Morning Rally Can’t Hold As Indexes Fall; Dow, ESCO Tech, Marex In Focus

0:01Alissa Coram:Every soda's got something to say. Colas brag. Probiotics give TED Talks. Then there's Mr. Pibb. No pitch, no promises, just bold cherry bringing the flavor. Bold kick of cherry.

0:13Justin Nielsen:Hey, yo, Mr. Pibb.

0:25Justin Nielsen:Good afternoon, everyone, and welcome to Stock Market Today for Monday, March 30th. It's Alyssa Coram here and tried to rally in the morning, but the indexes could not hold on to the morning gains. More weakness in the market. And joining me now to discuss where things stand is my colleague, Justin Nielsen. Justin, great to see you. Great to have you back, but not a great market.

0:51Alissa Coram:Yeah, I feel like, you know, I went on vacation and I didn't miss much. So it was a good time for a vacation and maybe I'll just have to continue it. And look, there's nothing wrong with not doing anything. There's no reason to kind of force something to happen in this market. And there's no reason to get excited by even a morning rally, as we saw today. So that's one of the things that you have to just kind of temper your enthusiasm, curb your enthusiasm, if you will. But we will talk about a few stocks that are holding up, because as much as we might not like the market right now, we still want to be very aware of what's holding up.

1:26Alissa Coram:And right now it's kind of, you know, not your typical growth stocks, names that you're probably not familiar with as much. We'll talk about Dow, Escotech, Merix. And I should note that Dow, that is not related to Dow Jones, which is our parent company. Different Dow. That was a Herbert Henry Dow, I think, instead of Charles Dow. So no relation there. Yeah. It was Dow Chemical. Now it's just Dow. They took the chemical off, but it is a chemical company.

1:56Justin Nielsen:Yeah. All right. Well, we will take a look at those stocks. But before we get to the major indexes, the other thing I just want to piggyback off of you, Justin, is even though right now it isn't a very exciting market, we know things can change very quickly. Right. So it's very important to stay engaged, just like how we're looking at things every single day to know when to scale back our exposure. We also need to be looking at the market and conditions and where the leading stocks are every day so we know when to scale back in because this market has been moving so fast. So now isn't the time to step away from the screens, maybe step away from the long positions, but not from our screens.

2:43Yeah.

2:44Alissa Coram:Keep your fingers off any buttons, you know, for a little bit. But, yeah, observation is important. And it's, you know, something that I think we both learned from William O 'Neill, the founder of Investors Business Daily, was how optimistic he would be during downturns because he knew that this was the time where setups for the next move happened. And so it was all about protecting the capital so that you weren't giving yourself such a drawdown, such a hole that you couldn't dig yourself out of it fairly quickly because the math really works against you if you let it if you let your drawdown get too big.

3:18Alissa Coram:But certainly there's reason for optimism because when we do come out of this, and we always do, things can really move and the next bull rally can have great, great opportunities for your portfolio.

3:32Justin Nielsen:Exactly. That's the silver lining. We know that this market has been so tough since that peak in October, really. Right, Justin? So to have more of a correction and an opportunity where we can get in a trending market where gains are being followed up on, you know, I think that's the silver lining here.

3:54Alissa Coram:Absolutely. I peaked in September. September 22nd was my peak day. I didn't really, you know, I started participating in the little October rally that we had. but I had gotten knocked down enough in September that I didn't make a new high. And I'll be honest, my drawdown was actually getting a little worse, even with the market going sideways, because I kept on dipping my toe in the water, getting a little bit heavier and getting the rug pulled out from under me with this sideways market that we basically had from October through March. But I feel like now it's a little bit easier because, you know, And rather than kind of being trendless, we have a trend now, right?

4:34Alissa Coram:It's not the direction we want, but it is a trend. And so the temptation to do things, to try things is not as high for me. So I have put some pilot positions on, quickly backed away. But again, in very simple terms, you know, if you think of what would an eight-year-old say here? This was something that I learned from Ralph Alcampora, who was the founder of the Chartered Market Technicians Association. You know, what would an eight-year-old say? This is down. You know, it's, you've got lower highs, lower lows. Everything about this, you know, shows a trend that's down. So there's really not much reason to try and pick a bottom here.

5:16Alissa Coram:That's just not something that we do. It can be very dangerous. And so it's better to just wait for that strength to come back in. And so far, even the single days that we've had here and there, they just don't hold. Or single minutes like this morning.

5:33Justin Nielsen:Right. We can take a look at an intraday chart here. The NASDAQ on the day down seven-tenths of a percent. You can see that opening gap up, Monday morning gap ups, even in good markets, right, can be tricky. And then here's a look at the S &P 500 on the day, down four-tenths of a percent. Small caps were the hardest hit today. IWM representing the Russell 2000, down 1.4 percent. And notable here with a first close below that 200-day line for the small caps since this move up here, Justin. And the Dow was positive on the day, but not very meaningfully. And we put a lot more weight into the other indexes.

