Indexes Turn Higher After Powell Scare: Ferrari, Rambus, ROAD In Focus

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0:40Ken Shreve:good afternoon everyone and welcome to stock market today for wednesday july 16th it's alissa quorum here and we saw some nice upside reversal action for the major indexes today after the markets felt at ease i suppose amid a little intraday drama over the fate of fed Chair Jay Powell. And joining me now to discuss the action in today's session is my colleague, Ken Shreve. Ken, what do you have for us today? All right. Well, we're going to talk about the stocks brought to you by the letter R today, at least in terms of their tickers. First one is RACE, R-A-C-E. That is Ferrari. Also Rambus, R-M-B-S, a very little known chipmaker that's Pretty significant in data centers itself.

1:25And then ROAD, R-O-A-D. This is a company called Construction Partners. Still acting well here.

1:32Ken Shreve:All right. Well, we are really ready for those R stocks. Ken, I know you'll bring it with the analysis there. But first, let's take a look at the major indexes, starting with the NASDAQ composite reversing higher. Another R word there. Reversal up a quarter of a percent by sessions closed. Meanwhile, the S &P 500 up three-tenths of a percent on the day, shaking off intraday weakness as well. The Dow up a half a percent, coming down to touch that 21-day. And small caps outperforming here, up one percent, also a reversal. And to show the intraday scare, let's go to an intraday chart here so you can definitely see when that news broke.

2:18Ken Shreve:Tell us more, Ken. Well, yeah, it was just right after 8.15 a.m. Pacific time, 11.15 a.m. Eastern time. And apparently there was a senior White House official who said that President Trump was very close to firing Fed Chairman Jerome Powell. We've heard President Trump in recent weeks talk about firing Powell. But, I mean, the market really, really took a dive there. Again, it lasted for about an hour, but it was kind of back and forth. But the NASDAQ was down as much as eight-tenths of a percent, just like that at the drop of a hat. And then, you know, the market was able to rally in a bull market alley.

3:01You want to see, if you see early morning weakness, it's always great to see some late afternoon strength. And this market is, we've just been talking about it on a daily basis, acting very strong. And it did it again today. NASDAQ down 0.8 % intraday, touches the 10-day moving average, closes up near its high after a not-so-great session yesterday. And it had higher volume today, too, which I think is encouraging.

3:30Ken Shreve:Yeah, so some resiliency and respecting the uptrend, one might say. All right, let's go to the S &P 500. A bit of a shakeout below the recent action, a notable low being that 7.7 low. We undercut that intraday and we were able to close in positive territory here as well. Yeah, another pretty sharp intraday drop for the S &P 500. You can see that downside reversal yesterday for the S &P 500. That resulted in a mild distribution day because you had higher volume yesterday. Volume wasn't as strong on the NYSE today as it was on the NASDAQ. It might have been just a little bit higher than what we saw yesterday, but equally encouraging performance by the S &P 500 today.

4:21And, you know, this market is giving getting opportunities to to go down. But again, the headline the headline this morning was very, very short lived because President Trump in the Oval Office quickly denied that he was he was close to firing Jerome Powell. So market found its footing and got a nice close near highs.

4:45Ken Shreve:OK, let's get your thoughts on blue chips and small cats, as always, starting with the Dow here. Yeah, a drop for the Dow Jones industrial average down to its 21-day moving average. So still seeing a lot of growth stocks holding at their 21-day line. Some starting to show a little cracks in the armor, maybe with drops below the 21-day line. But good to see the Dow respecting that support level. Of course, the NASDAQ and the S &P 500 still holding comfortably above the 21-day. Yeah, and the Russell 2000, similar action in that it, too, came down to its 21-day line and a nice round number here, 2 ,200.

5:29Yeah, very similar look to the Dow, but we had been talking about the Dow and the Russell 2000 lagging the market for some time, but both of these have started to participate here. So they've both fallen maybe a little further off highs than the NASDAQ and the S &P 500, But I think overall, you have to call today another win for the bulls. And again, just seeing maybe some small damage underneath the surface when it comes to some stocks. But again, I'll be writing the big picture column later. And there's still a lot of good to talk about in this market in terms of leading growth stocks still holding up quite well.

