Market Gets Much Needed Buying Oomph; Argenx, VanEck Semi, Kinross In Focus

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0:25David Saito-Chung:Good afternoon, everyone, and welcome to Stock Market Today for Monday, November 10th. It's Alexis Garcia here, and the major indexes were rallying into the close on Monday amid signs of federal government shutdown progress. Here with me to help break down all you need to know about today's market action is IBD Deputy Markets Editor, David Saito Chung. Dave, it's so great to see you today. And what do you have on top for us today? Well, thank you very much for the kind invite, Lexi. Always great to be on the S &T video team. And we're going to cover three really strong stocks and ETFs that are completely in different areas of the market.

1:11First, we'll start with the biotech ARGX, Argenix, then SMH in the semiconductor field, and then top it off with a gold play, KGC, which is Kinross.

1:24David Saito-Chung:All right, we'll get to those stocks first, but let's check in on the major indexes. The S &P 500 finishing the day up 1.6 percent, the NASDAQ up 2.3 percent, The Dow finishing up eight-tenths of a percent. And small caps also rallying today up 1.2 percent. So, Dave, I figure with Justin out, you seem like to be good news for stocks. But let me get my chart going here and talk to me about what you're seeing in the market. Because we saw the S &P 500 test the 50-day line on Friday. It had this nice upside reversal. But powering higher today, also closing in the upper part of that range. Yeah, well said.

2:12I mean, do you really need me for the video today? I definitely need you. You really covered it very well. And as we know in hindsight, that rebound on Friday was caused by the rumors and reports that the Senate was really going to try to end this shutdown, which is in record time in terms of the length of it. And it's nice to see after that positive reversal, and as you mentioned, the test of the 50-day, that the S &P 500, still driven a lot by techs, has almost now taken back all of last week's loss. It's not the same for the Qs or the NASDAQ composite, but it's definitely moving in the right direction.

2:56So if you look at that composite index, nice of a bounce off that rising red line, the 50-day moving average. And you can see at 23 ,527, we are less than 400, less than 500 points away from a potential all-time high. So this pullback has been healthy. It's been making a lot of us nervous, but it's also normal.

3:20David Saito-Chung:Yeah, as Webby would say, normal and natural so far. Let's just check in on the Dow. Get your thoughts there, Dave, you know, because this one has been kind of the laggard. But again, see similar action here, testing that 21-day line and finishing in the upper part of that range today. Yeah, totally agree with you, Lexi. It's had a nice year after strong moves by stocks in 23, 24. the Dow is clearly lagging in terms of that year-to-date gain, but the overall trend is positive. I also want to highlight that you have companies like NVIDIA, JP Morgan, Goldman Sachs doing very well, Microsoft doing well for the Dow Jones Industrial Average, of those which I do own shares of NVIDIA.

4:09But I want to highlight Caterpillar, if you don't mind just quickly looking at CAT. Believe it or not, CAT, CAT, is the best stock in the Dow this year. And we can understand why. Well, gold mining and copper mining, those have been hot areas. And this is a company that helps supply the picks and shovels. You can also see that earnings are expected to grow next year. And so if you look at the bottom of that market surge chart, you see, well, there's no growth, only growth in the stock price. And it's clearly the investors, the biggest and brightest investors out there thinking six to 12 months ahead.

4:48David Saito-Chung:Those losses definitely narrowing though, Dave. And, you know, again, just goes to show you this AI theme. Everything seems to be an AI play these days. But let me get your thoughts on small caps before we move on. Again, this one, you know, was trading below the 50-day, but again, a nice rally today up 1%, retaking that key moving average and at the 21-day line. Once again, it's reaffirming that the market is wanting to rally on all sort of sectors, if you will, market caps. We definitely like to see the Russell continue to spend its time above that 50-day moving average. You notice that the green line that you have on your chart, the 21-day exponential, maybe not as relevant for a slower moving index like the Russell.

5:44Nonetheless, if we see that rebound in the Russell continue, we should expect the 21-day exponential moving average, which is covering for about four weeks and change, to also continue to move up. We kind of like to see all of the moving averages rise in harmony, and that's not happening right now. And that includes your 10-day simple moving average. I assume that that fuchsia pink line is your 10-day line.

