In short
Stock Market Today (May 8) recap of a tech-led rally with Nasdaq at all-time highs, discussion of IBD “power trend” rules (21-day vs 50-day moving averages), resilience despite prior weakness, and how to manage extended markets/pullbacks.
Guests
Justin Nielsen (IBD/Investors Business Daily colleague and co-host; discusses IBD methodology and power trend rules).
Key claims
Market is resilient and not eager to go down; power trend conditions are bullish (21-day rising above 50-day); extended markets can still run higher, so avoid shorting just because they’re “extended”; pullbacks are opportunities to redeploy by trimming and using moving averages/support levels.
Notable examples
Nasdaq up 1.7% on the day; Rocket Lab up 34% after earnings (earnings +42%, revenue +63%); Broadcom-related setup ABGO discussed (cup-with-handle, strong relative strength, stop near yesterday’s low); BrightSpring (BTSG) discussed as a re-entry after prior breakout/earnings; also mentions using IWM pullbacks and redeploying into TNA, and watching ETFs like SMH/XLK, IGV, and VXUS.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOMarket Overview and Key Stocks
0:46 to 1:51
Discussion on NASDAQ highs and focus stocks like Rocket Lab and Broadcom.
“Joining me now to discuss the market action today and to take a look at the week in more detail is my colleague, Justin Nielsen.”
Major Index Performance Analysis
1:51 to 4:00
Deep dive into major indexes' performances and market resilience.
“Well, we'll get into those stocks, but first let's take a closer look at the major indexes.”
Understanding Power Trends
4:00 to 6:05
Exploration of power trends and maintaining exposure in the market.
“So the problem is that if you weren't aggressive at the beginning, which, hey, I don't blame you with all the headlines and everything like that, there's always this fear that you have to get over.”
Handling Market Pullbacks
6:05 to 8:06
Strategies for managing pullbacks while maintaining position strength.
“And so far, that strategy is paying off.”
Lessons from Trading History
8:06 to 13:30
Importance of historical context in trading decisions and handling pullbacks.
“Because at the end of the day, it's not enough just to be right.”
Know Thyself as a Trader
13:30 to 14:01
Understanding your trading style and implementing effective strategies.
“So how do you think we should apply, you know, some of those lessons from Bill O 'Neill with handling pullbacks, bracing, bracing for a pullback within the context of a powerful move higher?”
Understanding Trading Strategies and Moving Averages
14:01 to 18:00
Learn how to tailor your trading strategy based on your personal style and market conditions.
“bit of a test coming up, like you said, how here's how we would treat that to be able to survive and hold these stocks for bigger moves.”
Assessing Market Trends and Position Management
18:00 to 20:40
Explore how to assess market trends and manage your stock positions effectively.
“And like you said, I'm in SanDisk as well.”
The Role of Major Indices and Sectors
20:40 to 23:00
Understand how major indices and sectors influence your trading decisions.
“Okay, let's just quickly take a look at the weekly action in percentage terms for the S &P as well here, up 2.3%.”
Analyzing the Magnificent 7 and Market Dynamics
23:00 to 25:20
Learn about the performance dynamics of the Magnificent 7 stocks and their impact on the market.
“You know, so whether you look at MAGS, M-A-G-S, and again, you look at these and it's funny because you've had stocks like Microsoft and Meta that are definitely a drag on this, right?”
Show all 17 chapters
Risk Management Strategies for Traders
25:20 to 27:43
Discover effective strategies for managing risk when trading extended stocks.
“But yeah, between SMH and XLK, it's very clear to see where the strength has been for this rally.”
Examining Broadcom's Market Position
27:43 to 28:00
Delve into Broadcom's recent performance and market positioning.
“Well, since you mentioned Broadcom, let's go there.”
Analyzing Current Market Setups
28:00 to 30:25
Learn about analyzing stock setups, focusing on relative strength and managing risk.
“Tell me more about what you're seeing here, Justin.”
Analyzing Current Market Setups
30:26 to 30:39
Learn about analyzing stock setups, focusing on relative strength and managing risk.
“Most finance teams are spending on the wrong things.”
Rocket Lab's Impactful Earnings Reaction
30:42 to 36:15
Understand Rocket Lab's strong performance post-earnings and trading strategies around it.
“Shares crossing into new high territory, at least a 52-week high.”
Strategizing for New Market Opportunities
36:16 to 42:01
Explore strategies for managing existing positions and considering new stock entries.
“And then I was hosting IBD Live and, you know, juggling a bunch of other things throughout the day.”
Strategic Positioning in Trading
42:01 to 45:01
Learn how to strategically add to your trading positions and manage costs.
“I'll say one of the things that I like to do, because you make a very good point about, hey, what do you want to add to?”
Transcript
Automatic transcript. May contain errors.0:00Alissa Coram:Introducing Fidelity Trader Plus. With customizable tools and charts you can access across all your devices. Try our most powerful trading platform yet at Fidelity.com slash Trader Plus. Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC. Member NYSE SIPC.
