technology is reporting after the close. We have some inflation data coming up on Friday. I think that's the PCE, the Fed's favorite inflation gauge, as well as some job reports from the likes of ADP.

6:33So this will be a more active, busy week. And so we need to really monitor both these indexes and the top stocks.

6:43David Saito-Chung:And let's take a look at an ETF here, Dave. Ibit, we mentioned Bitcoin, having a tough time here extending its slide here down about 6 % today. So give me thoughts on this one. And again, it just really seems to be pulling certain things down here in the market. Yeah, it really is, Lexi. And I really advise all video watchers to try not to catch a falling knife. We're down, look at that 5.9%. We didn't undercut the prior low, but the relative strength rating of 23, some of the moving averages really starting to really curl lower. this is under a lot of pressure. And clearly, from just a technical definition of a bear market, the Bitcoin, the Ethereum, the cryptocurrencies are definitely facing their most severe correction in quite a while.

7:43So best as an individual investor to stick to the sidelines and just let the selling exhaust itself and monitor it from there. At CLA, we're in your corner and on it. We coach tax strategies and Little League First Base. We help you adopt AI data tools, and we adopt rescues named Buddy. We walk your factory floor and jog the local 5K, though sometimes we walk that too. Wherever you're coming from, we're right there with you. Wherever you're going, we'll get you there. CLA, CPAs, consultants, and advisors. Learn more at claconnect.com slash with you.

8:24David Saito-Chung:All right, well, let's take a look at some individual stocks today. starting with billion to one, that's ticker B-L-L-N. This is a recent IPO in that biotech space, really struggling here, an ugly downside reversal today, down about 13.2%. But again, really trying to hold above this IPO-based breakout here, but failing today. Yeah. I mean, maybe some of you are scratching your heads. Why do Lexi and Dave want to look at a stock today that was down 13%, right? And this is not the typical stock we want to focus on, but there are some merits to actually taking a look at this company and kicking its tires.

9:11One, brand new IPO. It debuted at$60 a share. And throughout its public trading history, it's never traded below that. In fact, at the lows of that chart we see, I think it was around 80, 78, 80 or so, or excuse me, even a little bit higher. So the fact that after its IPO, the fact that it's been trading well above that$60 pricing is a bullish thing. It indicates that there's demand. Now, we did have a breakout attempt from a very narrow IPO base, and no base breakouts are ever guaranteed to make people money. The stock did go up quickly, but then look at that bad reversal that happened on, I believe that was Wednesday.

9:57And then you had that gap in between the blue day on Friday. That's the Thanksgiving holiday. And then obviously some large investors, at least someone out there, wanted to really unload stock. So this can happen with any kind of new IPO. But it's interesting that as we talked about on today's IBD Live show, we highlighted the impressive sales growing fast right now, running at a perhaps at a maybe trailing 12 month or four quarter clip of nearly 250 million. Maybe it's going to grow further. And yes, in fact, that market search chart shows the acceleration expected for the sales. And the company looking like it's got a shot to become like sharply profitable.

10:44According to their website, this company has what they call a proprietary quantitative counting templates technology. What I find interesting is that they say that they can detect and measure tiny sparse disease related DNA fragments or molecules. So they might create medicines or help improve diagnostics for individual patients at the single molecule space. I mean, this sounds very, very high tech, doesn't it, Lexi?

11:13David Saito-Chung:Yeah. Well, you know, this is the kind of future we want, right? Yeah, I think so. I mean, well, yeah, I mean, for years now, right, the media and scientists have talked about individualized personalized medicine is billion to one, one of those future tool providers we shall see. So not viable right now, but one to watch. All right. How about we move on over to ticker ESE? That's ESCO Technologies. Another one down today, 3.7 percent and really falling below the 50 and 21 day lines, almost conjoining there, Dave. But why is this one on your radar? I wanted to highlight a stock that's had a really good year, probably even doing better than the NASDAQ, which went into Monday's action up around, I believe is something like 20, excuse me, yeah, 21 percent and the S &P up 16 percent.

12:11You can see on this chart that the stock going from the low 100s, 125 or so, rising 80%. What a grand move for a stock that probably is not really talked about at the kitchen table very much, right? This company is a specialist in filtration technologies for aerospace, industrial markets. And I just found that today's drop through the 50-day might have signaled kind of a possible changing character, one from strength, in which if you look at that daily chart back in August, it had a big wild sell -off after earnings. But then it finished, yes, exactly right there, it finished above the 50-day, dipped back below it again, but it wasn't severe.

12:58And then similar tests of the 50-day in September at 200.99, 204.09, which is you can see those lows. It held above the 50-day. Now we have, it looks like three straight closes below the 50-day moving average. And hence, those who bought the stock brand new recently might have to really cut their losses. And if you have a big gain in this, you have to maybe make a decision as to whether you're willing to hold this stock if it tests the 200-day moving average, which is well below 190 there, or try to preserve some of those profits and wait for a new base to form. All right.

13:43David Saito-Chung:Well, let's wrap this up, Dave, with Sandisk. That's ticker SNDK. This one falling at 5.9 % today. And we've seen the wild price swings in this one, Dave, but another one that's been a really big winner here, especially since this move started back in September. But what are your thoughts here? Falling below the 21-day line, but some tighter trading action today. Yeah, exactly. Spot on with the analysis of the 21-day line. And hence, for those who are more aggressive, active traders who like to buy to bounce off the 21-day, it's probably been some rough sledding. I wanted to highlight this one because it gets a lot of play on our videos on IPD Live.

14:29The data storage group is strong. You can see right at the top left corner that computer data storage is the second best industry group in terms of six-month action. But I think at this point, given the monster run that it's had, my suggestion would be to let the stock continue to cool off and see whether it does one of two things. One, does it test that 10-week moving average, which is that red line that Lexi is showing on the weekly chart, and does it bounce off that? If it does, that could be a potential buy signal. However, the stock has just had an enormous run after the breakout. Look at the angle of the sun here.

15:09David Saito-Chung:Perfect. Exactly. Yeah, I just wanted to show how strong some of these AI-related stocks have performed since the April 22nd follow-through day that IBD highlighted as the start of a tradable rally. Well, this one really didn't get going until it really broke out to multi-month highs in the summer. But maybe if it doesn't have a real strong rebound up to 10 week line, maybe wait to see out this one and its peers such as WDC and STX. Those are some fellow winners. And so is Micron, MU, which used to be on leaderboard, a model growth stock portfolio that we also manage as ideas. If these stocks take time, weeks or months, to build a new base, we'll maybe sometime later check out the quality spaces and see whether they produce some new outstanding breakouts.

16:08David Saito-Chung:All right, Dave. Well, thank you so much for your analysis today. And that's it for us. We'll be back with more market analysis starting tomorrow morning with IBD Live. You can head on over to investors.com slash IBD Live for all the details there. Thank you.

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