Nasdaq Jumps 1% As Tech Earnings Impress: Arista, Walmart, CSCO In Focus

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0:40Ken Shreve:good afternoon everyone and welcome to stock market today for wednesday august 6th it's alissa quorum here and a day of outperformance for the technology sector with a lot of impressive tech earnings and joining me now to discuss the action in today's session is my colleague Ken Shreve. Ken, what's going on? Yeah, things were a little shaky last Friday, Allie, when we had that market sell-off, but it's been three days in a row of pretty decent price action. Mild distribution day yesterday, but good volume behind a nice gain for the NASDAQ today. So let's take a look at Arista Networks, A-N-E-T, nice earnings report from this networking company.

1:20Also in the retail sector, Walmart and Cisco, CSCO, not a name we talk about very much, but actually setting up at a base here.

1:28Ken Shreve:Yeah, some compelling action there today. First, let's take a look at the major indexes. So we have the Nasdaq composite with a strong day finishing up 1.2%. Meanwhile, the S &P 500 up 7 tenths of a percent on the day and the Dow up two tenths of a percent. Small caps finishing roughly a quarter of a percent lower. So it definitely was a day of outperformance for the technology sector. Like we mentioned, a lot of big tech earnings, but even you have a name like Apple, which has been underperforming, but with its big index weighting, definitely providing a boost today with a gain of over 4 % for that name.

2:10Ken Shreve:So what do you make of the fact that we have been able to snap back and shake off the weakness, at least so far, that we saw late last week? I think it tells you that this market uptrend still has to be respected. Again, the Friday drop for the NASDAQ below the 21-day line, it did it in lower volume. So that was a plus sign. But then the very, very next day, it gapped up and did very well on Monday. Not much volume behind that rally. Had a very mild distribution day yesterday for the NASDAQ. But then I think the close above yesterday's high for the NASDAQ in higher volume, just, you know, very, very compelling, very compelling day.

3:00And again, just another day of a lot of, you know, double digit percentage gainers on the NASDAQ. And I think we still have to respect this uptrend. And, you know, it's just a strong market that still is showing signs of strength out there.

3:16Ken Shreve:Yeah. So the 21 day line, very important. The fact that we've gotten above that, we now have three days with the low above that level. That's something that our senior market strategist, Mike Webster, has been keeping a very close eye on, three days with the low above the 21 day, a key development in his eyes. And if you look at the a high from Thursday to the low of Friday. We are now, in terms of a 50 % retracement, in addition to being above Tuesday's high, we are definitely well above that 50, I would say, well above, but at least above that level. So that's another thing to look at. Now can we stay above that 50 % retracement as well?

4:01Ken Shreve:Or at the very least, that 21 day, that's going to be key for any stocks or exposure potentially added on a day like today, you have a line in the sand, right? And it's that 21 day. Yeah, absolutely. And again, it's not to say, I mean, we're not, you know, decidedly bullish on this market as a result of today's price action. We know we've seen some very volatile, whippy action in the NASDAQ over the past, you know, five, six, seven trading sessions. But the 21-day is the line in the sand here, and all uptrends tend to show good support at this level, and the NASDAQ is doing it again. But if we should get a distribution day down the line or another bad break of that 21-day line, it'll force our hand and likely cause us to lower exposure a little bit.

4:54So we have to kind of bob and weave with the market here, get used to the volatility. But for now, the market is handling Friday's sell-off very nicely.

5:04Ken Shreve:Right. And we will be taking a look at one of the earnings movers from today, Ken, here in a bit. But something that I want to point out, since you did mention that there were so many of them, I remember this morning on IABD Live, you mentioned you couldn't really recall a day where there were so many somewhat high profile, but just widespread double-digit percentage earnings movers to the upside. It felt like today was one of those days. Today was one of those days. We had several leaders down in volume as well, but there were definitely some fireworks today. Astera Labs, A-L-A-B, Arista. There was Shopify, Hinge Health, H-N-G-E.

5:52So lots of compelling price action in the market today. Did have the market pulse in the big picture tonight. It's going to show a lot of leaders down in heavy volume. So that's just kind of keeping us a little honest here. And it wasn't just today. I mean, the second quarter earnings season has been outstanding. And yeah, there were a lot of double-digit earnings gainers again today. But that has really been the case for the past couple of days. Lots of stocks responding very well.

6:23Ken Shreve:Yes. And then, of course, like we always like to say, what we want to see from here, well, we want to see those big gains hold, right? So we want to see that strength continue. And for more on the big picture, Ken, you're going to be writing that today. So folks definitely should keep an eye out for that when it drops on the homepage of investors.com. Yes, indeed. And, yeah, we'll be sending that market pulse out there shortly with our leaders up and down in volume. And, yeah, pretty compelling day today, though. I think the bulls have reasons to be optimistic after the close we got today. All right.