0:25Justin Nielsen:Good afternoon, everyone, and welcome to Stock Market Today for Friday, May 8th. It's Alyssa Coram here. And what a week, what a market. More all-time highs and an exclamation point for the NASDAQ composite in today's session. Nicely above that$26 ,000 level. Joining me now to discuss the market action today and to take a look at the week in more detail is my colleague, Justin Nielsen. Justin, great to see you.
0:56Alissa Coram:Great to see you as well. Well, we're going to revisit some stocks because, I mean, that's really what we're doing here is sometimes revisiting the same names because they're just so strong. But one of the stocks that Ken and I talked about in yesterday's show, Rocket Lab, got to take a look at that stunning move there. Broadcom as well. And Bright Spring, which you and Mike Webby covered last week. So we'll cover all of those. And I do have small positions. Wish they were larger in all of them.
1:25Justin Nielsen:Well, you know, if they keep going up, they'll get bigger. Yes, exactly. And we were just saying, everyone, pre-show how you know what kind of market you're in. If you're feeling like all of these stocks are going up without you, there's too many to buy. Too many things looking great.
1:49Alissa Coram:Absolutely.
1:50Justin Nielsen:All right. Well, we'll get into those stocks, but first let's take a closer look at the major indexes. And Webby, Mike Webster, our senior market strategist, is out this week, but we will keep him in mind in the analysis today.
2:07Alissa Coram:I'll ramble on a little bit with some tangents. Yeah, maybe you just will ramble on.
2:11Justin Nielsen:And you know his—
2:12Alissa Coram:Like I've ever had a problem doing that.
2:14Justin Nielsen:Right, on your own. Yeah, blame him.
2:16Alissa Coram:Blame Webby for it.
2:17Justin Nielsen:Yeah, but you know his perspective on things very well with the work that you've done with him over the years and how closely you two work together each and every day. So let's look at the market action on the day. The Nasdaq, let's see here, up 1.7%. Meanwhile, the S &P 500 up 0.8 % on the day. The Dow was basically flat, so we don't put as much weight in this as the S &P and the NASDAQ, but we do still like to keep tabs on blue chips. Let's take a look at small caps. The Russell 2000 up 7 tenths of a percent. An inside day after that downside reversal off highs on Thursday. But the story continues to be the tech-led strength here, Justin.
3:13Justin Nielsen:It's not just exclusive to the technology sector, but that's definitely what we're seeing move the needle in a big way in a lot of portfolios out there. Your thoughts?
3:25Alissa Coram:Yeah, absolutely. And again, it was stunning for as ugly as the day was personally yesterday and certainly with a lot of the leaders, how little the NASDAQ composite was moved with that. But the Russell 2000, of course, was hit more. But even that, it's just, you know, the market does not look like it wants to go down. And even with news out that in a weaker market would absolutely destroy it, this market has really been very resilient. And that's, I think, the hallmark. So the problem is that if you weren't aggressive at the beginning, which, hey, I don't blame you with all the headlines and everything like that, there's always this fear that you have to get over.
4:13Alissa Coram:And that's why we have rules. But if you weren't getting in then, it's really hard to get in now because everything is extended. And the things that aren't extended, the things that are coming out of bases right now, you have to deal with, OK, well, their relative strength is a little bit weaker. And these were kind of lagging for a while. So it's a little bit slim pickings, but, you know, that's the market we're given. If it were that easy, everyone would be doing it, right? Exactly. One of the things that Bill O 'Neill, our founder of Investors Business Daily, used to say is, hey, look, they're not going to hand you the money on a silver platter here.
4:49Alissa Coram:You're going to have to work for it.
4:50Justin Nielsen:Exactly. And I think that also speaks to your point about revisiting some stocks, right? We have our watch list. We're looking at setups. We're tracking them, tracking when the earnings news is coming and looking at all of the impressive growth out of the AI theme and other sectors. And, you know, then then you get the payoff. Right. Of course, it's there are some landmines that we've seen in earnings season or just on a on a tough day, like you mentioned on Thursday. But shout out to the IBD team and the IBD methodology and Justin, your role in coming up with rules alongside Mike Webster for the power trend.
5:33Justin Nielsen:We are in a very powerful power trend right now, well above a rising 21-day moving average. We've seen a big thrust off the lows. And the follow-through day that IBD identified on April 8th was a big starting point for that to start getting invested. And now that we've been in this power trend for a little bit here, this is the type of market that we want our winners to run. And so far, that strategy is paying off. Because like you said, there might be a lot of talking heads out there saying how extended the market's getting. But then you have a day like Wednesday, you have a day like today where we it's like, all right, hold hold my beverage.
6:25Justin Nielsen:I'll show you what extent it is.
6:28Alissa Coram:Yeah, right. Exactly. And that's that's the thing is. And keep in mind, look, a power trend, which, again, as you said, the hallmark really is that 21 day moving average line trending above the 50 day moving average line. And that is where we want to lean more bullish. We want to kind of hold our positions, not get shaken out, you know, remain kind of heavy on our exposure. It doesn't mean you're not going to have challenges. It doesn't mean you're going to have, you know, go up every day. You know, in fact, a lot of times you can have some pretty stark pullbacks during a power trend. And the whole point of it is that you want to be aware that because of the trend that you've been in, those are actually sometimes opportunities to redeploy.