6:11Ken Shreve:Yes, great call out there. Make sure to check out Ken's big picture article today. you'll be able to find it when it drops on the homepage of investors.com. All right, let's turn our attention to two ETFs of note before we move on. And let's start with the chip sector. We saw some weakness from ASML here, Ken, but it looks like the broader sector was more or less able to shake off that weakness. I know at one point during IBD Live when we were taking a look at this chip sector ETF, It was down about 1.4 percent, closed down just a half a percent. Yeah. And I was on IBD Live with you. I actually saw it down up as low as 1.7 percent.

6:57And this was before the NASDAQ started selling off at around 11.15 a.m. Eastern time. So it was just another way that the market is showing, you know, showing underlying strength here. Chip stocks had every reason to sell off because of the news that ASML delivered. This is not the leader ASML in the chip equipment group, but they do make equipment for some of the world's most advanced chips and what they say matters. But, you know, the chip sector as a whole performed, you know, very well. You see the bottom line and top line growth for ASML was there again, but they guided third quarter revenue a little below expectations.

7:39And then their outlook for 2026, they just cited some uncertainty about whether or not they were going to be profitable. You can see on the earnings, annual earnings estimates, profit next year expected to be up 10%. They're still trying to figure out if they're going to be able to earn close to 2743. So you can see why the stock was down 8 % on the day. But really the selling, you know, filtered into the chip sector for a little bit, but SMH really, really strong close and support at the 10-day.

8:11Ken Shreve:Agreed. And on IBD Live this morning, Ken, you flagged Taiwan Semi due with its report tomorrow. So that'll be another test for the semiconductor sector. Yeah, a big time test. The good thing about Taiwan Semiconductor is we do get monthly sales data from them every month. And just recently, it seems like for several months in a row, they've been reporting monthly revenue up at least 30 percent. That was the same this time around when they reported June revenue, not just just just recently, actually. So we get a little feel for how how businesses at Taiwan Semiconductors. So I wouldn't be surprised to see another another strong report tomorrow morning.

8:54But again, a lot of these stocks have been running, running higher into earnings. So, you know, sometimes you can get a sell the news situation. But, you know, we are in a we're in a pretty strong uptrend here. And it just seems to be there's still money on the on the sidelines wanting to come in here. So we'll see what TSM has to say tomorrow. But, yeah, what they what they say typically moves chip stocks as well.

9:18Ken Shreve:Yep. Sounds like a plan. All right. Well, let's turn our attention to three stocks of note from today's. Harvard Business School Executive Education creates powerful connections for leaders from around the world. Their programs strengthen organizations and individuals by deepening relationships and fostering new ones. Participants leave with lifelong friends, new potential business partners, and a powerful globe-spanning network of fellow changemakers. Learn more at hbs.me slash breakthrough. That's hbs.me slash breakthrough. session beginning with Ferrari. The ticker here is race and Ferrari cleared a cup with handle buy point today up 3.7 percent.

10:03Ken Shreve:Ken, strengthened throughout the day. Yeah, I took a look at this one early in the day on IBD Live when it was trading below 5.500. So it was kind of revving its engines for a possible breakout try, and it just got stronger with the market after that initial sell-off. So, you know, some breakouts have been a lot trickier lately. This is the way you want to see a breakout in an uptrend, close near highs. You know, it closed above that left side high of 503, 503.10. So still in a buy zone here. But what we want to see tomorrow for Ferrari is follow through. Because when the stock is breaking out of a base, you want to see some follow on buying.

10:54And that has been a little tougher to see lately. So we'll see if Ferrari can follow through tomorrow. But good, strong breakout for the stock today. Relative strength line, you can see, is lagging a little bit. And that is one reason I wanted to talk about Ferrari is just that, you know, if you're looking at stocks that are setting up in bases right now, you are running the risk of, you know, buying a stock that has a lagging RS line. And on the weekly chart here, you can see it's still far off highs, even though Ferrari is moving into new high ground here. So not a total deal breaker, but we often teach that you want to see an equally bullish, you know, relative strength line when a stock is breaking out.

11:37And if it's lagging a little bit, it can just be a clue that the breakout could be challenged.

11:43Ken Shreve:Great points there, Ken. And you also mentioned that round number of 500, not only that approximately the buy point for the recent handle, but that's a resistance area that goes back several times as a key level back to February of this year and even last September. So if it can punch above that level and stay above it, that seems pretty notable here. Yeah, I think. And again, so we'll look for some follow through tomorrow. It was a good performance for the broad market today. I think the market is still showing us that it is it's getting a bid here and acting well. So maybe we'll get some follow through in Ferrari.