6:09David Saito-Chung:That's all conjoining almost. Yeah, conjoining. Exactly. So not negative, but clearly a sign of how the short term action has differed a little bit from the longer term trend. And then let's just quickly check on RSP, Dave, because it seems like, you know, maybe today at least leadership in the market was trying to broaden out a bit. This up six tenths of a percent and right at that 50 day line. So give me your thoughts on what you're seeing in terms of market breadth with this rally. Great question. You notice that the RSP has really not made much progress over the past three or four months. And that's partly because, one, we usually have some seasonal chop.

6:56Two, we've seen the concern about the economy and the shutdown and inflation reflect itself in the sort of indecisive action and movement that we've seen in the equal weighted indexes. So you could take that as one, a good healthy concern for the economy going forward as relayed by the market. And two, that AI is still the dominant theme in the stock market. Nonetheless, I mean, it's good to see RSP technically retake that 50-day line. And if you go to QQEW, you'll see that the equated version of NASDAQ 100 is a little bit stronger than the equated version of the S &P 500. Nonetheless, either way you slice it, both are trading relatively close to their 52-week highs, and that's a sign of strength.

7:50David Saito-Chung:All right, let's just get your thoughts on the 10-year Treasury yield before we move on, Dave. We've seen this ticking higher over the last month or so, but again, it's kind of positive news for the economy. It means that this may go up a bit, But what are your thoughts with the yield and what investors are anticipating? Well, you know, late last month, we had the Fed cut rates. And so the Fed funds rate is now, I believe, at a target range of 3.75 to 4 percent. And that's quite significantly lower than the peak of the rate tightening cycle that culminated with the Fed funds rate at, I believe, 5.25 to 5.5%.

8:36So, you know, consumers are getting some relief. Banks are getting some relief. interestingly, the bond yield has gone up since that decision by the Fed. And it kind of reflects that the bond market is still actually concerned about inflation going forward. There's also the much, much longer term problems or issues, if you will, with the gigantic debt that the country has. And so, you know, demand and supply for treasury bonds will act accordingly. We will see whether or not we, you know, continue to, you know, inch higher, which is exactly what's happening. You know, it's too early to say, hey, yeah, we have hit a bottom in the short term for the cost of money.

9:32And this is really important. That's why we're spending a little time on this, because equities do really respond to big changes in the cost of borrowing because the cost of money affects decisions on buybacks, dividends, taking on debt to invest or buy new other companies. So right now, overall, though, I would say it's good to see Treasury bond yields at a reasonable level and in a kind of tighter range because that kind of helps reduce the overall uncertainty.

10:06David Saito-Chung:And how much of the government's shutdown do you think has played a part of this? Because we haven't really had any access to any sort of data out there. So what are your thoughts on that? That's a great question. I mean, right now, I think it's pretty cool that Wall Street firms and other participants in the market have relied on data sources that are not directly from the government. So we do get a sign that, yes, the labor market has softened, but it's not crashing. and you can see that since the end of September, which is when the government shutdown began, yeah, if you click on September 30th or so, the cost of money in terms of the tenure was 4.14.

10:55So we're actually still actually a little bit below that. That implies that one, we will hopefully regain some normalcy at the federal government level And two, people aren't fleeing. They are not fleeing the treasury market. That's good for stocks. All right.

11:13David Saito-Chung:Well, let's take a look at a couple sector ETFs, Dave, starting with FFTY. That's the IBD50 ETF. And this one gaining 2.6 % today, Dave. But we can see, again, a nice upside reversal day on Friday after, you know, really coming below this 50-day line on Thursday's trading action. but getting closer to clawing back some of those losses there. So what does that signal to you? Well, I think this is a little more volatile in ETF, Lexi. And part of the reason is that some of the highest ranked stocks are small caps and they're more volatile. They have more what we call average to range. So I don't really look at this microscopically.