7:12Alissa Coram:redeploy. So, you know, sometimes what we'll do in a power trend is when we get extended, we may take some off the table a little bit, not to necessarily protect our capital, but more to, you know, kind of keep some powder dry to redeploy. You know, because again, you're coming from a position of strength rather than weakness. A lot of times, again, at the beginning of a rally, you're really in that protection mode. You really don't want to let something get away from you. But again, once you've got some cushion and you're playing with house money, as it were, then that risk reward relationship is very different.
7:48Alissa Coram:And so it becomes a lot more a difference of survival versus domination. Right. And when you're in a power trend and you are getting it to stick, it's a lot more about, OK, how much can I get out of this? And how can I be strategic about getting more money into the winners? Because at the end of the day, it's not enough just to be right. You want to make big money when you're right.
8:12Justin Nielsen:Exactly. And since this is the Friday stock market today, I want to give kudos to Webby because every Friday on this show, since we've had that follow through day, he's really emphasized looking at history and looking at this action in the context of that and really hammering the point home of how these powerful trends can go a lot higher than you think before. you get any sort of pullback. And that thesis is playing out fabulously. So Webby, if you're listening, I just want to give you kudos for being our North Star when it comes to the perspective. You nailed it, Webby.
9:01Alissa Coram:Yeah. And I think another thing that you have to be careful of, and this is something that in doing the podcast, I've had the pleasure of speaking with a lot of great traders. And one of the things that they almost universally say is, look, don't think of an extended market and, you know, something that, oh, this has gone up too far too fast as an opportunity for shorting. Because that's where you can really get your head handed to you. Because again, to Webby's point, you know, you might be right that the market is extended and due for a pullback. But if you're wrong on your timing, you can lose a heck of a lot of money trying to short in a market like this.
9:38Alissa Coram:So again, it's okay if you need to take some off the table every now and then with the hopes that a pullback will give you that chance to redeploy or even, you know, one of the columns that I wrote today was about how we used IWM at the beginning of the rally. We used a pullback in IWM, the Russell 2000 Index, and then we redeployed it with TNA, which is the 3X version. And so again, there's a lot of ways in which you can kind of, again, put more chips into the pot so that you're making more money when you're right.
10:14Justin Nielsen:And I do want to go to the weekly perspective of the charts to give that view for the audience. Here's a look at the Nasdaq composite on the weekly, up four and a half percent on the week. Justin, this is so powerful on the weekly chart here, not only just the bar from this week, re-accelerating after the two smaller up weeks here, but now having six weeks up in a row off the bottom. And then this, you know, if you look at where we were last week, Webby was saying, hey, we're kind of in the early stages of a breakout. So I think having that perspective, too, has been quite helpful. Your thoughts on this weekly win streak here?
10:59Yeah.
11:00Alissa Coram:And this is where I think, again, it's very important to kind of remember history. You know, that's one of the things that's great about what Webby does is he uses a lot of history. I just heard a quote, and I hope I don't massacre it. It was from the Tim Ferriss podcast. And it was one of his guests, you know, basically saying that if you don't know history, a lot of things seem unprecedented. And so that's a word that's getting thrown out a lot. Oh, this unprecedented move. But the reality is, if you know history, this type of move has happened before. And a lot of times you can see a pullback.
11:35Alissa Coram:In fact, one of the things that kind of stuck in my head was a reminder of some charts that Bill O 'Neill used to show on the weekly chart with Fairchild Camera and Syntex, one of his big winners back in the early 1960s with the birth control pill and even AOL back in 1998, where sometimes you will have this absolutely powerful. three, four weeks breakout, and then you might have this really, you know, harsh pullback. And his whole thing was about how to survive that pullback on something to really be able to take advantage of the overall move. Because if you, you know, and this happened to him because he studied history.
12:18Alissa Coram:He got shaken out of a Redmond Industries position back in the early 60s. And And it was like on that fourth week. And he said, gosh, you know, this this is something I need to learn from. He also got shaken out of CertainTeed. And because he came up with a rule for CertainTeed, he used that rule in syntax and was then able to, you know, really start the firm. Yes, exactly. Not only start the firm, but also buy a seat on the New York Stock Exchange. So, again, there is a huge benefit to learning from history, really kind of knowing what has happened in the past. And again, as you said, yes, this is absolutely very powerful and it would not be unprecedented at all for us to get a pullback here.
13:01Alissa Coram:But it also wouldn't be unprecedented for us to come right back from that pullback into new high ground, kind of like what we saw this week, because, again, we're seeing a very resilient market. So be prepared for it. Kind of have your stomach tightened for that punch that may be coming. like it did yesterday, but also how are you going to survive and thrive and not get shaken out of positions that are really not doing anything wrong when viewed from what stocks do on a historical perspective.
