Nasdaq Rebounds After Growth Sell-Off: KLA, Primoris, Armstrong In Focus

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0:40Ken Shreve:good afternoon everyone and welcome to stock market today for wednesday july 2nd it's alissa quorum here and quite a rebound in the stock market today particularly for the nasdaq and joining me now to break down the action of today's session is my colleague ken shreve ken how's it going? It's going pretty well. Yeah, some selling in the NASDAQ Tuesday, but nice rebound for tech stocks today, despite pretty weak jobs reading before the open. We'll talk a little bit about that. But I wanted to take a look at a chip equipment stock, KLA, formerly known as KLA 10 Core, now just KLA. Also, a couple of building stocks, Primorus, P-R-I-M, and also Armstrong worldwide, AWI.

1:27Ken Shreve:All right. Looking forward to getting your take on those stocks. But first, let's take a closer look at those major indexes. So the Nasdaq on the day up about nine tenths of a percent, almost one percent here, Ken. So definitely snapping back after that day of underperformance in yesterday's session. Meanwhile, the S &P 500 up a half a percent on the day. Another new high here for the S &P over to the Dow, down just a fractionally on the day, but it's been on quite the run here over the past week and a half or so. And the Russell 2000, we saw another day of strength here for small caps after that decisive move above the 200-day line on Tuesday.

2:12Ken Shreve:Let's start with the NASDAQ. So what do you make of it, Ken? Seems like we shook off that weakness pretty well here? Yeah, I'd say so. You know, after six up days in a row, actually, I think yesterday's decline looked pretty orderly. I mean, it did close a little bit off lows. Volume was below average, but it did pick up the pace. So we got a distribution day Tuesday. But you can see volume was below average again today, but pretty close to the levels that we saw yesterday. And NASDAQ just rebounded quite well. So the market is just reminding us once again that it's quite strong here. And we did not get a good reading from the ADP private payroll report before the open.

3:04Payrolls declined by 32, 33 ,000, and estimates were for a gain of just over 100 ,000. So it'll be interesting to see what tomorrow's jobs report looks like because the market's been kind of shrugging off maybe a little bit of, not weakness in the jobs market, but some softness recently. So we'll see what that eventually turns into. But the market just continues to shrug off bad news, and we got some this morning, but really nice day for the NASDAQ.

3:36Ken Shreve:Yeah, and even from a technical perspective, We were expecting another day or two potentially of weakness here. And now let's take a look at the S &P. Just going over there, it seems like clear skies for now. But the S &P, let's see, it's now about 6.1 % above the 50-day. What are your thoughts? We've seen this lockout rally, sort of this runaway power trend here for the most part. holding support at shorter term moving averages, at what point should traders switch from the bullish buying mode and more into profit taking or being ready for more of a pullback? Well, really, it's just about recognizing signs of institutional selling in the market when you see it.

4:27But the S &P 500's performance, again, on Tuesday was quite impressive. Volume really picked up the pace. Remember, volume was below average on the NASDAQ yesterday. It was above average on the S &P 500. And look at what the index did yesterday. You know, we had a violent sell off in growth stocks, but S &P 500 traded very tightly, held on to three days in a row of strong gains. And then it followed the NASDAQ higher today. So I thought the S &P 500 was particularly strong yesterday and it showed more strength today. So we've got, you know, the NASDAQ and the S &P breaking out here into uncharted water.

5:11So not a lot of sellers up here. So that's the whole concept of when you're breaking out to new highs, there's no overhead supply to worry about. There's no, you know, sellers looking to, you know, knock the indexes lower. It's kind of clear sailing right now. But, you know, as usual, we'll just keep an eye out for higher volume declines. We have five distribution days now on the S &P 500. But again, only one of those declines was 1 % or more. So neither the NASDAQ nor the S &P 500 are under distribution at all at this point.

