Nasdaq Flashes Bearish Signal; Guardant Health, Palantir, Freeport-McMoRan In Focus

0:09Hello and welcome to another episode of the Stock Market Today video. It's Ed Carson and myself, Justin Nielsen, with you today. Both Allie and Ken are out on vacation, so they put in the B squad. But we're here to help you make sense of what happened in the market today, or at least try to. But Ed, what do you got for us today? Thank you so much for joining us. Yeah, I do have a few stocks that have been acting pretty well. Garden Health, Palantir, and Freeport McMoran. Awesome. Well, before we get to that, let's go ahead and start with how the indexes closed today. It was not a great day. I don't know how else to put it.

0:50There was just a lot of damage continuing to happen, a lot of breakouts failing, and certainly the area that has been hit the hardest has been tech. So the NASDAQ composite, as you can see here, closing below this August 4th low. That's not a good look. It was down 1 % today. The queues were down about three quarters of a percent. Let me try that again. and yeah, down about three quarters of a percent. That's getting down below its 50-day moving average line as well as its 21-day moving average line. The S &P 500 SPX, that closed down about nine-tenths of a percent. And while it's just, I think, above that August 4th low, it's below the 21-day moving average line.

1:38So that's not a good look. Dow Jones Industrial average. That was down about 1.3%. That kind of fell apart right at its 21-day moving average line. It had already undercut the gap up on August 4th. And then we have the Russell 2000. I'll pull up IWM here. Oh, not IMAX. Let's try it again. Okay. I'm typing too fast for it. It was down 1.3%. Closing at the lows, as most things did, still above its 50-day moving average line, but a decisive break below the 21-day moving average line. It's hard to find good news here, Ed. I'm like, what do you make of it? Yeah. And as I've been saying, the underlying sector rotation has made it even harder than the indexes suggest.

2:23But before it was difficult. Now, this is just getting bad. Now, all the indexes went through their 21-day line. And I think the The NASDAQ closing below its follow-through day low. That is a highly bearish signal. Now, the S &P hasn't quite done that, but it's not like, hooray, it's doing great. It's a very strong sign that the rally will ultimately fail. It doesn't mean it will fail, and maybe this is one that won't. Maybe this one is also, you could see, a situation where they fall below their 50-day line and really shake everybody out and still rebound. And technically, the rally is going on.

2:58So we don't know. we'll see. But look, if you bought on the follow through day on the NASDAQ, you're probably down. You know, I mean, that's just what you're probably down on almost anything. Stocks have come up, a lot of stocks have, you know, that were looking good have really weakened over the past week, there are some sectors that are moving, you know, if you didn't get to them quickly, a lot of them moved out, or then they turned around and rolled over. So again, very difficult. And I think it's investors should be more of a defensive mindset, right now until things perk up. And if nothing else, let your sell rules kick in and don't really make many new buys and let yourself reduce exposure that way.

3:40Yeah. Now, we have been talking on IBD Live about how the power trend started technically on the S &P 500 yesterday, but I will just kind of give some caveats. Again, the power trend is one of the things that we look at on our market school rules, something that Mike Webster, Charles Harris, and myself came up with, gosh, over a decade ago. And the position of this power trend starting wasn't great. Usually what you have with a power trend is you have your follow-through day, a continuation follow-up move, and the power trend is happening in a much higher position. That wasn't the case with this power trend.

4:18And I will say that in looking at the examples where a power trend did, you know, kind of undercut the 21 day moving average line very early from when that power trend occurred in the first eight days, it doesn't look good. You usually get worse before you get better. And Webby will probably go over some of these in his SMT tomorrow, but just want to kind of let you know, don't be looking at, oh, there's a power trend, so everything's okay. This power trend never really got the power that we really needed to see. In terms of sectors, it just really seemed like there was nothing that was working except for energy and maybe some medical, but, oh, Staples, that closed positive, XLP.