13:29Justin Nielsen:Exactly. So really quickly before we move on. So how do you think we should apply, you know, some of those lessons from Bill O 'Neill with handling pullbacks, bracing, bracing for a pullback within the context of a powerful move higher? Is it trimming positions or is it just keeping an eye on moving averages to find support, a little bit of both? What would be helpful here for our audience if we have this if-then analysis, right? If we do get a little bit of a test coming up, like you said, how here's how we would treat that to be able to survive and hold these stocks for bigger moves. Yeah.
14:14Alissa Coram:First of all, I think it really comes to the old wisdom of know thyself. You really have to know what kind of trader you are, what your time frame is and what you're able to handle, because for some folks, they're very, able to go very fast, take losses very quickly, get back into them without a problem. For others, hey, maybe you've got a job that doesn't allow you to watch as closely. Maybe you have to kind of let positions go and rely on automatic stops, which is all fine. You can still be successful, but know what your strategy is going in to the market and know what those exit strategies are.
14:53Alissa Coram:Don't try and decide them on the fly, right? Because that's where things can really go awry because that's where emotions can really creep into your decision making. And that's what we really want to avoid. That's why we have rules. So first, know yourself, know what kind of trader you are. And then it, I think moving averages are a great tool. But which moving average do you use? That goes back to what type of trader you are. If you're a swing trader, you might be relying a little bit more on your five and 10 day moving average line. If you are a position trader, you might be relying a lot more on your 21 and 50 day moving average line.
15:29Alissa Coram:And if you're a long term, you might be looking at the 200 day moving average line as your line in the sand. So again, very different positions and what you get out of stocks is also going to be very different. I'll be honest with you. I don't have a lot of doubles. You know, I do OK, but I don't have a lot of doubles. I'm often compounding smaller gains for some really, really powerful years. But every now and then it does happen and I have to make sure, okay, I'm going to have to handle this a little bit differently. Usually that double is coming in a very short period of time, like a month's time, like a SanDisk, you know, right now, which I do have a position in and I know you have a position in as well.
16:11Alissa Coram:So yeah, you have to start deciding, okay, how am I going to handle this one differently? But yeah, moving average lines are great tools. just looking at the chart and drawing lines. Sometimes it's just a matter of looking at a level, going to the left and saying, OK, is this a level that has been important before? And there's a lot of tools in order to do that. Retracement levels. And because of the market surge revamp that we just went through, there are a lot more technical indicators and tools that that we now have at our disposal to kind of find those support levels in a lot of different ways.
16:49Alissa Coram:But sometimes it's just as simple as looking at the chart and seeing where does a stock hit its head? Where does a stock find its floor? And drawing a line right there and saying, okay, this is a level of interest that I'm going to have to do something. If it doesn't hold or if it breaks through, that's an area that I'm going to want to do something. And then finally, remember, it doesn't have to be all or nothing. You can be making decisions. I love what Scott St. Clair, one of our panelists often on iBity Live, and he, of course, has his own webinar that he does weekly for market search subscribers.
17:25Alissa Coram:One of the things he often says is let the market kind of dictate. You know, if you make a trim, you know, you make a sell of a small position, then if it goes down more, well, you know, that was a good decision. Do more of that. If it keeps on going up, well, don't do any more selling. You know, you're still participating until it hits another level for you. So, you know, it can be just as simple as letting the market dictate your decisions. If a decision is working, you do more of that. And if it doesn't, you don't. It's just that simple.
17:58Justin Nielsen:Yeah. Well said, Justin. And like you said, I'm in SanDisk as well. So I'm keeping a very close eye on the moving averages. I do want to hold it for a bigger move, but I also am conscious of not wanting to take a drawdown all the way off highs, you know, down to the 10-week moving average if it happened at a rapid pace. So seeing where the stock to is, where it typically finds support. Is it typically finding support at the 10-day? Is it typically finding support at the 21-day? And over what time frame? So those can be helpful as well. And like you said, no need to make all or nothing decisions.
18:41Justin Nielsen:But also what would look abnormal, right? Is it a major downside reversal off highs? Do we start getting some of those classic climactic signals where you start getting a bunch of gap ups and the trading ranges continue to widen and you get more volatility? Other extension metrics as well that we look at for that truly climactic action. Gap downs as well, of course, some things that we want to be aware of there. So we'll watch for the signs. Yeah.
Read the full transcript
19:16Alissa Coram:Two things that you said that I think are really important there, Allie. Number one, you know, you're looking for something that looks abnormal. And Webby, of course, always says normal and natural, right? You know, that's kind of one of his refrains that he often uses. And how do you know what looks abnormal? Well, you look at a lot of charts.
19:34Justin Nielsen:Study history, yeah.
19:34Alissa Coram:You study history. You look at a lot of charts, not charts of things that, you know, you don't have to look at everything. You want to specifically hone in on winning stocks. What do those look like? Because that's what you're trying to duplicate. And that's when we say normal and natural or abnormal, we're really trying to say, OK, in terms of these model book stocks, these best performing stocks of all time, how does it look? And I also like what you said in terms of kind of knowing the math a little bit. How far down are you, you know, setting your levels, your support levels or your moving average line that you're using?