5:46Ken Shreve:And you mentioned the tough day for growth stocks on Tuesday. So let's check back in on the FFTY ETF, which, as a reminder, down 2.9 % in Tuesday's session today, up 1.3%. So it did outperform the NASDAQ composite, but a pretty notable down day on Tuesday. But just like the major indexes, it's not like we saw a continuation of the declines today. So starting to get some of that snapback. Yeah, when you get a higher volume decline, you're right. You do tend to see some follow-on selling, or at least it wouldn't be surprising. It wouldn't have been surprising to see FFTY Why kind of extend losses, maybe pay a visit to that 21-day moving average?

6:31But yesterday it was a sharp decline for FFTY, but it held, closed off lows and held at the 10-day moving average, and it's still holding there. So this is also showing strength. I mean, you can't just ignore the violent selling that we saw in growth stocks yesterday. But as I mentioned on IBD Live this morning, we've got, I think, 17 stocks in the leaderboard model portfolio. And they're basically all growth stocks. And there was some damage yesterday, but we only ended up cutting ties with one stock. And the other 17 are, you know, kind of look like FFTY, just kind of holding at their 10-day lines or holding support at the 21-day.

7:19So, you know, pretty, pretty strong performance.

7:23Ken Shreve:Okay, let's check in on two ETFs. Then we've got three stocks and you've got a podcast to get to, Ken. So let's go to IBID. And I save our performance here for Bitcoin at 4.3%. I do own it. And on IBD Live, we were talking about this being an actionable opportunity. Yeah, we put this on leaderboard on June 9th, I think it was. So we're coming up about a month of owning it. It's been a bit lackluster since we added, but we were encouraged by what looked like a little mini breakout today. Still trying to get over that recent marked high of 62-79, but I could see why people may have decided to increase their position today.

8:10But we elected to just sit tight with our half position on leaderboard. That's equal to about a 5 % portfolio weighting. But I think IBIT here is on breakout watch. Again, kind of a mini breakout today over a trend line. We'll see if it can take out those two recent highs here.

8:31Ken Shreve:Yep. And let's check out chips. Here's SMH. What a day, up 2%. Yeah, SMH kind of in the early stages of breaking out here as well. Yeah, let's look at the weekly chart here, and you can see just a big, big, long consolidation up for five weeks in a row, and actually quite a move off lows here. Only one down week during this latest uptrend. So, you know, I wouldn't be surprised to see SMH pause and consolidate here a little bit. But, you know, ETFs and stocks can pause in healthy fashion, and then they can pause in unhealthy fashion. So if this can just kind of drift lower in light volume, we would look at that as a constructive pullback.

9:20Again, lots of up weeks, very few down weeks here. So could try to digest gains here. We'll just look for it to do it in orderly fashion. This podcast is brought to you by Federated Hermes. We put our investments through a ruthless vetting process because we don't like surprises and neither do our clients. Learn more at federatedhermes.com slash US. Investments are subject to risk and may lose value. Okay.

9:45Ken Shreve:And in the chip sector, let's check out KLA, a semi-equipment firm, blasting above this 900 area and change, up 2.5 % on the day. And it too looks like it's in the early stages of a breakout. Yeah, not surprisingly very similar look to SMH here, but I think KLA gave a buy signal today, definitely, with this move over that marked high of 914.83. Still well within the 5 % buy zone here. Didn't get much volume behind the move today, but some stocks will start moving in light volume, and then volume will come in a few days or several days later. So not all that concerned that the volume was light today.

10:37Nice technical move over a key resistance level here. So still encouraged to see chip stocks acting very well in this market.

10:46Ken Shreve:Yeah. And speaking of volume, we do have to remind ourselves that it is a holiday week, right, Ken? Mm-hmm. Yep. One more trading day left to go on Thursday and then, yeah, a three-day weekend for 4th of July. So we'll see. I'd probably be a quiet session tomorrow. We'll see. Yeah. And it's a shortened trading session as a reminder. Only a half day. That's right. 10 a.m. Pacific, 1 p.m. Eastern market close. Okay. Let's move on. Get your thoughts on Primoris Services and that building heavy construction group. Yeah. So 7836 classic cup with handle base. This one has also been moving in relatively light volume, but still holding right near the top of a buy zone here.

