Mild Down Day After Bullish Win Streak; Argan, Five Below, Emcor In Focus

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0:25Justin Nielsen:good afternoon everyone and welcome to stock market today for monday april 20th it's alissa quorum here and it was just a mile down day for the major indexes after that beautiful wind streak that we had for the nasdaq composite especially but if you look underneath the surface on a down day, there were still some notable pockets of strength. We will get into that. And joining me now to do just that is my colleague, Justin Nielsen. Justin, great as always to see you. What do you have for us?

0:54Alissa Coram:Yeah, pretty impressive for, again, as that huge win streak, 13 days was going on. And of course, that that win streak got broken today, but still plenty of stocks looking great. I was up today. So, I mean, really, that's what matters. And we'll take a look at Argon, Five Below, and MCOR as a few stocks to cover.

1:17Justin Nielsen:Sounds like a plan. We'll do that. First, let's check in on the major indexes. Here's the Nasdaq Composite, down about a quarter of a percent on the day. Similar decline for the S &P 500, down about three-tenths of a percent or So the Dow down just a hair, one-tenth of a percent on the day. And we'll take a look at IWM, which represents the Russell 2000 small cap index, up on the day by about six-tenths of a percent. And the NASDAQ had that impressive win streak, even though this was a down day, Justin. Look at how we closed, right? We closed off the lows just a mild day. And for the S &P 500, it was an inside day.

2:02Justin Nielsen:So we are holding strong here. And if you also put in context these renewed headlines out of the Middle East, right, there's still a lot of uncertainty out there when it comes to those headlines. So the fact that we are seeing the major indexes hold near highs and then underneath the surface, some pockets of strength like the semis. And like you said, your portfolio, that's a signal that we can go by. But growth investors, right, are seeing progress in their portfolios. So very impressive what we're seeing unfold.

2:37Alissa Coram:Absolutely. And let's just start with the news, because, again, you know, like it or not, news is always one of those factors. But the reaction to the news is very telling. And you certainly, with the news out there, you could have easily seen this at least fill in the gap, right? You would expect at least it to fill in the gap. But the fact that it didn't, the fact that it closed so strong, again, this is just a very resilient market. It's really shaking off bad news. And that's what you typically see in a bull market. Things that, you know, start out weak and finish strong. And that's kind of how the days have been for the most part, including today.

3:17Alissa Coram:And it's also worth mentioning that underneath the surface, you look at a QQE, which is the equal weighted of the NASDAQ 100. that was up uh you know so not oh not qqew qqe um the the qqew is a more select list and so well i typed in qqe and it sent me and it didn't like uh three cues qqqe okay there we go that looks much better yeah i'm like wait i don't remember this being below the 200 day moving average line. So yeah.

3:53Justin Nielsen:Yeah, you gotta give me that extra cue, Justin.

3:56Alissa Coram:So very strong day, you know, in terms of the average stock out there, the equal weighted and the RSP, which is the equal weighted S &P 500. That was also finished up today and again at the top of its range. So very good looks there. And I also wanted to point out that RSPT, which is the technology sector. So that's, again, market cap weighted. So you have Microsoft, which was down a percent, kind of weighing on that. But if you look at the equal weighted technology, it's a little surprising to see that, you know, this was up not just a little bit. I mean, this was up, you know, almost a full percent closing at the top of its range into new high ground.

4:37Alissa Coram:And again, with a day where the NASDAQ, the tech heavy NASDAQ composite was down, pretty impressive to see that your average stock on in the technology space was up. So, So, you know, there's still kind of, again, whereas before we had this mix of, as you noted, SMH, which has been holding up very strong, and IGV, which is the software, which just got pummeled into the dirt, you know, with all the news with Anthropic coming out and saying, hey, these guys are going to eat your lunch software. This has had a really big, strong bounce off the bottom. And some people might be saying, well, why don't we go this, you know, this route?

5:17Alissa Coram:This must be the bottom in software. And, you know, why not participate in that bounce? But to me, there's so many stocks that are making new highs, so many stocks that held up well and were in such stronger positions as this rally got underway. That remains my focus. And so that's going to be kind of the stocks that we're looking at today as well. Yeah.

5:40Justin Nielsen:I mean, if you look at this prior move in the late February, early March timeframe, looks very similar. And that was not the bottom, right? Could this be the bottom now? Perhaps. But like you said, we like looking at those leading stocks, not the ones that are coming up off the bottom. Those perhaps can be playable, but not really our bread and butter. Yeah.

6:03Alissa Coram:The one thing I will say that is kind of a positive this time around is that you did get above the 50-day moving average line. But look, you're almost at that 88.58 level that you were at previously before you got turned around. So yeah, I'm not getting too excited until I see it kind of cross at least that level. Mm-hmm.

6:24Justin Nielsen:Yeah. We just know from market history that the odds are in your favor when you're above rising major moving averages and you're in more of that markup phase versus that, well, is it a bottom or, you know, is there more to unfold there in that bottoming phase? All right. Let's now go to a couple of stocks. How does that sound, Justin?