20:10Alissa Coram:And really kind of think, you know, do some hard thinking. Is that something you can handle? Because the percentage might not be too bothersome for you. Maybe it is. But when you put a dollar amount to it, it's, you know, it's hard to see that on the screen and sometimes not do anything. So, again, know where you're, know yourself, again, where are your pain and pressure points and how much do you think you can realistically handle?
20:36Justin Nielsen:Exactly. All right, Webby, that was, that was for you, that tangent. Okay, let's just quickly take a look at the weekly action in percentage terms for the S &P as well here, up 2.3%. 3%. So clearly the NASDAQ in the driver's seat here. Small caps for the week up 1.8%. It was a notable move there. And blue chips up just two tenths of a percent. So seeing that relative weakness kind of pick up here, Justin. Anything else that stands out to you from a thematic or sector level that we should be taking a look at? I know earlier this week we looked at the VXUS. I feel like that made a really notable move this week.
21:27Justin Nielsen:It was up 3%.
21:29Alissa Coram:Yeah, so definitely the international coming back on a little bit stronger. Now, keep in mind the relative strength, again, on this has been a little poor as this has been basing while the Nasdaq has been, you know, going up, you know, incredibly. So you got to you got to kind of weigh your decisions. It's sometimes good to have a little bit of diversification in that regard, especially if the Nasdaq does pull back. But at the same time, you have to recognize that you might have to sacrifice something in order to get that diversification. if the NASDAQ continues higher, you might be having a little bit of a drag on your performance.
22:05Alissa Coram:So you're always gonna give something up. You're either gonna give up something on the return side or you're gonna be giving up something in terms of safety and less risk. It's also worth mentioning, I think in a comment that you made that's kind of funny is the Dow Jones Industrial Average. You're like, yeah, this isn't something that we typically look at that much anyway. And that's true unless it's leading, right? That always changes. And the fact that this is not leading makes it even more like, oh, yeah, who cares? You know, so it's funny because everyone puts everything in terms of the Dow.
22:39Alissa Coram:And there are times, you know, my mom used to sometimes say, oh, you know, the Dow was up this much. And I'm like, I didn't know that. I have no clue, you know, because, again, it's not something, as you said, we follow that much unless it's leading. Then it's like, oh, we'll be interested in anything that's leading.
22:56Justin Nielsen:Yeah, exactly. That's such a good point there.
22:59Alissa Coram:On the sector side, I also want to bring up the MAG7. You know, so whether you look at MAGS, M-A-G-S, and again, you look at these and it's funny because you've had stocks like Microsoft and Meta that are definitely a drag on this, right? I mean, these are below their 200-day moving average line still. And yesterday, yeah, yeah, yesterday, Microsoft and software, let's go ahead and look at IGV because software had really been, you know, an ugly, ugly downtrend here. And that was continuing. But it's recently come up off the bottom. And so while SMH, the Bannock Semiconductor ETF, and I do have a position in that myself, or SOX, if you prefer that, while those were getting hit pretty hard yesterday, IGV was kind of softening the blow, at least on the tech side.
23:53Alissa Coram:So there is kind of that relationship, you know, chips were where it was at yesterday, not so much, but today right back to chips, you know, and IGV was down quite a bit initially, but that came off its lows considerably. So it'll be interesting to watch to see if IGV can improve. But yeah, the MAG-7 has certainly been one of the leading areas. And one of the things I like to do sometimes is look at the XMAG. X-M-A-G, this is kind of like, oh, you know, for the S &P 500, you know, you got the Magnificent 7 and then you got the other 493. This is the other 493. And you can see that this was not as strong.
24:36Alissa Coram:You know, it was an inside day here. And so and that's not to say that you have some very powerful names in there, very heavily weighted in Broadcom, which is, again, I have a position and is a very, you know, high market cap stock, but it's not a Magnificent seven. It's just kind of outside of it. Maybe it's the Magnificent eight, you know, but it's very interesting to watch this to kind of see, OK, this is what's going on with the indexes because their market cap weighted. and you can learn a lot from that as well as you brought up the RSP and we also look at QQQE to kind of get a sense of what is the average stock doing versus these big market cap weighted names.
25:19Justin Nielsen:Exactly and so there's a quick look at RSP and the QQQE on the day.
25:27Alissa Coram:But yeah, between SMH and XLK, it's very clear to see where the strength has been for this rally.
25:38Justin Nielsen:I'd say so. And I think, you know, like you said, it's a matter of timing, right? Ideally, traders were getting in around the follow through day. And then now it's a matter of managing existing positions. But also on IBD Live this morning, we were speaking with Brian Shannon of Alpha Trends about looking at the five day moving average and pinpointing setups for stocks that aren't just runaway trains right now and where you can manage risk. I think perhaps the temptation for some retail traders out there is to let the FOMO get the better of them. And we know that there are some strategies for that, Justin, for managing risk when stocks are extended like David Ryan calls it the mental health buy.
26:31Justin Nielsen:Right. But you have to, you know, when you start seeing this level of extension, could we go higher? Yes. But you could also be putting yourself in a dangerous position. So just something to keep in mind with new buys at this juncture doesn't mean they can't work. Have a stop.