6:18Justin Nielsen:So that is where we will stay focused. And, you know, Justin, it only takes four days for meaningful change in the market. So in terms of where things stand now, yes, the trend is down. It's a bad market. But remind our audience what we are looking for from here.

6:39Alissa Coram:Well, first we have to start with some type of rally, you know, and again, it can just be one day where at least you finish up or well off your lows. Today was not that day. But once you do get that day, then you start the count. That becomes day one for you. And we wait until day four before we start looking for a confirmation that that rally is potentially signaling a change in trend. So, you know, day one, you don't do anything. Day two, you're still watching. day three, day four. And as long as you hold above that rally low, then you still keep on counting until you get a day of power. And if you get that day of power, that's when you can start saying, okay, you know what, now it's time for me to, because I've been doing my homework and I have my watch list ready and I know what's been holding up, what's had the relative strength, that's when you can start scaling in a little bit.

7:33Alissa Coram:And it's important that you use the market as a feedback mechanism. So how do you do that? Well, if your first decisions start gaining some traction, then you can add more. You can add either to those positions if you maybe started them off small, you can add to those positions. Or if you're seeing other setups, you maybe spread out a little bit into some other names. And then again, you wait, you wait for the market to give you the feedback. One of the things I learned very early on that I'll just be honest doesn't work is plunging in because that's what I did. very early on in my career, plunging in at each sign that, oh, maybe this is a turn.

8:09Alissa Coram:And I got my head handed to me. So I had a big drawdown, lost 50 percent of my account. Luckily, my account was small at the time and I was able to come back from it with, you know, with contributions. But, you know, at this point, you know, when your account gets large enough, you can't you can't contribute to to make up for those losses. So if you let something go 50 percent, And, you know, from your highs in your account, that's 100 percent. That's a double that you need just to get back to the starting line. That's the kind of thing that we don't want to do to ourselves. We don't want to put ourselves in that kind of hole.

8:46Alissa Coram:And so, yeah, it's just important to be patient. Wait for the signals starting with the follow through day. And then, again, there's going to be a lot of hurdles that we're probably going to ask the market to do for us, including getting back above the 21 day moving average line, getting back above the 50-day moving average line. Or now, in this case, we even have to get back above the 200-day moving average line. And more importantly, not just get above those levels, but stay above those levels and start trending above those levels. And that's where we've had a problem, is we could get up above those moving average lines, but it just wasn't staying and trending above those lines.

9:22Right.

9:22Justin Nielsen:I also want to give a quick shout-out to IBD's market exposure model that we have exclusive for IBD Digital subscribers. Back on March 13th, which was the close below the 200-day line for the NASDAQ, that first close below, we went down to 0 % to 20 % exposure, Justin. So, I mean, even just doing that and going to cash, essentially, right there, I think is a huge thing, right? So there's a reason why we're paying attention to the market every day. and adjusting our exposure based on these conditions, because we know that not a lot of good can happen underneath the 200-day line, especially when you're first cracking below that level.

10:12Alissa Coram:Absolutely. And it should be mentioned that, yes, while that is when the exposure level went to cash, it's not like it was fully invested the day before. It had been scaling back, you know, and, you know, and that's why we use kind of a five tiered system to kind of show different levels. And so we had already been scaling back considerably, you know, suggesting raised cash levels. And so, again, it wasn't like it was, oh, all of a sudden, now that we're just below this line, now we have to act. There was a lot of action and movement, you know, in terms of raising cash before that. Absolutely.

10:50Justin Nielsen:All right. Well, a good overview there. Anything else on the index or ETF level? How about taking a look at one sector ETF? One or two. What do you think?

11:03Alissa Coram:So, yeah, there's two maybe to look at. I do want to start out by saying, again, you gave the numbers for all of the indexes. But one thing to remember for those indexes, you know, as poorly as they closed at one point, they were almost all up one percent, you know, across the board. So, again, it was looking like a strong day, but even a strong day at this point, it's kind of putting you inside some really weak action. You know, so I think we need to start getting above, you know, the highs of the previous day or previous week to even start really getting excited about something. You know, even a 1 % gain at this point, it's not going to thrill me.

11:43Alissa Coram:There's a lot more work that needs to be done. But in terms of an ETF that was holding up a little bit better today, and I'm not sure what was doing the heavy lifting here, but XLF, I did notice was, you know, finishing positive. So here's the warning, though. Okay, so this finished positive and was up considerably 1%. So not bad. But again, look at the position this is in. This has just been in a very severe downtrend, still inside the ugly day of Friday. So, again, this is where it's important. Even a 1 % gain here just isn't telling you much. It's certainly not breaking any downtrend here. In order to do that, you can draw a simple line and just, again, connect kind of those highs and see.

12:35Alissa Coram:I mean, you can visually see it. It's pretty far. It has some distance to do before it gets up there. So, yeah, even a 1 % day here, not enough. And then on the downside, something to keep in mind, SMH, which is our chips, that is an area that was holding up pretty well and was making new highs as recently as February. You know, even though the indexes were in the sideways action, but, you know, that has really kind of undercut some levels of support that were previously being held. Certainly, you know, one of the things that a lot of people are watching, of course, here is NVIDIA, which is one of the larger components of SMH, the Van X semiconductor.