7:01Ken Shreve:We'll stay flexible. Moving on, let's get some quick thoughts on the other indexes, and we'll get to those stocks. So here's the S &P. Also compelling that the S &P 500, very similar price action here to the NASDAQ. I think that the close above yesterday's highs, very compelling. Also slightly above the 10-day moving average. So kind of a similar setup here for the S &P 500 like the NASDAQ. You know, lower volume probably on the NYSE today, but it looks like higher volume on the NASDAQ. Okay. And then taking a look at the Dow. Your thoughts? You know, same sort of similar situation. Gap is still below the 10-day moving average here, trying to reclaim the 21-day line.

7:49So the Dow and the Russell 2000 in a slightly different position than the NASDAQ and the S &P 500. But both indexes are still holding three days of gains very well here.

8:03Ken Shreve:Okay. And then we'll take a look at the equal weighted ETFs representing the NASDAQ 100 and the S &P. So here's a look at QQEW up a half a percent on the day while the Qs were up one and a quarter percent. So it seems like having those weightings of the mega caps definitely helped the index performance here. What do you make of breadth? Well, you know, listen, we can we can always find reasons to complain about breadth. I mean, you had the NASDAQ 100 up sharply today, like the composite, but QQEW lagged quite a bit. I think QQEW is testing its 50-day. Yeah, still holding support here. But just overall on the NASDAQ exchange, declining stocks had just a slight edge over advancers today.

8:52So on a nice 1 % up day for the NASDAQ, you would have hoped that, you know, breadth would have been at least two to one positive, maybe three to one positive. It was slightly negative on the NASDAQ and also slightly negative on the NYSE as well. So not a deal breaker, but, you know, just something to watch and continue to monitor going forward.

9:14Ken Shreve:Yeah, well, absolutely. Harvard Business School Executive Education delivers breakthrough learning for leaders, stimulating classes led by faculty at the forefront of their fields, topics that will define the future of business, discussions that transform perspectives and ways of thinking, and access to the brightest business minds on the planet. Learn more at hbs.me slash breakthrough. That's hbs.me slash breakthrough. Keep that in mind. Okay, let's take a look at Arista Networks. You mentioned this being one of the big earnings movers on the day, finishing up almost 18%. Heavy volume here. Some acceleration on both the top and bottom lines, Ken.

9:57Ken Shreve:Earnings up 38 % on the quarter. Revenue up 30 % on the quarter. So some impressive growth there. Getting to new high ground. Finally, getting back above the highs from January. Yeah, pretty impressive. Not often mentioned as an AI stock or data center stock, but their networking hardware is all over data centers these days. So this company is definitely benefiting from the proliferation of data centers. You know, you've got six up weeks in a row and maybe another, it looks like another one obviously taking shape today. So I was impressed how Arista held its gain throughout the day. If you look at the, you know, just intraday chart, huge gap up.

10:43And then it just, you know, really, really showed a lot of strength after the gap up. So that's a positive sign here. I think you could probably keep it on the watch list just for multiple up weeks in a row. watch and see how it digests these gains. You know, Axon, AXON, had a really nice gap up yesterday. We talked about, you know, what kind of price action we want to see here. So this is very encouraging price action for Axon. So a lot of these stocks gapping up, you want to see them hold these gains and start to move sideways. So Axon showed very bullish price action today. We'll see what ANET, how it handles the gap up.

11:22But again, the buyers were in there all day and really no selling pressure at all.

11:28Ken Shreve:Yeah, and they gap up low on the day around exactly. Look at that, 133.67, the exact prior high from late January. So that seems like a key level of support to watch on the downside. Let's shift gears here and take a look at Walmart breaking out on the day, clearing that century mark, that round number of 100. We know those round numbers can be key psychological levels for traders. And today shares up 4%, some above average volume here too. Yeah, another strong move that held well all day. So very, very impressive. And the earnings aren't due for a few weeks, but there was a positive note out from UBS today saying they're expecting a good quarter from Walmart.

12:19Walmart doesn't have the earnings and sales that we normally like to see. It's obviously a mega cap stock. So you get that single digit revenue growth. But this was a bona fide breakout today. And based off of that 100.89 pivot here, still in the 5 % buy zone. That's how that blue shaded area is still telling you that the stock is still in the 5 % buy zone. So great to see a breakout in the retail sector today in heavy volume. Definitely looked like there were some institutions in there buying. So always want to pay attention and keep track of the breakouts. We saw a lot of them, obviously, in April and May when we got that initial follow-through day.

