Nasdaq, Mag 7 Lower, But Semis Shine Again; Solaris, Eli Lilly, Trane Tech In Focus

0:00There's a lot of hype and a lot of good news already priced into the marketplace today.

0:03Ken Shreve:We're entering a period of so much more change that it could be a tailwind for active management. Women are now in the protagonist seat for the family's financial story. I'm Joe Davis. And I'm Christine Kashkari. And this is season two of Better Vantage by Vanguard, an eight-part video podcast series hosted by custom content from WSJ and Vanguard. All investing is subject to risk, including possible loss of principal. This content was created by Custom Content from WSJ, a unit of the Wall Street Journal Advertising Department.

0:42Ken Shreve:Good afternoon, everyone. Welcome to Stock Market Today for Thursday, June 25th. It's Alyssa Coram here. Now, we had a mixed session with some really interesting divergences underneath the surface. We'll get into all of that. Joining me now to break down the action from today's session is my colleague, Ken Shreve. Ken, what do you offer us today? Hey, how's it going, Allie? Yes, let's take a look at a very interesting day in the market. Like you said, had the NASDAQ down a little bit. The NASDAQ composite was down a little bit. Had some outperformance from the NASDAQ 100 and then, yeah, up session for the rest of the market.

1:22So let's take a look at a few stocks here. I want to take a look at Solaris Energy, S-E-I. And then in the healthcare sector, let's take a look at Eli Lilly, L-L-Y. And then another HVAC cooling company, Train Technology. T-T is the ticker symbol there.

1:43Ken Shreve:Okay. Thank you, Ken. We'll get to those stocks. First, an analysis of the major indexes, the Nasdaq composite down about a half a percent on the day. Looking at an intraday chart, you can see it was a very volatile day, very volatile start to the session. Things calmed down a little bit as the day progressed, but seeing further deterioration as of now below the 50-day line. Blue chips up on the day. The Dow up about four tenths of a percent, but coming off of intraday highs. SPY, let's take a look at the S &P 500 finishing up fractionally on the day with finding support right at that 50-day moving average.

2:28Ken Shreve:Russell 2000 small cap index up about a half a percent on the day. A strong uptrend remains for small caps. And then we also want to highlight the NASDAQ 100. We saw this really interesting divergence between the NASDAQ composite and the NASDAQ 100. So the latter here up about three quarters of a percent, a volatile day here, too. But a lot of strength in the semiconductor sector, which you mentioned, Ken, and a lot of buying coming into the NASDAQ 100 right at the end of the day. So what do we make of this? You see the Nasdaq deposit, which is, I would say, historically, this is sort of our North Star for market guidance, right?

3:09We're seeing the MAG-7 perhaps weighing down this index.

3:16Ken Shreve:What do we make of it, Ken? Yeah, I know. Ed proposed the question. Our news editor, Ed Carson, proposed the question to the group in Slack. And it's a little bit perplexing because normally you'll see both indexes maybe not moving in tandem all the time. But, you know, if you see chip stocks outperforming in the NASDAQ 100, you'll usually see that, you know, having a positive impact on the NASDAQ composite as well. And I'm just looking at all the, you know, big gainers in the NASDAQ 100 right now. And you've got your memory stocks, your Sandisk and Micron, obviously a great earnings report. Chip equipment stocks leading the NASDAQ 100.

4:00Of course, they all performed very well on the NASDAQ composite. So really going to have to get into the nitty gritty and see why there was that divergence because I honestly don't have answers right now as to why there – or maybe you do. I don't know.

4:17Ken Shreve:Well, yeah. I know that – I was going to say the Magnificent Seven were broadly lower. We saw Apple took a big dive today. But I don't know. Maybe you can enlighten me. No, I would just say what's adding to how interesting it is, is when you think of the NASDAQ 100, you think of the Magnificent 7, but you did see it really was outside of the Magnificent 7, right? That was quite strong. Here's the XMAG ETF up 1.5 % here. So it seems like tech outside of MAG 7 looking interesting here. You talked about the memory chips, chip equipment. So let's check out SMH to see there. Look at that. Off of highs, but still up 2.9%.

5:12Yeah, yeah. It was another great day for semiconductor stocks, yet, you know, it was still some components in the NASDAQ composite that were still dragging on that index. And, you know, I'm just going to go inside the NASDAQ composite here and just look at some of the decliners in the composite index and just take a quick gander here because I can look and see some of the drag here. It does look like there were some, I see, Trip.com, T-C-O-M, which was down 12 % in the composite today. There was I-N-O-D, InnoData. That has been a very strong performer in the NASDAQ composite. That was down 11 % today.