12:24But, you know, in terms of the breakout day, good solid close up near highs and you had nice volume expansion as well. And by the way, a company that has a pretty consistent record of bottom line and top line growth, the auto manufacturing group often doesn't rank that highly in our 197 industry group rankings. But, you know, Ferrari has been a very consistent performer in this group.

12:50Ken Shreve:Let's check out Rambus in the Semiconductor Fabless group. So along with NVIDIA and the likes of Broadcom, this is a member in that same industry group up three and a half percent today, Ken. Yeah, and it's not a name that people talk about. I mean, when you're talking about data center and chips, obviously NVIDIA, AMD get a lot of attention. But Rambus has a chip interface technology that is front and center in data centers, again, involved in just the speedy delivery of data through these data centers and AI training and things like this. So Rambus is right in the middle of that market. You can see growth has started to ramp up.

13:39That first quarter revenue accelerated nicely from the fourth quarter there, up 41%. Earnings accelerated as well. So in a sweet spot here, there was initial breakout for Rambus over 63.15. A good example how if you miss that breakout, it formed another handle, came down to its 21-day moving average earlier this week on Monday, and is now in the early stages of breaking out over this 66 area. So still looks actionable here. Volume picked up the pace today. You know, again, just the caveat here, another stock that's breaking out. Relative strength line looks a little better here than race. You can see it's kind of poking up near high.

14:29So this one, I think the relative strength line looks a little healthier than race's. But, you know, I think alternate buy area here. Okay.

14:40Ken Shreve:And we've got earnings coming up at the end of the month. So we'll keep that in mind. And now let's round things out with a look at road. This is construction partners up 2.8 % on the day and I would say a constructive looking base. A constructive looking pattern here for construction partners. The ticker symbol is RODE because they're an infrastructure. They do a lot of work on roads, highways, bridges, even some airports. And they're mostly centered in the southeastern U.S. A pretty healthy relative strength line here, just off highs. You had a breakout from a long cut base. Didn't really get going, but I like how it just kind of moved sideways.

15:25Held support at the 50-day moving average. This one's very close to breaking out of a downtrend, and you can see it's forming a nice little flat base here. So the industry group is still quite strong. You can see it ranks 20th out of 197. There's broad-based leadership in this group. I think Construction Partners is a mid-cap stock worth watching here. And I like the perspective on this weekly chart. Nice, strong move up off lows and then just a little tight consolidation while holding support here. So, you know, big move in 2023 and 2024. But after a nice shakeout and pullback, looks to be setting up again.

16:08And I think the industry group is still looking strong.

16:12Ken Shreve:Yeah, well, let's see if we can build on this base. And earnings here are due, it looks like, roughly in the first week or so of August. So we're going to make that out. We're just now getting into the thick of second quarter earnings season. Lots of financial reports still to come. And we've got a big one tomorrow with Netflix. And it's only going to get busier. So it could be a little challenging. I will hope that stocks don't sell the news when they're rallying so much ahead of earnings. But I think the one thing we have going for us is just a really healthy uptrend here that's still showing a lot of strength.

16:52Ken Shreve:Well said. All right. Well, thank you so much, Ken. We always appreciate getting your take. Thanks so much. And thanks, everyone, for tuning in. That is it from us for today. But it's Wednesday, so we have our weekly Investing with IBD podcast. live at 5 p.m. Eastern on our YouTube channel, hosted by our very own Justin Nielsen. And this week's guest is Dawn Vandenbord of Revere Asset Management. It's going to be a great episode talking about how to build a portfolio from scratch when you get a turn in the market, like we saw in August, what to look for, how to construct that portfolio. It's going to be a very interesting discussion.

17:32Ken Shreve:So we hope to see you there. And of course, you can always check out the archive on YouTube at investors.com slash videos or listen wherever you get your podcasts. Thanks again for tuning in, everyone. And we'll see you right back here tomorrow.

18:04Ken Shreve:This episode is brought to you by MassMutual. When people count on financial guidance, they want a company known for strength, stability, and trust. With the solutions to fit their needs, financial professionals can help people move forward with confidence, backed by MassMutual's 175-year legacy. Learn more at MassMutual.com. MassMutual.com.