26:51Alissa Coram:Manage risk. That's always job number one. And, you know, that's why a lot of times we hesitate to buy something that's extended because we know what a normal and natural look for the stock would be in terms of a pullback. And if that's not something you can survive, well, then you've got to think about, OK, how am I going to approach this? Am I going to approach it with a smaller position and manage my risk that way? Am I going to and then you can have a looser stop or am I going to go with my normal size position? I'm just going to have a tight stop. And if it works and comes right out of the gate, then I get my cushion and I can manage it differently.
27:29Alissa Coram:Or if it stops me out, so be it. You know, I knew I was playing with fire. So again, you can do a lot of different strategies as long as you are making that managing of risk a top priority. All right.
27:43Justin Nielsen:Well, since you mentioned Broadcom, let's go there. So here's a little good ticker. ABGO up 4.2 % on the day. Had a nice move off lows around that follow-through day in that early April timeframe. It's digested over the last couple of weeks today. A nice gain. Tell me more about what you're seeing here, Justin.
28:08Alissa Coram:Well, again, one of the things that we have been noticing that with a lot of the setups right now, if you're looking at a cup with handle, it's more than unlikely that you have a situation where you've got a pretty poor relative strength line. This is an exception to me. You know, the fact that this had such a strong move off the bottom, it really did put this in a strong relative strength position, but it had a little bit of a pause here over the last few weeks, and that kind of gave you another opportunity. So this is, again, something that Brian Shannon was talking about. Sometimes when you see that level of extension, what you want to do is wait for the pullback so that you have something to trade against for an entry.
28:48Alissa Coram:And so for me, I put this on Swing Trader today, and then I bought it after the restricted period with the idea that yesterday's low is a very easy place to say, look, if this doesn't work, that's going to be a very easy indicator to tell me, yeah, this isn't doing what I thought it would. So yesterday's low is a stop. It's about 4 % away from our entry on Swing Trader. So very manageable in that regard. And look, if it undercuts it and you're out, it could very well come back and maybe you have to buy it back. But again, the thing that really stuck out to me was how strong this relative strength is.
29:27Alissa Coram:Yes, it's not at highs, but it's pretty close. You could see that relative strength line getting to new highs very quickly. And look at it on the weekly. Yeah, it's right there. Right there. So, but it did give you a little bit of a pause with which to trade off of to manage your risk. So again, that low yesterday, or even if you were wanting to give it a little bit more room, you could use the weekly low to give it all the way down to 400. You know, and then what are you? You're, you know, you're still under, you know, well under 10 % using the lower 400 levels. So, again, managing your risk is pretty gosh darn easy on this one.
30:09Alissa Coram:And it's already shown that it has that ability to make a move. It's, you know, got some strong fundamentals. It's got a great composite rating, a great EPS rating, and a very decent relative strength rating at 84. war.
30:26Justin Nielsen:Most finance teams are spending on the wrong things. Expense reports, spend policy PDFs that nobody reads, a close that stretches into weeks. That's maintenance, not momentum. It's time to get Brex AF, a Gentic finance that eliminates that work before it starts. Learn more at brex.com slash AF. Okay, let's go to Rocket Lab. Like you said, you and Ken covered this yesterday, but you and I were talking about stocks to cover on the show today, and we had to include this one because it was definitely a standout with this powerful earnings reaction we were calling rocket lab a rocket ship at the open here and finishing the day up 34 percent heavy volume behind the move had a really decent looking setup heading into the report and then in terms of the numbers also what we like to see that double digit growth on both the top and bottom lines and some acceleration, Justin.
31:21Justin Nielsen:Earnings up 42%. Revenue up 63%. Investors were loving it today. Shares crossing into new high territory, at least a 52-week high. Let's take a look at the weekly chart and that round number of 100. Oh, yeah. It's clear skies here in new high territory. I'm seeing an RS line blue dot on the weekly. And this was the very first stock that we covered on IBD Live this morning out of the gate with Brian Shannon. A couple of opportunities to get in with brief pullbacks. And it just kept running throughout the day, Justin.
32:04Alissa Coram:Yeah. And so one of my strategies, a lot of times I don't particularly like buying in the after hours or pre-market. I like to see, you know, how it trades in that first minute. And so if you go to the minute bar on this one, you know, you can, I mean, even the five minute bar, either one, but the one minute bar was very strong and the five minute bar even better. So that tells me, okay, look, I'll just use the low of the day. And I go into it almost expecting a day trade because, look, I know it's very possible I'm going to get shaken out. And if I do, even that's not too bad because if it pulls back and then starts bouncing, well, then I have another level that I can use for a reentry to put a stop at.
32:53Alissa Coram:But this one just never looked back. Now, my mistake was not adding to it, you know, very quickly. And that's, again, sometimes a hard thing to do. But just buying it in that first, actually, you know what, I'm looking and I didn't get it in the first minute. I was a little slow because I was doing something else. And so I think I got it in the second or third minute. But even so, you know, I wait until after the first minute. So I usually try and buy it in the second minute. But even so, it was a 20 percent gain, you know, on on the stock in a single day. So, again, the part that you bemoan is, oh, well, I wish I had more.
