Major Indexes Slide On Big-Cap Losers; AppLovin, Wells Fargo, Nutrien In Focus

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0:40good afternoon everyone and welcome to stock market today for wednesday january 14th i will be your host rachel fox and today we saw the major indexes take a hit intraday and undercut some key moving averages but we also saw slight strengthening into the close which could be a positive sign. Here to help me break down all you need to know in today's market action is IBD news editor Ed Carson. Ed, what do you have on tap for us today? Yeah, Rachel, it was a divergent day, different things moving around. I want to take a look at AppLovin, Wells Fargo, and Nutrien. Okay, we will definitely get to all of those.

1:19But first, let's go ahead and check in on the major indexes. So just to give you a quick rundown, The S &P 500 closed down 0.6%. The Nasdaq was down 1%. The Dow Jones fell 0.2%, and the Russell 2000 rose 0.5%. So I'm going to go ahead and share my screen here so we can take a look at this all in more detail here. So I've got the Russell pulled up. So Ed, just to kind of give a quick overview, tech led the downside. Mega caps were also down. Bank stocks were down on some earnings trepidation. But then we saw gold and silver at fresh highs. Russell 2000 is also holding near highs. So there's a lot going on.

2:05Give me your thoughts on the market here. Yeah, I mean, there is a lot going on. And it was, yeah, the big financials and a lot of big techs, some mega caps and just other just large caps like AppLovin, which we'll look at. And it's, you know, for investors, it's like there's still plenty of sectors that are working well. I think software is definitely struggling. I mean, there's a couple of names here and there, but that's been a hard hit sector. And I think investors have to be nimble, know what's working. And there is a lot working, you know, small caps, gold, aerospace is still looking good.

2:39There's still a lot of areas. Chips are still doing all right. I mean, certain chips are doing all right. so um you know just be wary of all that uh also obviously as this week's bank earnings have shown got to pay attention to earnings because financials were looking pretty good heading into the last couple of days so you know we'll see how that you know goes so yeah it's just tricky i don't want to make too much of it because you know you can diverge sometimes on any given day and it would just take one good day and the nasdaq is almost at record highs of course it would take hardly anything for the NASDAQ to be below the 50-day line.

3:15So I don't want people, people shouldn't ignore it either. I mean, but so it definitely depends on where you're invested and you just have to be definitely, you know, focusing on the areas that are working well because the market breadth was pretty good today. Yeah, absolutely. Yeah, just to highlight this, we saw the NASDAQ undercut the 21-day line here, this green line on my chart earlier today, but it did hold up and it strengthened into the close. Comparing that with QQQE, which is the equal weighted, not down nearly as much. We saw this one close down 0.4%. And then if we're comparing the S &P 500, which closed down 0.5 % here with RSP, its equal weighted counterpart, Our, you know, RSP is up 0.4%.

4:06So that's, you know, in line with kind of, you know, a positive sign what we want to see. Yeah. What do you make of this divergence? Yeah. I mean, again, there just seem to be certain areas. I mean, it's nice to see the, you know, the small caps. It's nice to see the underlying strength. There's energy. There's a lot of areas that are working well. It's just software is not working well. And the point that David Ryan has made a lot is that you can't rely on those magnificent seven necessarily. I mean, Google's still doing well. It doesn't mean that they can't do well, but a lot of those names are just struggling right now.

4:40So we don't know if it'll last. Sometimes we've had a lot of these start and stops. Oh, small caps are going to go. Small caps are going to go. And that always seems that's the moment when they roll over. But maybe this one really is. The relative strength line has been picking up on that now consistently for several weeks. Yeah, there was a dip a few weeks ago, but it's like we're getting higher highs, higher lows along the way. So it does seem like maybe we're getting a little bit of a lead after some really big gains for big cap techs and honestly, big banks. Big banks often don't go on these enormous runs.

5:17And a lot of them have had really good runs. Like KBWB would be one just to show that how that, you know, that has done very well. and the relative strength line has sort of improved, not massively, but it's outperformed for a couple of years now. That's a little unusual. So maybe these sectors just need to take a break. Yeah, certainly. I mean, you brought up XLF earlier and that one has been, it was doing well. And then we're getting into earnings season now and we had some big banks kick off their earnings season for the quarter. So, you know, we saw, you know, JP Morgan come under pressure.