12:03I just want to make sure that this is moving in the right direction, which is obviously up. And it's nice to see that, you know, at 4136 last month, that was a multi-year high. And then you see it come all the way down to 35. So six points means that for smaller companies that are part of the IBD50, they've had a bigger correction or bigger pullback. And that's natural. So, you know, we'll see how much of last week's losses does it recoup. I think ultimately everyone listening on the show is best served by looking at each individual stock in their portfolio and looking for signs of strength, weakness, and use the right buy, sell, and hold rules to maximize their gains.

12:54Overall, though, you know, if you look at that uptrend, it's still pretty much intact. You know, you could say, hey, we're going to go sideways in this for a while. Or you could say, oh, no, we're going to roll over and go further down. Nobody knows that. We're just going to have to watch this on a day-to-day and a week-to-week basis.

13:11David Saito-Chung:All right. Well, let's take a look at XLK. That's the technology select sector, Dave. I'll switch back to the daily here. This up 2.6 % today. And again, same story, flirted with this 50-day line. But a nice move today, regaining those key moving averages. Yeah, exactly. Not much to talk about here other than, one, you highlighted the key level of support. Two, you can see that we're not far off the highs. Three, this kind of also supports the case for looking at one of the three stocks and ETFs, SMH. I'm Steve Booth, CEO of Baird, an independent wealth, asset management, and global capital markets firm.

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14:20David Saito-Chung:All right, well, let's go ahead and get to those stocks. But let's start with Argenix first, Dave. That's a biotech play. This up 1.8 % today, breaking above this 855.46 buy point out of a ascending base pattern here. But talk to me about this, because it seems like the volume hasn't really been there on the move up. But again, what are your thoughts with Argenix? Well, that's, first of all, a great observation there, Alexis. And what's interesting here is you've got a company that is probably not as well known as some of its other compadres in the biotech group. And yet it's got fantastic fundamentals.

15:04Let's start with that. Fundamental wise, look at the sales. You know, we're approaching$1 billion in quarterly sales for this company that has a novel treatment for generalized myasthenia gravis. That's a neuromuscular autoimmune disorder which causes twitching in the face and overall muscle fatigue and weakness. And so it's clearly a company that is serving an important need and it's also very profitable as a biotech. You know, you look at the 800 or 900 stocks in a biotech group and almost 99 % are without any earnings and many of them are without any sales. So this one really stood out to me.

15:46And if you go, if you stay on that weekly chart, you can see that, yes, the last couple of days, the volume has not been there on the upside. But when you look at that weekly chart, you go back three months. First of all, we had a great weekly gain in heavy volume on that last earnings report in which it said earnings were up 664%. That happened in Q3. That was real volume. That was institutional accumulation. That was the start of a breakout. And you can see since then, well, we've had a couple down weeks in heavy volume, but we've also had two or possibly three up weeks in above average turnover.

16:30When you look at that weekly chart, you can see that that red squiggly line going across the volume bars is a moving average, and that's tracking the 10 weeks of average volume. And it hasn't been going up, hasn't been really going down, kind of just wiggling around. So what we really care about is, okay, on big up weeks or on big down weeks, what is the volume like? And overall, I would say it's positive. Now, when you go to the daily chart, you can see the same thing as we just talked about. big gap up and huge volume. And you can see in that space in July to August, we have three or four or five big updates in heavy volume.

17:12And then if you keep going forward, you can see a number of nice blue spikes. Jim Ropal likes to call that a wall of blue. We just like to call that institutional accumulation. No real need for a fancy nickname for it.

17:27David Saito-Chung:I appreciate Jim flourishes all the time. Oh, yeah. Well, I do, too. And we love Jim. That said, also, you know, even though right now we are coming out of a very special pattern, I'm really glad we got a chance to talk about this one. This is the ascending base pattern that was identified by William O 'Neill, the founder of IBD, where you had three pullbacks. And in every pullback, the size of the decline was light. generally not more than 20%, generally a little bit more than 10%. And you can see we had 9%, 10%, 12 % pullbacks, and the stock continued to hit new highs. That's a sign of strength in a choppy market.