13:16Alissa Coram:And that also undercut these really important levels that it had tested a number of times, had bound support, but breaking through those more recently as it has also gone below its 200-day moving average line. So again, just it was a little bit tougher before from October through February. When there were things that were working, the data storage, the fiber optics, there were all these areas working. Now it's mostly oil, which I mean, that's that's great for oil. But one of the things that makes me nervous there is that's just a headline away from being 20 points, 20 points down or 20 points up or more.

13:59Alissa Coram:You know, I think Larry Fink from from Blackstone saying, hey, oil could be at 40 or 150. You know, having that kind of a price range that you could conceivably see very easily, that's just too much. And so, yeah, that's something that I'm not playing myself right now. I've taken some small trades here and there, but I just don't find myself able to hold on to these for very long because of the headlines and the whippiness. Right.

14:28Justin Nielsen:I mean, it's one thing if you would have bought the breakout in this USO or some of those leading oil and gas names. But at this point, like you were saying, Justin, just the risk and this OIH ETF, we saw a downside reversal off highs today. just the risk at this point is elevated. If you weren't already in and sitting on a big cushion, you know, the timing is off now with the headline risk there. And with the chip sector, I think that this is yet another example of the leading areas hold up until they don't. You know, when you have a bad market, everything eventually starts crumbling. So if you had some of these leading memory plays, like you were pointing to Justin, fiber optics, hopefully taking profits and following sell signals, right?

15:26Justin Nielsen:If you see downside reversals off highs or closes below some of those shorter term moving averages, hopefully protecting profits in those really great trades before you round trip your entire gain and then some.

15:40Alissa Coram:Well, and I know you did a recent trade in SanDisk, you know, so that was, again, I think where you got in was really great in terms of, okay, if this is going to work, if this is going to support, get support, this is where it should be. But, you know, you don't want to, oh, let's just forget that this has had such a big move. Even looking at where it was at that time, when it starts rolling over, you know, you have to have some sell signals in there. You know, you don't want to just sit there and wait for it to for all those profits to go away or even worse for a nice gain to turn into a loser.

16:22Justin Nielsen:Exactly. If one of the most exciting areas of the market is starting to see failed breakouts, then you know that something is wrong. right so I'm not gonna stick around and and find out in this type of market but I was looking to see if it could find support at the 21 day that's the green line on my chart it didn't so I sold uh some the next day and then early today I just got out of the rest of it so yeah a whole whole lot of not to show much for you know I didn't didn't have a lot to show for that really awesome trade that I had. So yeah, should I have been a little, you know, a little tighter with the stops?

17:03Justin Nielsen:Yes. But it was a really small position to begin with because the market hasn't been acting right.

17:09Alissa Coram:And again, you use the market to give you feedback. And I was in there myself. I got in a day later, but I went on vacation and said, you know what, I just don't want to hold anything, you know, kind of thing. There's not much reason to, you know, to try and look and, and especially with a small position, it's more of a distraction on a vacation.

17:31Justin Nielsen:Totally agree. Okay.

17:49Justin Nielsen:Sponsored jobs have four times more applicants than non-sponsored jobs. So go build your dream team today with Indeed. Get a$75 sponsored job credit at Indeed.com slash podcast. Terms and conditions apply. With all that said, let's go to a couple of tickers for the radar. You mentioned stocks holding up in this week tape. So first, we'll start with Chemical's Plastics name Dow, D-O-W. So a very strong uptrend.

18:19Alissa Coram:Yeah, absolutely. So it's not like everything is getting clobbered. You find this a lot of times, even in a downtrend, you will have some stocks that are that are working. Let's go ahead and take a look at the weekly chart. You know, just keep in mind that this is a this is a stock that hasn't really participated in a lot of the strength that we've seen over the last few years. Remember that, you know, 2022 was a bear market. And yes, this held up fairly well in 2022, but 2023, 2024, 2025, all very great years for the market. And this just didn't participate. So, yes, it's working right now. And it's worth mentioning that, you know, it doesn't really have any fundamentals to lean on here.

19:03Alissa Coram:It doesn't, you know, so yes, there's maybe something where it's benefiting from some of the shortages and some of the chemical plays, especially with the Strait of Hormuz being closed and, you know, certain bombs that had been thrown by Iran into areas that have put pressure on a lot of these chemicals, whether it's, you know, helium, fertilizers, what have you. So, yeah, maybe this is having some benefits from that. But at the end of the day, again, you've got to expect if the market does turn, what do you think is going to happen to this? So keep that in mind. So as much as it's, again, something that's working right now, you're still dealing with headline risk potentially, where if headlines change here, you could easily see this, you know, turning tail.

19:49Justin Nielsen:Mm-hmm. All right. And I went to the monthly here. This was one of the ones where it was, I think there was a three-way merger, right? And then they split again, something or other. Yeah.

20:03Alissa Coram:Dow Chemical has been around for a very long time. It's not a recent IPO.