6:05You had Atlassian software name, T-E-A-M. That was down 8%. So you had some software weakness. It looks like, you know, Akamai. So there was Duolingo. So there you see some software names. I didn't check IGV today. Obviously, that was probably some weakness, some that was down about, yeah, 1.4%. So maybe, yeah, some software weakness in that NASDAQ composite. But again, in that NASDAQ 100, Ali, you had so much strength in the memory and storage stocks. That lifted the chip equipment stocks in particular. because when you looked at all the, you know, the best performing areas of the semiconductor stocks, it was the chip equipment firms, the applied materials, the LAM research, and all of these, you know, the equipment suppliers to the memory and storage stocks that were the real big leaders.

7:06There's your LAM research, yeah. So, you know, it was, you know, not a bad day for the market. We had such heavy volume on the NASDAQ yesterday that, you know, we're definitely going to avoid a distribution day today. We did lose more ground on the 50-day moving average today for the NASDAQ composite. But you can see three down days in a row prior to today, and volume picked up the pace two days in a row, and volume was quite a bit lower today. So silver lining, we avoided a distribution day today. And, you know, great earnings from Micron last night, And, you know, good to see those memory and storage stocks hold on to, you know, a good portion of those gains today.

7:52Absolutely.

7:53Ken Shreve:Because there were some tests intraday with the broad market coming in right at the open. Look at how Micron really tested that gap, but it was able to recover. And it does seem like, you know, if the NASDAQ 100 is tracking the largest 100 NASDAQ companies, X Financials, you do have stocks like your microns and company just having a larger effect on that index than the more dilution from the composite. So perhaps that explains it. But a fantastic report and a nice close. Let's actually see. It looks like it was a photo finish with the prior closing high. Let's see. 12, 11, 38 looks like we topped it, Ken.

8:42Yeah.

8:43Ken Shreve:So that's a powerful sign. Very powerful sign there. Yeah, no doubt. No doubt about it. Okay. Let's take a look at the S &P 500 as well, sitting right at the 50-day line. you know, Ken, we've had all this volatility, but we have not yet undercut the lows from earlier in June. So that's something else to be thinking about here as we sit at that 50-day line. Yeah. And if you look at where the S &P 500 has closed for the past three sessions, pretty much right at the same spot here. So it's really just kind of hugging right at that 50-day moving average. So it's showing some support at the 50-day line.

9:29You do have, boy, I mean, it really has been several closes in a row. I mean, what, five or six days in a row where the S &P has closed near its low. So we kind of want to see the S &P lift off lows here and start to rally here. But, you know, not a great day for the S &P 500 to close near lows, but it's holding support here. And, you know, we'll see if support holds. The distribution that we've seen on the NASDAQ has not been nearly as pronounced on the S &P 500. So that's a positive sign. But I know that the bulls would like to see some lift for the S &P 500 sooner. rather than later, and maybe we start to get some lift above these short-term moving averages here.

10:25So we will see, but we'll have to see. The inflation data this morning was a non-event for the market, the Personal Consumption Expenditures Price Index, which the Fed monitors very closely. That came out for May this morning, and it was, again, and just in line with expectations. So there was no big surprise there for the market. It was just kind of the market's response to Micron's earnings last night, which was very, very positive. So we'll end the week tomorrow, and we're pretty much at the end of the quarter here. I'm trying to think Monday's date. Let's see, tomorrow is Friday the 26th. Tuesday's period.

11:12Yeah, so we're pretty much right at the end of the quarter here. So hard to believe we're at the end of the second quarter and we've got earnings season, you know, coming up here. So maybe some more earnings of volatility ahead, but market's in an interesting spot here. Yeah, it sure is.

11:34Ken Shreve:Let's check out quickly blue chips and small caps before we move on. Here's the Dow, Ken. Yeah, this really looks like a classic stalling session by the Dow. We don't track stalling on the Dow Jones. We just normally would track that for the S &P 500 and NASDAQ. But you have a big gain for the blue chip index, and it gives it all back, and it only closes higher by one-tenth of 1%. 1%. So we would not call it stalling for the Dow today, but this is the type of price action that stalling looks like. You have a big gain, you can't hold it and only close higher just by a little bit. But another all-time high for the Dow early in the session.