33:33Alissa Coram:It's a smaller position. I only got it in one account. I didn't have the time to get it on all my accounts. But still, it's a it's a strategy because, again, it was it was gapping up very powerfully, but I still had a way to manage my risk. And look, Brian Shannon was sharing with our audience exactly what he was doing. He was actually buying it a few minutes before the open. He got in at 84 because he was waiting for some type of pullback. He was watching that in the pre-market. It hit exactly the level that he was wanting it to hit and get support at. And then when it bounced from it, he was a buyer right around 84.
34:10Alissa Coram:So again, there's a lot of my price was 87. So I didn't have as low a price. Yeah. But again, there are, it was not going in with guns blazing. The position was smaller and I knew where my risk level was. And I I could have taken a very small loss on this very quickly or as as what happened in this case, let it run. Now, because I went into this expecting a day trade, it would have been completely legitimate for me to take the, you know, take the profit and run. You know, that's that's fine, too. But Rocket Lab, I have a little bit of a soft spot for this was one of those 100 percent gainers in a month that I had back in October a couple of years ago.
34:58Alissa Coram:And so I've played this a few times, you know, hoping for a similar move. And look, this has been all over our radar recently. You know, the ETF UFO has been something that we've talked about a number of times because a lot of these space stocks have been moving as a group. And UFO was certainly helped quite a bit by Rocket Lab's move today. So that looked pretty decent as well.
35:25Justin Nielsen:Mm-hmm. Yeah, great job on that, Justin. Okay, moving on, rounding out our trio.
35:36Alissa Coram:So one more thing I should say.
35:37Justin Nielsen:Sure, go ahead.
35:38Alissa Coram:I had no idea this was going to go up 34%. I want to make that very clear from the outset. But again, when you get in at a price where you can manage your risk, this is where you can, you're going to get these. You do this enough. And if you're managing your risk, you're going to get these on occasion. And so that's what it really is about is giving yourself the chance, letting the market tell you where the winners are. And again, you don't know ahead of time which which one it's going to be. You let the market tell you. And you just have to be kind of open to that.
36:12Justin Nielsen:Yeah. And then for those of us who missed it, because I had plans to buy it in the first five to ten minutes. And then I was hosting IBD Live and, you know, juggling a bunch of other things throughout the day. And but looking for some sort of alternate entry at this point. Right. because this type of power is very impressive. So we'll see. And I think it also, Justin, the fact that you are willing to buy something in the first minute of a gap up on earnings also speaks to the type of market environment that we're in. You're not doing this every earnings season, you know?
36:51Alissa Coram:I wish I did it more this earnings season. I wish I did it more this earnings season. Right, Max Liniere. Yeah, you know, but... Right?
37:00Justin Nielsen:I mean, you using the tools for the kind of environment that you're in.
37:05Alissa Coram:Yeah, no, absolutely. And again, it really does come down to that, that as long as you're going in managing risk, you can do a lot. You can get into a lot of things and participate. And, you know, speaking of the strategy you're talking about with, hey, there might be another opportunity here. because when a stock goes up this much, it's very normal for it to pause and digest those gains. And so that's kind of our next thing that we would look for in Rocket Lab. And that was something that I was looking at in BTSG. So kind of leads us right to that one. So Bright Spring here. This is one that I, again, I have a position in this and I actually played this before.
37:46Alissa Coram:So this was a nice winner from me from that breakout in September. And I actually held it through a couple earnings announcements. And then when it crossed the 50-day moving average line, I was able to survive the first time because it wasn't enough of a break that I got too concerned. But that second time it hit the 50-day moving average line, I was out. And so, look, I didn't participate in this last part from 40 to 45. And then it had the earnings move and it caught, you know, caught my attention. How can I get back into this? And here's what we had. We had a little bit of a pause here. I was actually hoping for more of a pause, but you can't always get what you want.
38:29Alissa Coram:Sometimes you gotta either, you know, play it or not play it. And I decided to go ahead and, you know, try this one out. So again, starting with a smaller position, but it's one I can always add to, make it larger if it works. So I'm looking at, you know, that 55 level, can it cross above there? Looks like it's right on the cusp and maybe trading there in after hours.
38:50Justin Nielsen:Great. All right, Justin, anything else to add before we run in the spirit of Webby?
38:58Alissa Coram:Well, I don't know. I didn't come up with a song if that's what you're asking. But really, I think, you know, there's a few of the tenants that we repeat often that I think are worth doing as an exercise over the weekend. Number one, rate your stocks, right? Because a pullback would be very normal here. and you want to be very clear on which stocks you're trying to hold, how much of them you're trying to hold, how much of them you're maybe willing to let go to, you know, take some pressure off yourself, because a lot of times that's what we're trying to do. We're selling into strength or maybe, you know, trimming a little bit to just take some pressure off.