6:01We saw Bank of America come under pressure as well, undercutting these moving averages, undercutting its 50-day line. But with XLF, we are seeing it get support here at the 50-day line. So hopefully it can, you know, bounce from here. But what do you make of this? Yeah, I mean, you know, with the big banks and the credit card names also getting hit. So it's important to get hold here. Would have been nice if it could have held at the top of that prior base, but it's not that far from that 54-49. We still have Goldman Sachs. We still have Morgan Stanley tomorrow. There's going to be a lot of big and small regional banks that will come over the next week or two or three, along with some of the other type of financials and insurers.

6:48But, yeah, we'll just have to see how that one goes. you know that that's just a little disappointing it was it was doing pretty well there and it just taken a couple of days two or three days and uh it's it's at a key level uh you know tomorrow might be pretty important to see how how it reacts to Goldman Sachs and Morgan Stanley yeah absolutely seeing how much exposure you may or may not want to this area um and uh and yeah and just you know highlighting the the heavy volume kind of coming in here on these last few days. But, you know, still, you know, we can't throw this one out just yet. IGV, on the other hand, software names, you know, can't really say the same for this one in terms of holding up at moving averages.

7:33This one has shown that its 50-day line is now resistance instead of support, and it's been showing that for, you know, a few months now. So, you know, we're going to talk a little bit about this one. What are your thoughts? Yeah, not good action at all. The Rela Strength has been really weak for quite a while on this one, and it's just really deteriorated lately. 50 days for a million lines resistance. I mean, we've seen all the other things like SMH, ARK, you know, some of the names, you know, they've been up doing well. You know, so, I mean, they've taken some hits, but it's not that much of a hit.

8:08And, you know, ARK has gotten back above its 50-line, but IGV, 50-day, 200-day line, a lot of damage here. We're going to look at App 11, but Microsoft is weak. Just a lot of names. Snowflake. There's just a lot of CRM, which has been bad for quite a while. But just some of these are big names. Oracle. Just really getting hammered. And there's not much going right for this sector. I don't know what's going to turn around. Yeah, at some point this will turn around. It doesn't have to turn around anytime soon. And there's not much going well. This is clearly an area that probably seems like you probably want to avoid, except for the rare circumstances of a rare stock that's looking strong because the sector, you know, stock after stock looks pretty bad right now.

9:00Yeah, absolutely. One area I did just want to do a quick check-in on was precious metals. So we're seeing, you know, gold kind of hitting new highs here. And then silver also had a really strong day, outperforming up, you know, over 7 percent, hitting new highs. You know, there's a lot of geopolitical issues that are contributing to this here. Do you have anything to add on these on this rise here? Yeah, there's always the possibility that geopolitical, that peace will break out. But it doesn't seem like that's happening anytime soon. It is interesting. Silver, in particular, it had some shakiness, those big whipsaw moves.

9:41And that's the reason why you talk about sometimes not buying extended, because it would have been hard to hold on when it first made that move up and then started having these huge sell-offs. But if you bought way more back at 48, 49, you might have said, you know what, I'm just going to hold. I'm just going to hold if you bought even earlier. Didn't have to. You could have taken profits. That would have been fine. But yeah, that shakeout is over and it's made just another big run. I mean, maybe it'll pull back at some point, but there just seems to be a lot of tailwinds to precious metals and metals in general.

10:13Yeah, currently 50 % extended above its 50-day moving average. So, yeah, that's definitely one that you want to be watching, not chasing right now. But, yeah, still very impressive to witness what's happening here. So, all right. Well, with all of that said, let's pivot over to our stocks for today. Balance your trading strategy by adding futures. CME Group helps you manage risk and capture opportunities in all market environments. Capitalize on around-the-clock access to highly liquid global futures and options markets across all major asset classes. Visit your online broker to get started. See what adding futures can do for you at cmagroup.com slash podcast.

10:53Derivatives are not suitable for all investors and involve risk of losing more than the amount originally deposited in any profit you may have made. This is not a recommendation or offer to buy, sell, or retain any specific investment or service. Okay, let's take a look here at AppLovin, which has kind of had a whipsaw day, closing below its 50-day line here. Attempted a breakout, struggled, got support, now it was pulling back. Tell me, what do you see here? Yeah, this was not good at all because it was pretty high volume. And it actually got an initiation at a buy, pretty strong. Analysts know that didn't help at all.