6:49Alissa Coram:That sounds great. And again, a lot to choose from. So for as much as people are calling this a lockout rally and, oh, you know, if you if you didn't get in a couple of weeks ago, it's too late. It just doesn't feel like that's the case. There still seems to be a lot of setups out there. There were a lot to choose from actually today. The biggest concern is that with earnings season starting to pick up, we do have to start being very aware of earnings around the corner. So definitely as you're going through your lists, make sure you've, I actually had the mistake made of, I didn't have my earnings tab on market surge.

7:28Alissa Coram:And so I missed a few where it was like, oh, this has earnings coming up. And I didn't realize. So I did check on all these. We do have earnings coming up on a few, but we've got enough time on them.

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8:06Alissa Coram:Start with Argonne AGX. Again, heavy construction doesn't necessarily sound like the most exciting thing, but you've got to remember that a lot of these folks in this group are engaged in AI adjacent things. So sometimes the heavy construction involved is your data centers, you know, you know, telecom in this case for Argon. So very interesting stuff. And you might look at this and say, well, gosh, again, isn't this kind of up and out of there? Yes, but look at how it really paused kind of nicely around 600. And then today we saw a really strong upside reversal. Again, started weak, but finished strong and right back above that 600 level, you know didn't even didn't even get down to the 21 day moving average line but really kind of found a lot of buying support that pushed it back over 600 and so here again we have another stock where as opposed to looking for those things that were kind of you know ground into the dirt this is something that's already made it to new highs let's just take a look real quick at the monthly chart just to see how far this has come, which might scare people.

9:16Alissa Coram:But what we did get is we did get this small little pause at 600. So I'm looking at these small pauses as potential opportunities, just looking at kind of shorter consolidations, shorter timeframes, maybe start it as a swing trade. And then if it works and I can get traction on it, maybe it's something that we turn into a position trade. And speaking of swing trades, this did get added on to Swing Trader today.

9:39Justin Nielsen:Yeah, really solid looking upside reversal on that daily chart here. And also impressive is this monthly chart with the expansion above the relative strength line moving averages. I know that's something that Mike Webster, our senior market strategist, he really likes taking a look at just to show that staying power over time. So this has been a leading name for the last two plus years here, Justin. And like you said, it has that AI element to it. And it seems like in this, if you're in a type of market where we just had the NASDAQ have 12 days up in a row, a very powerful follow through day and a lot of subsequent follow through days, that pulling out of the toolkit, an entry point like this, seems like the kind of market where you can do that.

10:36Alissa Coram:Yeah, and certainly we do look a lot at the technical action. You know, it seems like maybe sometimes that's our only focus. If you watch some of our videos, because we talk so much about the chart, but let's not forget, there's a strong fundamental company behind this one as well. Let's just real quickly go to the weekly chart, and you can see the earnings line on this. Phenomenal. Really strong, steep angle. EPS growth rate of 56%. It doesn't quite have the stability. You know, the earning stability is not bad, but it's 38. The lower number is more stable. But some of that instability is because it's been so strong.

11:14Alissa Coram:So if you're going to be unstable one way, better be, you know, unstable on the strong side. It also has strong sales growth rate, 34 % there. Return on equity of 34%. You know, really strong cash flow. A lot of times I look at that cash flow versus the earnings per share number. This is a cash flow per share. So looking at$29 versus a$9 EPS for the last year, you know, having a multiple of that for cash flow is pretty impressive and very, very minimal debt, 1 % debt. So, again, this not only has kind of a story behind it, again, with the data centers and AI adjacent areas, it's got the technical side and it also has the fundamentals, you know, a little bit of a turnaround situation from 2024.

12:01for.

12:02Justin Nielsen:Yeah, checks off a lot of boxes. Let's now go to the retail area. We've been keeping an eye on a number of names in this space, including five below moving out of a sideways range here on the weekly chart. And you can see the relative strength that this stock has had for the last year or so as well and a nice uptrend here. Drilling down to the daily chart, taking a closer look, not quite a full-on base as identified by pattern recognition, but I mean, it had this explosive move on earnings a couple of weeks ago and a very orderly digestion after that, Justin.

12:47Alissa Coram:Yeah. And so that's one thing you have earnings behind you. So that's a plus. Same situation for a lot of banks. They tend to be the early reporters. And so you have some of those behind you as well. But yeah, a really, really strong move. And, you know, a lot of people might look at this and say, well, gosh, you know, the relative strength line isn't that great because a lot of stocks have been really so strong out of the gate and this has been basing. So that does happen. But this, again, speaks to kind of like those shorter consolidations that we might be looking at as ways in which to get into this.