12:25The blue chip index is still leading here, but it gave back gains today, still holding above its short-term moving averages still acting pretty well. Look at that relative strength line still shooting up shooting up near highs there. So blue chips still looking pretty good here.

12:45Ken Shreve:Also with a shooting relative strength line, you have small caps, Ken. And I guess now is a good time to also point out what we're seeing in interest rates, seeing the 10-year continue to come off. So that's definitely helpful for small caps. Yeah, another all-time high for the Russell 2000 today. So that's a picture of strength right along with the Dow today. So very, very strong action in small caps. And yeah, not much 10-year Treasury yield under a little bit of pressure today, but that yield really didn't move a whole lot today when that inflation data came out, but under a little more pressure today.

13:30Interesting to see yields softening a little bit. The market is still feeling pretty comfortable that there's going to be a rate hike by the December meeting. So we'll see how that all plays out. We still have inflation a little sticky out there, but market is still feeling pretty comfortable. The economy is still fairly, fairly strong here. So the market feeling that the Fed is going to probably bump up rates by a quarter point by the end of the year. We'll see.

13:59Ken Shreve:Okay. One more ETF to briefly look at before we move on. The team was noticing strength in the transportation average today. So here's a look at the IYT up 1.6 % on the day. And here again, that relative strength line on the move, Ken. Yeah, well, listen, the Fed is feeling pretty good about the health of the economy and to see the, you know, the transports acting as well as they are, whether it's the railroad stocks or the airlines or the, you know, a lot of the trucking stocks are acting, you know, very well. We actually put IYT in the leaderboard model portfolio today. We just like the relative strength that IYT is showing and like the action, like the recent breakout and the pullback and support off of the 21-day moving average today.

15:01Closed a little bit off highs, but you mentioned the relative strength line here. And to see just the tremendous outperformance, saw a lot of great breakouts in the airline group yesterday and a lot of follow-on buying today. Today, I mean, look at the Jets, ETF and United Airlines and Delta. All of these are just showing great. United Airlines has just been tremendous. So has Delta. So, yes, leadership has been broadening out. And NASDAQ is, you know, below the 50-day moving average. But we're really starting to see a lot of these, you know, the leadership, you know, broadening out into different areas of the economy.

15:43So good to see the transports really perking up here.

16:13Ken Shreve:dot com. That's R-E-L-I-A-Q-U-E-S-T dot com. It is. All right. Let's talk about SEI. This is Solaris Energy. Tried to break out of a base a couple of sessions ago, but it had a trip down to the 50-day moving average. We're now seeing a bounce off of that level. Shares up four and a half percent today. I still have my eye on this stock just because I like the business and I like the service that it provides to data centers here. And, you know, it's taken a little while here to try to break out. But during the markets down day yesterday, I liked the close off lows and liked how it held at the 50-day moving average and then liked the move today.

17:05There wasn't much volume in the stock, but this is still trying to, you know, after a little test of the 50-day moving average, it is flirting with another breakout here. So I think this one is worth watching. The relative strength line is still perched up near its high. Mentioned recently that Solaris made an acquisition back in 2024. I think it was the second half of 2024. They acquired a company called Mobile Energy Rentals. And this used to be an oil field services provider. And then they acquired a company called Mobile Energy Rentals. And what they basically bought were mobile natural gas-fired turbines.

17:53And now they are a provider of modular power to data centers. So they, you know, these natural gas turbines are, you know, providing power to data centers. So it's a very big business for the company. Our news editor, Ed Carson, told me that SpaceX is a big customer of Solaris Energy in Texas, I believe. So, you know, but big, big earnings growth here. And you can see this is a stock that has been trending very nicely near its 10-week moving average. So you can see the support holding at the 10-week line this week. It's down for the week, but sitting right at the top of a base here and support holding at the 10-week line with a good relative strength line.

18:44Love the top line growth in recent quarters. is really selling a lot of product, and it's very profitable. And the numbers look good all the way around here. So Solaris Energy, a provider of Power 2 data centers, looking pretty strong here.

19:02Ken Shreve:It sure is. And the quarterly earnings a little bit bumpy, but on an annual basis, you're still seeing a lot of that strength. So, yeah, very compelling business there. Thanks for breaking that down, Ken. Next on our list, we want to talk about Eli Lilly. Full disclosure, I do own some of this. I really like, and there's a little bit of a theme here, breakout, pullback, support, bouncing again. So whether it's something like a Solaris or something very different like an Eli Lilly, you are seeing that chance after the breakout, an orderly pullback, providing another opportunity with a bounce, supported the 21-day, and this round number of 1 ,100, Ken.