18:09And now we've got a buy point almost four months since that breakout in heavy volume. So volume doesn't necessarily have to be heavy every single breakout day or up day, but we do clearly see that there's been accumulation. stock is in the buy range. You don't want to chase the stock more than 5 % above 855.46. So on your calculator, on your iPhone, just type in 1.05, multiply that by 855.46, and you've got your perfect IBD buy zone. And then lastly, let me just highlight on the left-hand panel of the market search chart, you can see that the accumulation distribution rating is excellent. It's an A - on a scale of A to E.

18:53So focus on those stocks that have a B or A, and you're generally going to be finding those stocks that have that really good upside volume.

19:01David Saito-Chung:All right, Dave, great analysis there. Let's look at SMH. That's the Van X Semiconductor ETF. You brought up this one a couple of times. It's a gainer today, up 3%. And again, retaking the 21-day line here. But talk to me about semis here. We had a pullback over the last few weeks, But again, finding support and trying to reestablish itself back above this key moving average. Yeah, you nailed it right there. Nice support near the 21 day exponential. Those of you who have listened to the show a lot know that what Mike Webster has done a lot of pioneering work on the 21 day. So when you see a fund or a stock that's leading the market and getting support there, you know that that's a good sign for the longs.

19:48You could argue that the retake of the 21, they could be a nice entry point for those who are more active traders. I don't want to spend too much time on this, Lexi, because you already gave me more than my usual lot of time on this show. But I do want to highlight that NVIDIA, which I own, TSM, AVGO, MU, AMD, LRCX, these are the top six of the top 10 holdings, and they're all doing great. So this is, I think, if I were to be trading tech and I want to spread the risk, so to speak, among individual names in semis, you know, I think Bannock has done a really, really good job. And, of course, there are some others that you could use.

20:34But generally, this is the one I like to look at and it's acting really, really strong.

20:39David Saito-Chung:All right. Let's hop on over to KGC. That's Ken Roth's goal, Dave. This up 4.6 % today. And again, we were thinking maybe the run in gold was over, but it seemed to get support at this 50-day line. And again, retaking those key moving averages on Friday and continuing to power higher today. Well, let me first mention a few things that I found in my research in their fundamentals. Q3 production of gold for Kinross was amazing. 503 ,900 gold equivalent ounces. The cost of sales to manufacture that gold, 1 ,150 per ounce. The all-in cost, 1 ,622. And we all know that gold had a great date, up 2%, well over 4 ,000 an ounce.

21:34Operating cash flow is at 1.02 billion. And the company in its Q3 report said that they have already bought back$405 million worth of their shares with a plan to up that to$600 million by year end. So you can see it's a company that's very confident in what it's doing and very confident that its stock is good value. Now, the stock arguably is actionable here. If you click on today's move, you can see that it is a little bit above that 5 % threshold from the 50-day moving average. However, if you go to the weekly chart, it might be a little bit closer to 5%. Yeah, right at 5%. Yeah. So we kind of like to buy as close as possible to that 10-week line or the 50-day moving average.

22:18You would definitely want to use both. But you can see that despite the inherent volatility of commodity plays, it's very impressive how much this has risen. and we can possibly see, in fact, due to the size of this recent pullback, it's very possible that we'll see a new base form. And with that in mind, you don't have to be forced to be buying on this pullback. You can watch it and see whether it acts well. Meanwhile, that relative strength line, which is in green on your chart, is above both the Webby moving averages, which is good, the 8 and 21 week living averages, very, very high relative strength rating, B accumulation, good earnings going forward.

23:01One I would definitely highlight.

23:04David Saito-Chung:All right, Dave. Well, thank you so much for your analysis today. We really appreciate you coming on the show. Anytime. And let me just squeeze into that Kinross is also part of IBD Leaderboard. That's a product that I co-managed with Eagle Eye, Ken Shreve. Both of us are on the IBD Live show as well. All right. Well, Ken will be back tomorrow, but that wraps it up for us today. And again, if you want more market analysis, you can tune into IBD Live. That goes live tomorrow morning at the opening bell. You can head on over to investors.com slash IBD Live for all the details there. And we'll be back here tomorrow after the close.

23:44David Saito-Chung:Thanks so much.

23:50We'll see you next time.