13:22Alissa Coram:And look, I think that this is actually something that was viable on Friday, but certainly crossing more of those resistance lines that were tested around 238 before, really kind of going through that in a very strong way. You see how the volume has just steadily increased the last few days as it's kind of formed this right-hand side, bouncing off the 50-day moving average line. And here again, we do have something with some very strong earnings. You could see that weekly earnings, you know, earnings line kind of having a nice little jolt up recently, the EPS growth rate of 30%. Earning stability, a little bit more stable on this one at 15.

14:03Alissa Coram:And it has a lot of those other checkboxes too. Strong cash flow, a strong return on equity, 17 % at least is what we like to see. This is 18%. So yeah, it checks a lot of boxes there too. And for those that are a little concerned, so many AI or AI adjacent plays that have been really looking interesting lately, sometimes it's nice to have something in a different space. So being in the retail space can kind of give your portfolio a little bit of balance.

14:33Justin Nielsen:Well, it's only a matter of time, Justin. I mean, you saw what happened with Allbirds, right? Right, yes. New company now getting into data centers,

14:43Alissa Coram:right yeah exactly not not not normally something you would expect from a company that's in the apparel uh shoes and clothing uh business uh to say hey we're an ai company now but uh right i know it reminds me of that long island uh yeah this cycles uh long and for those that remember way back in the day, you know, you know, back in the late 90s, you had all sorts of things that were just slapping dot com at the end of their name. And that was that was their business model. We're going to make money is just throw dot com on our name.

15:22Justin Nielsen:Yeah. All right. Let's round things out with a look at Tigger EME. This is MCOR in the building maintenance and service group. Looks like it's on the verge of a cup by point. Let's take a closer look at the daily chart. It Looks like an earlier entry perhaps could be used here, Justin.

15:43Alissa Coram:Yeah, I'm all about those early entries. And so, yes, this wasn't technically long enough for a handle, but I think it looks handle-ish. And in fact, you know, you could have even said that there was, you know, a proto handle, maybe a little bit low for our tastes that offered an early entry. But certainly, I think this offers an entry. You don't have to wait for that all-time high of$835. you got a place to get in here too. And I like that cross of a round number of 800. That's something that looks very interesting as well. You know, you might kind of shrug a little bit and say building maintenance and services, is that like what janitorial or, you know, doesn't sound very sexy, but hey, this is one of those AI adjacent because guess what?

16:28Alissa Coram:One of the things that they're providing services to, data centers, you know, that kind of infrastructure. And, you know, HVAC systems don't seem, again, Again, very sexy, but they do a lot of the maintenance of those HVAC systems. And so MCOR is really kind of an AI adjacent play. So it makes sense that this one is potentially actionable right now, breaking out above that early buy point. But here we have something where there are earnings in nine days. So something to be aware of. We have more and more earnings that are going to be coming up. I think when I was doing a screen, I noted that there were about 100 stocks in the S &P 500.

17:07Alissa Coram:So about 20 % of the S &P 500 that is reporting this week. So there's a whole host of them coming out. And so just be very aware of those. Doesn't mean that you can't buy them, but it just means you might want to be very aware of when the earnings report is, how much cushion you have, and what kind of position size you have going into that. How has that stock acted previously during earnings reports? How has it reacted? Just so that you're not surprised, because last thing we want to see happen is you've got a decent size position in something and you get one of those, you know, what we call the landmines and the gold mines.

17:45Alissa Coram:Sometimes those landmines can really shake your portfolio. So we don't want to see that happen.

17:50Justin Nielsen:Exactly. Yeah, all of those very important risk management variables. All right, Justin. Well, before you go, how about a quick tease of what's in store for the podcast this week on Wednesday? You know, it's we're going to start we're going to start promoting it on Mondays.

18:07Alissa Coram:How about we might as well get people excited about and there's certainly something to be excited about here. Leif Sarada, he is, you know, a former U.S. investing champion, just really great swing trader. We've had him on IBT Live a number of times and he always comes with a host of ideas. had a very interesting conversation with him, kind of getting prepared for Wednesday. And yeah, he's gonna be great to talk to because he's been at this for a long time. He knows those pitfalls, but he also knows when to get aggressive. And he's very positive right now in terms of all of the options that we have available to us as investors with a lot of stocks setting up.

18:49Alissa Coram:So it's gonna be great to talk to him on Wednesday, live at five. Yep.

18:53Justin Nielsen:All right. Thank you so much, Justin. And make sure you check out the Investing with IBD podcast this Wednesday live on our YouTube channel at 5 p.m. Eastern. You can also check it out wherever you get your podcasts as well. Thanks again. And we'll see you Wednesday, Justin. Thanks, everyone, for tuning in. That is it from us for today. But we will be back with more tomorrow morning on IBD Live. Investors.com slash IBD Live for all the details where David Ryan and we'll make his weekly Tuesday appearance. So don't miss it if you want his latest comments on the bullish market action. So we'll see you there in the morning, investors.com slash IBD live.

19:33Justin Nielsen:And then we'll see you right back here tomorrow after the close.

19:51Alissa Coram:Hey, this is Telus Demos.