5:08I think it closed positive on the day. Oh, no, it didn't. I was looking at something bad. Yeah, I mean, oil went up again. So if you looked at USO, I mean, oil's going up. So as long as that happens now it's just tough it's just tough if oil goes down if there's peace in the middle east not it doesn't look like it and that's why it's been trending higher but if there's some deal or some perception the market perceives a deal is coming this could fall sharply and all those energy stocks could fall it makes it very difficult uh gold is still doing well at least gdx i don't know i mean gld is a little you know some of these things get difficult you know i think that one might have that was okay that's holding up a gdx is stronger uh even though yields rose which is interesting uh you know that that was short-lived now we really haven't uh basically retraced the loss from yesterday but an unusual move uh which in some ways was more symbolic than anything else and i guess uh but the dollar is still weak the dollar may have bounced back i'm not sure where we closed for dxy uh but you know okay it ended up fractionally higher but you can see yesterday's big drop and the big drop we've seen and that's a reason why gold and a lot of commodities are going up is because the dollar is so much weaker uh yeah so but yeah other things biotechs they were huge yesterday but if you didn't already have it xbi or some of these names a lot of them gave up against you know if you bought it yesterday you're down obviously it's having a good week but you're down you know that's just it's just it makes it tough uh if you look at and XLV is somewhat similar to that, you know, I think, and that has a lot of that.

6:48Some of the big pharma names were up strong. And, you know, again, if you bought it yesterday, you're down today. ITA, Aerospace, we don't talk about a whole lot, but it was hanging in there, hanging in there. And boy, oh boy, last couple of days, I don't know what's going on. I mean, I didn't, you know, but a lot of the names, some of the big names in there are really struggling again. So you look, oh, you look around, oh, I'll go here. I'll be, you know, it's just really tough. And I think you, It's certainly not a buy and forget. Never really is. But boy, there's some markets you can just sort of like, hey, I'll just coast back in the backseat and everything's going to be fine.

7:22Other ones, if you're going to drive, you really have to be nimble at best or step away. There's nothing wrong with going to the side and cash in a great extent. Yeah, no, absolutely. So you mentioned TNX or the 10-year treasury yield, I should say. Um, TYX, uh, was certainly of interest yesterday with Scott Besson's comments. Um, and you know, what, what that attack of the long, uh, the long side of things was, uh, gonna, gonna be what ramifications there would be there. Um, but let's take a look again, just a revisit of IWM. This was looking really good. It was kind of one of the first ones to get out into new high ground.

8:02Uh, it had been holding above its 21 day moving average line. But now with the Russell 2000, the small caps faltering again, coming down almost to the 50-day moving average line with that slice, what is that kind of meaning for you? Well, it's another breadth measure. And so you could say, well, okay, some of the chips' names are struggling. And those are really big market caps, and they're not doing well. Fine. Some of the software names aren't doing well, especially the leading ones. Okay, fine, fine, fine. But surely underneath it all, it's going well. And yeah, you could have said that up until this week with idemium.

8:35You know, like IGV looks okay still. It's pulled back, but that's fine. But hack and a lot of the, you know, but yeah, I'm sorry. I'm sorry. I thought you were pulling that up. I missed. Yeah, yeah, yeah. No, I was going, you said software, but then you kind of came back. Yeah, but hack is coming. And obviously that's gone up a lot more, but that there's a lot of names that come down. Now there's earnings next week on a lot of them, but that's disappointing. And it's sort of done this big ups and some big downs and maybe it'll, you know, roll up and that's fine, but it's tough to get into. in any particular time.

9:03Yeah, IWM just, it's close to the 50-day line. The NASDAQ's close to the 50-day line. Again, there's more bearish signals you could have. It's not, it's just not good. If you, again, if you bought almost anything, certainly by the close of August 4th, you're down on any of these indexes. And it's just hard to make money in that environment, especially with all the rotation we've had. And as I say, like it, a lot of these indexes were peaking out just a week ago. It wasn't just that we went sideways since August 4th. there was a moment where like, aha, here we go. We're going to take off. And not just the indexes, but all those chips were, and those AI plays were, aha, we're just above.

9:41Like SMH doesn't really show it that well, but it's still, you can sort of see how it peaked above the 50 day line. A lot of things were doing better than that. But then - Maybe even DRAM. Right there. Yeah, DRAM, all these things immediately, just when you might be getting in, Just when you say, okay, it's safe to go back in the water, and that's when the Jaws soundtrack picks up again. So it's just – that was just exactly at the wrong time, but that's what happened. Anyway, it's just tough. It's a really tough market, and I think investors need to recognize that. Maybe, again, it could be in two days, the S &P could be at new highs.