19:53Ken Shreve:If you're talking about strong growth, Eli Lilly definitely has it. But it's kind of sleepy. So can it really wake up here? I think it's possible. Yeah, this is a name that we have in the leaderboard model portfolio. And I myself own a little bit of Eli Lilly as well. And yeah, this is, again, another kind of rotation play. We've seen a lot of money, you know, not only rotating into biotech stocks, but into, you know, pharmaceuticals and the healthcare sector in general. So, you know, Eli Lilly, obviously their work in weight loss and these GLP-1 drugs is well documented. Their top-line growth has been super impressive, and their earnings and bottom-line growth has been very strong as well.

20:47Their focus is still next-generation oral weight-loss drugs. Their pipeline is still filled with weight-loss drugs, but the pipeline is also very strong. They're doing a lot of work in Alzheimer's medications, immunology, oncology, lots of different areas. So it's got one of the most dynamic pipelines out there. Great CEO as well who's been with the company a long time. So after a recent breakout from a fairly long base, the pullback here down to the 21-day line, You can see how it was on Tuesday. It kind of came down to the 21-day line, reversed off its lows, and now it's starting to rally again and trying to reclaim the prior buy point from the top of that base.

21:41So starting to move back into the buy zone here. So we'll see if it can get going. We'll see if – you see volume has not really picked up in the stock yet. So still watching to see if this can really get moving and see if volume can come back into the stock again. But like the strength that's still showing, the recent pullback came in mostly light volume. So still has a chance to work here, but just a very, very well-run company and really still look at Lilly as one of the Cadillacs in its industry group.

22:17Ken Shreve:Yeah, and a very, very compelling story with the ongoing innovation in the weight loss drug space. And, you know, maybe over the last couple years, it hasn't outperformed significantly. But in the short term, Ken, that relative strength since the earnings report in late April, early May, you definitely are seeing that outperformance there. And to your point, the rotation into health care, into medical, into these pharma, biotech stocks is quite notable at this point. So seems like one for the watch list. I mean, clearly you and I are drinking the Kool-Aid a little bit. Yes, indeed. We'll sell it if it breaks down.

23:09Yeah, yeah. No, I think it's really looking strong. And again, you know, people tend to pigeonhole Lily into GLP-1 drugs, but their pipeline, again, they probably have two or three different next generation, you know, weight loss drugs that they're working on that are doing very well. Once a day, oral pills. And I'm not going to try to pronounce the drugs. Reddit you tied? There you go. There you go.

23:42Ken Shreve:And we're waiting for FDA approval. That's right. That's right. And, you know, like I said, Alzheimer's, diabetes. I think they've got a non-opioid pain drug that's far along in Phase 2 or Phase 3 trials. So lots of exciting stuff in the pipeline as well. All right. Well, let's choo-choo on over to train. and here's a look at a stock that went up 4.2 percent on the day crossing a round number at 500 we love those psychological round levels we saw a lot of construction names on the move today the pay vtf got some discussion on iubd live this morning that was up about 2.7 percent this is one of the top 10 holdings ken well here again you know we're talking about this leadership in the market, you know, expanding and whether it's the transports that we were just talking about and, you know, the building, the building sector is a big, a big sector.

24:49I mean, interest rates were down sharply yesterday. That fueled a lot of breakouts in the home building group, which obviously is part of the part of the building sector. But, you know, building sector is filled with a lot of different stocks. So in the construction products group, you've got a lot of leaders now train, you know, know, with a relative strength rating of 70 is not one of the big leaders in the group. It's been a solid performer in the group. I'm going to just start right off the top by saying this is not one of the elite stocks in the group. It's been a, you know, steady performer.

25:25I'd call comfort systems an elite, you know, an elite stock in the group. It's been a big, big time leader. Trane, you know, deserves some credit. It's been a steady performer. It hasn't been a rocket ship. But you can see it's got a composite rating of 94 because it's, you know, it's delivered the goods. You see the revenue growth has not been, you know, outstanding. It's been okay. But I like the move today. The stock did break out. And it broke out over a high from earlier in the week. And it was just a good technical breakout and volume picked up the pace today. So I thought this stock was actionable.