11:31the uptrend prior to three days, but that had come on light volume, not terribly light volume, but you can just sort of see, you know, there was a sell-off through the 50-day line, then sort of lightish average volume, come back up, and then heavy volume again. This is one of the best-looking software stocks out there, and it fell almost 8 % today through the 50-day line, which just tells you things. There's still some concerns about maybe an SEC probe over some practices. But it's had some up and downs. And I think it's a software stock. It's also a time when we've had some sector rotation. This is a high beta name.

12:06It just seems like there's all sorts of reasons why you might want to say away. I mean, you should still pay attention to this name. And I mean, maybe this will just rebound tomorrow and go up 12%. I don't know. But it just seems like a stock that it doesn't seem like the right stock, the right sector, the right market for this name right now. That could change tomorrow, but it doesn't feel like it today. Yeah, absolutely not. It had a pretty good run there for a while with these base breakouts, but it's been struggling, and now we're losing ground at this key moving average. So one to watch, but definitely not one to be acting on at this moment.

12:48Let's take a look at Wells Fargo, which was another name on your list. WFC falling to the 50-day line, barely clinging to support here, down 4.1%, some heavy volume behind this move. So what do you make of what's happening here and kind of with all of the names in this area? Yeah, I mean, disappointing. I mean, it's not crazy below the 50-day line. It's still holding above these areas around 87, 88 that you could have used sort of a, there was an entry there. So that was a completely round trip, at least by the Colotto. as it sort of probably did intraday. So if you bought somewhere in there, it's just like, well, you probably should have taken at least some profits, just not exited the position.

13:32If you bought more at the 83 level, that would have been hard. Maybe, I don't know, because that was sort of lumpy. I mean, if you have a longer-term gain, that's different because it's not broken. But for people who bought more recently, you've given up a fair amount of gains. That's unfortunate. It could bounce back. You can also wait for the end of the week. at this point, if you didn't do anything today, see if you can rebound tomorrow with earnings from others or just in general. But yeah, this was, again, it was looking so strong, you know, just a couple of days ago. And even yesterday, okay, JP Morgan was down.

14:08Yeah, it fell, but just a little bit, held a 21-day line. And then just a gap down on, I think the results were mixed. So there were some reasons for that. And it just, but yeah, it's just, So you want to make sure you don't turn a solid gain into a loss. So that's for newer investors, something that they should be taking action on. Yeah. And this is also a reason why if you are holding a stock into earnings or you want to make sure you don't buy into earnings, but if earnings are coming around the corner, you make sure that you manage your risks because this kind of thing can happen and it can get so much worse as we've seen.

14:45So it's always good to take profits. If you're up, make sure you have that 10 % cushion or more. And yeah, just be very careful because you don't want to get caught up in these moves. Yeah. All right. Well, we're going to move on to the final stock here today, which is NTR. Nutrien in the agricultural chemicals industry group. On the contrary, a nice breakout, a nice move higher, up nearly 8%, strong volume here. And we've seen it. It looks like it's been basing for quite a long time. So the relative strength line is not super impressive, except for, you know, just now recently today, we've seen a really nice move higher here.

15:29So what are your thoughts on Nutrien? Yeah, a really powerful move. I mean, maybe this is ready for another run. It's not supposed to have the most amazing earnings next year. They did get a nice analyst comment today. That may have been one trigger for this name. it is a fair amount above the 50-day line. That is always a concern for me. I like buying within 10 % of the 50-day line, but it's definitely in buy range here. So it would be great if it could pause here. I would like to see it pausing here and take a pause. But it may not. It may not do that. But have it pull back. Just give it a little bit of time for the 50-day line to do a little catch-up, maybe even just the 21-day line.

16:09If the 21-day line can close its gap a little bit over a few days, then it would seem more attractive. But yeah, I mean, it was a really strong action here. It's been sort of, you know, trending up in that regard. There's been a little bit of pickup in the results in the last couple of quarters. Just want to see if that if those fundamentals can continue to improve, you know, in the coming year. Yeah, very good. And I would say nice, as you mentioned, really nice year over year growth and earnings, a nice increase from the prior quarter. And yeah, it'd be nice to see it hold this gap, maybe set up a new area to buy from.

16:52It's also in a buy zone here. So a lot to consider with this one. Well, all right, Ed, I think that's going to do it for today. Thank you so much for joining me and giving all of that color on what's happening with the market here. And I think, yeah, that'll do it for our stock market today. today and we'll be back with more analysis tomorrow morning starting with IBD Live. So head on over to investors.com slash IBD Live for all the details there. And thanks so much for watching everyone and we will see you right back here tomorrow after the close.

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