13:04They're a little more challenging now, a little more tricky now because a lot of stocks have really taken off since the follow-through day. But still want to pay attention to the base breakouts when you see them.

13:16Ken Shreve:And I think the other thing to think about, too, is portfolio construction, right? There are some traders out there, you know, maybe you don't want a portfolio full of high octate, you know, your Rocket Lab or your Oclos or, you know, some of these big, you know, movers in quantum that can be very speculative. Walmart, a very stable business here. So, yeah, thinking about how this might add to that portfolio mix, if that's something that you're looking to do. Yeah, it's easy to, in this type of market where there's a lot of stocks working, there's a lot of heat out there. And we refer to, you know, a name like Rocket Lab, that's heat.

13:56The stock that, you know, tends to move a lot more than the S &P 500 on any given day. If the S &P is up 1%, you know, Rocket Lab could be up 3 % or 4%. So, you know, definitely want to pay attention to, you know, names like Walmart. And, like, it's a good point that you make. You don't want to have too much aggressive growth in your portfolio. And having some balance, maybe some large cap, big cap 20 type names makes sense.

14:26Ken Shreve:Okay. And last but not least, let's go to Cisco. So an up day of 2.6 % here above average volume. We have earnings in a week. But I think what impresses me here, Ken, is just how tight this flat base is here. I don't know the last time I saw a depth of 5 % for a flat base. That is something. Kind of holding right at the 21-day line here. You can see the 50-day is pretty close to this pattern as well. But arguably got an early buy signal today with this 2.6 % gain in higher volume. You can see it broke out over some recent highs. Sort of a mini little downtrend here. Still has that prior high of 69.78 to get over.

15:19But, you know, like the fact that earnings and revenue have started to accelerate at Cisco. Again, not a real fast grower here, but the stock has started to turn back into growth mode with a couple quarters in a row of accelerating growth. Relative strength line, still a little bit off highs, but not in too bad a shape. But I think Cisco, kind of in the same industry group as Arista Networks, I know Cisco is very busy in the data center business right now. So I wouldn't be surprised to see earnings and sales continue to turn around here as well.

15:57Ken Shreve:All right. So, yeah, earnings in a week, arguably actionable. Today's shares are 2.5 % above the 10-week line. So that could be a level to use as your stop. And, Ken, any final notes before we wrap? I think DoorDash earnings tonight, right? Uh-huh. We had DoorDash. I'm checking on DoorDash. Yeah, DoorDash is indicated a little bit higher here. trading very very well ahead of earnings this is a a stock that we've had on leaderboard since so may 23rd it looks like we we put it on there so has been showing a lot of relative strength and looks like those earnings are just what the market wanted to see so after hours activity doesn't always translate into you know pre-market but stock does look pretty liquid in after hours and holding a nice strong game here.

16:51Besides, let's see, besides DoorDash, DraftKings, DKNG, that was kind of near a buy point. That is also rallying a little bit. Elf Beauty, E-L-F. Elf kind of struggling near its 50-day line. That's under a little bit of pressure. And then I don't know if Triple Flag Precious Metals has reported yet. Ticker there? T-F-P-M, Triple Flag Precious Metals. Yeah, T-F-P-M. They're a Canadian-based miner that is kind of setting up here. Broke out over a trend line yesterday. Seeing the stock up a little bit. Not sure they've reported yet, but we'll watch and see what this company has to say. Nice little setup here as well.

17:39All right.

17:39Ken Shreve:Well, thanks for your quick thoughts on those earnings out after the close. and we appreciate your time today. As always, Ken, we look forward to reading your big picture article. And thanks everyone for tuning in. That's it from us for today, but we will be back with more tomorrow morning on IBD Live, investors.com slash IBD Live for all the details. We'll see you there and we'll also see you back here tomorrow after the close. One more thing that I got to mention because it is Wednesday. We have our weekly investing with IBD podcast tonight live at 5 p.m. Eastern. Justin is going to be joined by David Keller of Sierra Alpha Research.

18:19Ken Shreve:So go check it out live on YouTube. We'll also post it to investors.com slash videos. And then you can also catch it tonight, wherever you get your podcasts. Thanks, everyone. We'll see you right back here tomorrow.

18:47Ken Shreve:This podcast is brought to you by Federated Hermes. We put our investments through a ruthless vetting process because the market can be unpredictable and we don't think your investments should be. Learn more at federatedhermes.com slash US. Investments are subject to risk and may lose value.