39:36Alissa Coram:That's why it doesn't have to be all or nothing. Once you take some of that pressure off, it lets you kind of breathe a little bit, you know, when you're not, you know, facing as large of a drawdown and, you know, something that's more manageable. So rate your stocks. I always talk about, look, you've got this boat. And if you start taking holes on in your boat, it doesn't mean you have to jump ship immediately. The first thing you're going to do is start deciding what do I throw overboard? And, you know, and once you can do that, it can kind of give you that room to start thinking a little bit.
40:07Alissa Coram:And so that's the number one thing to do. Rate your stocks, come up with your position. And weekends are great times to do that because you don't have all the bells and whistles yelling at you, the flashing lights. You can think a little bit, you can be a little bit more strategic and thoughtful with your decisions. But then it's, you know, some people like to write those decisions down, put stops in, put alerts in, whatever it is you need to do to make sure that you can follow through. And at the same time, have some flexibility. There are a lot of times on Swing Trader where we will have a number of stops.
40:46Alissa Coram:And if everything comes in like very quickly at the very beginning, we don't necessarily want to take everything off because everything's hitting our stops at the same time. we usually want to give it a little bit more of a measured pace. Okay, so we'll wait for five minutes, 10 minutes, 15 minutes to see, okay, are we getting any support? If not, okay, let's start trimming. Okay, are we getting any support? If not, we trim more. If we do get some support, okay, let's hold. Let's see if we can bounce a little bit. And then we start moving our stops up. So there's a lot of different ways you can handle a pullback.
41:19Alissa Coram:But really, again, think through it, make some decisions over the weekend. And that way, you're kind of prepared for the week. matter what comes at you.
41:27Justin Nielsen:Exactly. For your existing holdings, know your levels where you're going to be taking profits, where you're going to be adding as well. Right. And it may not be in one or two bars. You may want to see more, like you said, more of a pause, you know, have that 21 day line catch up if that's your thing. That's something that I like using. Or maybe it is more of an aggressive or creative ad, but know your line in the sand for your ads. And then also for new buys. Let's see what new setups develop in the weeks ahead. So lots of great reminders.
42:03Alissa Coram:I'll say one of the things that I like to do, because you make a very good point about, hey, what do you want to add to? And that's a lot of what I'm looking at right now, because so many things are extended and hard to buy. But if I have positions in them, then I start looking at, hey, is this something that I can add to? And what I do is I do some calculations. Okay, how many, if I do this many shares, what would that do to my average cost? And then I might have a different stop. If I'm going to add at this level, I'm going to have a stop for those shares that I added. So I'm kind of protecting my initial position and looking at that as kind of a separate decision.
42:40Alissa Coram:And am I right on that decision or not? So sometimes I'm doing some very strategic ads there based on three weeks tight or, you know, kind of your traditional things. Sometimes I'm just adding to things because they're up, you know, and I want more of it. I mean, hey, you
42:55Justin Nielsen:looked at some of IBD founder Bill O 'Neill's trades and, you know, that's what he did. Add, add, add, add, add, trim, trim, trim, you know, on all of those different points. So, yeah.
43:06Alissa Coram:And sometimes that was just a matter of him doing a calculation of, hey, what size position do I want here? And then he would calculate how many shares do I need in order to get that? And then And he'd go about just slowly 100 shares at a time sometimes, which was nothing for him. But that's how he would build into the position that he wanted.
43:26Justin Nielsen:Yeah. Question for you, Justin, really quickly as we wrap. Do you have your account set to high cost or LIFO? Yeah.
43:37Alissa Coram:So I've, the reality is for me, it doesn't matter so much because all my trading is in, in Roth or, you know, traditional for retirement accounts, basically. So on the tax side, that part just, it doesn't matter. But for me, calculation wise, because again, I worked with Bill for so long, LIFO was what he did. Last in, first out. And because of that. They're very similar.
44:04Justin Nielsen:I mean, especially if you're not averaging down. Yeah.
44:10Justin Nielsen:So when you're peeling off, it's not peeling off your ads. Right. Or it's not peeling off your low cost.
44:19Alissa Coram:Exactly. It's peeling off the ads. And, you know, some brokerages are a little bit better about that than others in terms of calculating that average cost. A lot of times I have to do my own calculation because I just don't trust the brokerage calculation. But like with Fidelity, for instance, you know, you can actually when you put in a trade, you can specify the shares that you're selling, you know, and that makes it really easy. So I just say, okay, and it separates it out. It's like, okay, you're up this much on these shares. You're up this much on these shares. You're down this much on these shares.
44:52Alissa Coram:Boom, those are the shares that go.
44:54Justin Nielsen:Yeah. All right. Fun little reality of trading tidbit to end on there today. Love it. Thanks so much, Justin. Really appreciate it. And everyone, make sure to check out, if you haven't watched it already, this week's podcast episode that Justin did with our chief content officer, Chris Gessel. They talked about a key technical indicator that you can use in our market surge charting platform. So some interesting stuff in that discussion that is live on our YouTube channel and available wherever you get your podcasts and investors.com slash videos. That's it from us for today. We hope you have a great weekend and we'll see you back here next week.
46:08Alissa Coram:Thank you.
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Alissa Coram and Justin Nielsen walk through Friday’s market action and discuss key stocks to watch in Stock Market Today.
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