11:31This one kind of strengthened as the day wore on, but that blue shaded area is just kind of alerting to the 5 % buy zone from that 78-36 pivot. So near the top of the buy zone here, but still really encouraged by a lot of these building stocks. In fact, the next stock that we're looking at is also in the building sector, not in the same industry group as Primaris, but lots of these heavy construction firms doing well here. So I think Primaris is just, you know, close to being extended again, kind of at the top of that 5 % buy zone. This is they specialize in utility, energy, renewable construction.

12:12So kind of well positioned for growth here. And you can see really consistent track record of earnings and sales here. So this is a solid name in the group.

12:22Ken Shreve:And you mentioned energy. This is an AI play. It got hit on DeepSeek, so it's building construction, but this is definitely one of those AI adjacent plays here. And great to see so many of them continuing to make a comeback. Yeah, yeah. I'm not sure how much of their work is a data center, but you can bet that… But the market took it like it was… Yeah. Well, and it could be. Again, I know their specialties are like, again, utility, energy and renewables, but I wouldn't be surprised at all if they're starting to get a taste of that data center business, as are a lot of stocks in this heavy construction group.

13:04Yeah.

13:05Ken Shreve:OK, well, let's go to AWI. Same sector you mentioned and a breakout late last week. That is holding. Yes, indeed. And, you know, again, just seeing broad-based strength in this market building sector stocks still doing very, very well here. You had a nice breakout last week and the stock is just not giving up any ground at all this week. So another stock that's still holding in the 5 % buy zone from that 160-94 entry. They serve a niche market. This is not AI at all. They focus on kind of ceiling and wall systems, so kind of a niche market. And the company description there says flooring products, ceiling systems for residential.

13:53And I know they do some commercial work, too. So another stock acting well here amid good, consistent track record of earnings and sales and still in the 5 % buy zone here. So still looking at this building sector as being quite strong and lots of opportunities here.

14:13Ken Shreve:Great. Well, if you want more, Ken, make sure you tune in to our podcast live at 5 p.m. Eastern today. Ken, give us a sneak little preview here. Well, we're going to be talking about an IPO market that is starting to show signs of life. And the second half of 25, now that we are in the second half, is supposed to be pretty good, like the first half. So, you know, the IPO market is not back at historical levels, but it is showing signs of life. And we'll talk about some of the big IPO winners so far this year, a name like CoreWeave or Circle Internet. Talk about some upcoming IPO, a big competitor to Snowflake is going to be coming public later this year, a company called Databricks.

15:00So some new names to keep in mind here, and it'll be a good one. Looking forward to talking to Justin.

15:08Ken Shreve:That'll be a great discussion, super timely. I know on IBD Live, we've gotten a ton of interest in a lot of the new issues. So looking forward to getting your insights there on the podcast today, Ken. Thank you so much. You're welcome. I think new issues are, you know, they're right in our roundhouse because, well, a lot of them are doing something new and the newness of their product or services is driving pretty big growth. So, you know, CoreWeave, CircleInternet, again, good examples of that. And we'll take a look at some other names with strong fundamentals that maybe not have gotten as much attention because they've come off highs, but still some compelling fundamental stories out there in the IPO market.

15:53Ken Shreve:No doubt. All right, Ken, thanks so much. We'll see you then. And thanks everyone for tuning in. If you want to check out the podcast, make sure to go over to our YouTube channel live at 5 p.m. Eastern for that discussion. We also will post the video to investors.com slash videos. And if you'd rather listen to the audio, because it is a podcast, of course, you can check that out on Spotify, Apple podcasts, or wherever you get your audio content. So we will see you then. And then we'll also see you tomorrow morning on IABD Live. And as a reminder, it is a shortened trading day. So the market will close at 1pm Eastern, Eastern 10 a.m.

16:37Ken Shreve:Pacific. But we'll see you in the morning on IABD Live. And then we've got an early Stock Market Today show, Ken and I, at that closing bell tomorrow. So we'll see you then, everyone. Thanks so much for tuning in.

17:05Ken Shreve:This episode is brought to you by MassMutual. When people count on financial guidance, they want a company known for strength, stability, and trust. With the solutions to fit their needs, financial professionals can help people move forward with confidence, backed by MassMutual's 175-year legacy. Learn more at MassMutual.com. MassMutual.com.