10:20If it's a great day, we could be at new highs tomorrow. So you don't want to – this could turn around very quickly. but you know right now this is what we got and i feel like that's what we've been seeing we've been seeing oh you know as soon as things look like it's time to throw in the towel that's where you get like a upside reversal it kind of teases you in again and then as soon as you get the breakout oh now that's where they pull the rug out from under you um you know you mentioned with IWM, the Russell 2000, small caps, kind of being a good gauge of breadth. Let's take a look at RSP, which is the equal weighted S &P 500.

11:01That was down today, but it just looks very different than your S &P 500 or any of the other indexes that we just looked at. I'm going to pull up QQQE as well. This is the equal weighted. Again, a lot more strength on the equal weighted, But even in the tech-heavy NASDAQ 100, what do you make of that with the equal-weighted acting so strong? Yeah. I mean, I think RSP, you can say, OK, there's lots of the banks are doing OK and the energy is doing great. A lot of medicals are doing well. Commodities are doing well. So there's a lot of things that are doing well. It hasn't been easy to necessarily, if you didn't get on them quickly, a lot of them are extended.

11:39I messed up and didn't really do that enough. But yeah, so this never showed a correction. I mean, there was weakness through all this time. What was the weakness in June and July? There was no weakness, really. This continued to trend higher. QQQE is encouraging. Pullback to the 21-day moving average line. I mean, hey, that's a thumbs up, right? It got support exactly where you wanted it to. You know, since April, it hasn't touched the 50-day line. I mean, how can you not? That's great. That's great. So QQQE, in some ways, is really encouraging because, yeah, we see all this tech weakness, tech weakness.

12:12But honestly, if you bought this, you know, as a shallow correction, if that, and it's been acting well, yeah, it's a little disappointing here the last few days, but obviously holding up much, much better than the NASDAQ or the Qs. Yeah, so I think some of the software names are doing better. But again, if you bought in the last few days, again, if you bought on that Monday or bought just when we were peaking out, you're down. Not terribly. uh cash would still be better in the last week or two you know even for this but yeah so that is encouraging there's things that you can easily turn to if the market rallies you say see see look at all this underlying strength so uh you know it's not a disaster out there it's just not great yeah well you talked about you know kind of having cash as a position there and uh with the dollar getting weaker let's turn our attention over to ibit uh this is the bitcoin etf uh This, you know, had a really strong pop yesterday and a nice follow-up today.

13:13Now, look, this has been, you know, just not doing anything. It's been hanging out below its 200-day moving average line, just got back above its 50-day moving average line. What do you think is happening here? Well, I mean, some of the things that were lifting gold, maybe the weaker dollar, huge factor. And yesterday, the yields, yes, but that really didn't continue. But it's, I think, the weaker dollar. And also there's some legislative, maybe some hope that the Clarity Act will pass, which is good news for maybe crypto. A lot of people think the SEC is doing some things on its own. So there's legislative and regulatory things that could be doing it.

13:46I don't know, maybe you could say, well, if people are getting a little bit, if the momentum is going away from some of the chip or software names, you might be saying, well, maybe it's time for Bitcoin. You know, there could be a rush of, let's just a vibe. Let's go back into this. I sort of feel like yesterday was the day to do it. I suppose you're going to do it. I kind of did it today. But now you're getting close to the 200-day line. So again, with a lot of other things, this is where you're getting close to resistance. So you'd have to be real careful because that could be exactly where it falls back.

14:15So at this point, I think I'd like it to go up to sort of what would be sort of what looks like a buy point. I mean, like that 46, 56, I don't really can see. it's an odd because there's no prior uptrend maybe settle down and then move out but i don't know right you know i just so i i think there's a nice move but i sort of feel like it's it's it's tough here given the resistance level um you know but uh but we'll see yeah sometimes you can have the hypothesis that it is going to go up but you also have to say will i be able to make money off of it and that's where i'm kind of like yeah when things are in the no man's land between the 50 and the 200.

14:51I just know that I have a tendency to mess those up pretty good. So I kind of stay away. Just I've touched that hot stove enough. Okay, let's go ahead and take a look at some stocks. And certainly with Moderna moving so strong yesterday, stunning 176 % move. So yeah, down 24%. But you still if you had bought, you know, at the open, you would still be up on the day. I mean, on your trade, you know, so let's take a look at GH. This is one that has held up very nicely. It's had some tests of the 21-day moving average line, but on a day where there was so much destruction, there were some stocks out there that were looking just fine, and Garden Health was among them.

15:34Yeah, I mean, I sort of think you could treat this 174 sort of a buy point because that did pop up as part of a base, you know, because there was this 176, but clearly didn't close above that. It closed well below. You could also, I think, use yesterday's high or even today's high as a place where you would enter on that. I think that it's sort of, just as an aggressive entry, the relative strength line is strong. The revenue growth is strong. Still losing money, that's the biggest problem, is that where's the path to profitability? It's still a ways off. I'm not sure when, but it's not through the end of next year, it looks like.

16:10uh so yeah i think this one's this one is acting pretty well uh there's not a whole lot of setups out there i think a lot of things are sort of extended or in no man's land or trying to get back to key levels this one is actually seems like something you can move and it's and it's an area that's doing pretty well this well you and i both got burned by billion to one a lot of the names in this space are doing well everything but that one uh billion to one dot just completely be wrecked. But a lot of other names that you're sort of in this testing space are still doing very well. So I think that could give you some encouragement about this sector.

16:48And this is still on leaderboard and with good reason. Yeah, there were certainly, again, as I was just going through some of my screens, a lot of interesting medical names still looking very strong. One of the surprises, I think, was Palantir, because you mentioned how a lot of the software certainly has been pulling back. But in the computer software enterprise area, Palantir, and I do have a position in this still because it just hasn't done anything wrong yet. Palantir holding up rather well. What do you think is happening there? Yeah, I mean, I guess the recovery software names are doing better.

17:26The names that didn't already get to new highs. And so Palantir is a recovery name right now, but obviously, unlike some of the other names, this one has tremendous growth, accelerating earnings growth, 11 quarters of faster sales growth. It's, you know, it still has a high PE, but it was extremely high. And, you know, these quarters, it's now becoming more reasonable given the enormous growth. So I think that was it. Part of it just, it just got ahead of itself, even though all its fundamentals are great. Yeah. I mean, look on a weekly. It is flat for this week. uh i mean it's holding that really strong gain this could have easily given up five ten percent and you would say hey that's normal that's you know almost healthy but it's holding up you could view this as a it looks like it's on tractor three weeks tight but even if it isn't it looks like uh this is an area you could use as a shelf or even treat it as a handle to the larger consolidation from the very top this is halfway in that one maybe you'd like a little more of a shakeout but still i think this is this three weeks tight given so close it is to the base that you could treat it as a new buy point here.

18:29So yeah, look, the fundamentals are great. We'll see. Again, it's just so, it's tough. It could be this is exactly the moment where everything falls apart and the tax retreats. So I would definitely wait for that sign of strength and if you do make any buys with any of these things, just be very quick on the trigger. Maybe even take swing trader rules a little bit and take partial profits just to make sure you don't get burned. in this kind of market. Again, whatever works for you, but doing things to make sure that you do not, that gains do not turn into losses and that small losses don't turn into big losses.

19:07Yeah, it's certainly not a let's all swing for the fences type situation on every position. And just since we are on the weekly chart, you mentioned those strong fundamentals, the strong growth that we're seeing in the earnings per share. And just a reminder, folks can see that right here on the earnings line as we, you know, just basically plot out the last four quarters of EPS and put that so you can kind of see that angle of ascent, which Palantir has absolutely in spades. Now, to kind of close things out, we talked a little bit about the dollar, the weakness in the dollar, really helping commodities, and certainly one of the areas that is among the metals in the commodity space is copper.

19:48Freeport, McMoran, FCX, having a nice little cup with handle here. uh now some of these bases it gets right to the breakout and then fails um but could this be a third time's a charm it could be obviously this the problem with all these things it's like you know with energy commodities is that the underlying commodity price is so is so huge uh yeah i mean i think the last couple days you could have bought it breaking the trend i think it would have been nicer to do that when it's close to the 50 day line but yeah a lot of resistance here um you You know, going back, actually, if you go, yeah, I guess it's just the last few months.

20:24That works. You know, just the last few months, it's been hitting resistance right at this level. It's 70 to 72. So, yeah, there is the danger that it breaks out and then comes right back in. So, it might have been nicer to buy heading in today or yesterday. But showing a lot of strength. A lot of the mining plays are extended ore and no man's land. This one is not. this one is this one's in a buy area you know if something goes wrong so if it does rise up and then reverses lower well you might lose money but at least you know something is not acting right you know if not you know there's as opposed to oh it's in the middle of nowhere and it goes down three percent well okay what does that tell you not necessarily much of anything so uh again the the earnings have been strong because of the prices i think they're supposed to be strong through next year uh the revenue has been a little bit choppier there i think there's some line closers out there.

21:17So there's some of that, but the earnings have been really strong. And I think revenue is supposed to pick back up again. Well, to kind of close out, going back to the S &P 500, SPX on our charts, what's kind of the outlook here? Because again, there are some areas that are working, you know, gold, commodities, oil, oil and gas, medical, you know, you have within each of these industries some really, really strong looking charts. But gosh, personally, it's been tough out there, right? You know, a lot of things that I've tried, breakouts have been failing, things that have set up look good one day and disastrous the next.

22:00So what's kind of the overall outlook here? Yeah, I think it's one thing if you have long term winners, because it's in this kind of market, okay, you know, these little ups and downs, even 5%, 10 % moves may not be that big of a deal. It's just a lot harder when you have new purchases. I just, it just doesn't seem like a market. If you've got some toll holds in some of these industries that are working, great. I mean, that's great. But I don't know how much, it's just hard, you know, to be, it doesn't seem like a market to be making many buys, even in the areas that look strong right now, because it just hasn't been a market where, you know, if you don't get it immediately, you are, you know, know, there's just such a danger.

22:38Again, maybe some of these names will really run. That's absolutely could be the case. So, but if, and if you do that, you just have to be extremely nimble. If you're making a lot of buys, you have to be really ready to be scaling out quickly. And I'm not as good at that. So I, I'm just sort of like stepping back. I'm kind of taking some more cash and not doing a whole lot. So know yourself and know the market. And, and, and to, this seems to be more of a market to protect yourself rather than really be, as you say, going for the fences. Yeah. And, you know, it's a really good point that you make.

23:10This market seems like it's less forgiving if your entries are poor. And if you overstay your welcome, you're going to get punished a lot of times, too. So nimble is probably the word of the day. So thanks a lot for the comments, Ed. And we will see you tomorrow on the Friday earnings cheat sheet with Alexis. So make sure you tune in for that. While most of earnings season is done, you still got some important ones coming. Yeah, and I think, you know, like NVIDIA, CrowdStrike, a lot of cybersecurity names. So especially in that tech side, that's another reason to be wary. Even if some of these things are setting up and doing that, it's like, boy, there's some big reports on the chip and software side that could change the dynamics there.

23:59Yeah, absolutely. Well, thanks again for the comments. That's going to wrap it up for us today. Thank you so much for watching. Don't forget to tune in tomorrow. Webby will be on with Ali to go through the week's action. We also will be live in the morning with IBD Live 10 minutes before the open and we'll walk you through the first 100 minutes or so of the market action. So if you haven't tried that out, you can go to investors.com slash IBD Live. And then we also have Don Vanderbord was on the podcast yesterday. So if you haven't checked that out, he was sharing a lot of things in terms of what his AI index is telling him, how he uses stochastics to really get those entries and what his take on the market has been lately.

24:40So check that out. Lots of educational material out there. Thank you so much for watching and we'll see you next time. Take care.

25:02This show is for informational and educational purposes only and nothing should be construed as a recommendation to buy, hold, or sell any securities. Any securities and investment strategies discussed may not be suitable for all investors. Make sure to consider consulting with your financial advisor before making investment decisions.