Nasdaq, S&P 500 Hit Highs On U.S.-Iran Deal Hopes: FSLR, LLY, AAON In Focus

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0:39Ken Shreve:good afternoon everyone and welcome to stock market today for thursday may 28th it's alissa quorum here and the s &p 500 and nasdaq hitting fresh record highs on renewed hopes for a deal between the united states and iran and joining me now to discuss the action from today's session is my colleague, Ken Shreve. Ken, over to you. What are we going to be chatting about today? Yeah, not a whole lot of action in the Dow Jones today, Allie, but NASDAQ and S &P 500, good day for both of those indexes. So let's take a look at First Solar and also want to take a look at Eli Lilly. That stock has been on a tear.

1:20A little bit of news with Lilly today. And then let's also take a look at an HVAC firm. They have been doing very well. I haven't taken a look at AAON. So we'll take a look at that one, ticker AAON.

1:36Ken Shreve:All right. Sounds like a plan. Let's first, though, take a look at the major indexes. The Nasdaq Composite up nine-tenths of a percent on the day. Meanwhile, the S &P 500 and the Russell 2000 both up six-tenths of a percent in the session. And like you said, pretty quiet day for the Dow, the blue chip index, essentially flat, but erasing an earlier loss. So we are seeing a tech-led rally here once again in the market. The Nasdaq poking into new high ground and closing in on another round number, Ken, this time that 27 ,000 level. Yeah, didn't have any problems with 26 ,000. So we'll see how the NASDAQ handles 27 ,000 here, Ali.

2:28But another close near highs for the NASDAQ today. We did have a bit of a piece of inflation data before the open that ended up being a non-event for the market. Actually, a pretty busy morning of economic data had a very strong reading on durable goods orders and the inflation data that was part of the personal income and spending report, personal consumption expenditures index, that was really a non-event. Inflation is still quite elevated. It came in at 3.3 percent. That was in line with expectations. But this is the number that the Fed wants to see closer to 2 percent. So it's still elevated, but again, in line with expectations.

3:16And again, the market is just kind of looking past that and feeling that, you know, this energy inflation that we're dealing with is going to be, you know, transitory. I'm not convinced, but, you know, we will see. NASDAQ, you know, shrugged it off again and pushing up against 27 ,000. Decent breadth in the market again today. Not so much, you know, semiconductor stocks did okay today, but this was really about software stocks today because we had an unbelievably strong earnings report from Snowflake after the close yesterday. And that one, you know, that gap upheld pretty well today, closed a little bit off highs.

4:01But Snowflake did fuel a nice gain for IGV today. And, you know, a lot of nice software gainers in the NASDAQ 100 today. Even Palantir kind of came back from the dead today. And I think that was up at a nice 7%, 8 % gain today and actually closed above its 50-day moving average. So good day for some software stocks and a good day for the Nasdaq, too.

4:29Ken Shreve:Yeah, no doubt. All right. Well, let's take a look at the S &P 500 and levels to watch there. Similar move into new highs for the S &P. And it looks like to the upside, we've got 7 ,600 in our sights. And to the downside, of course, we're keeping an eye on the 10-day line. But, Ken, it was looking like potentially we could see another sort of pullback after the move to the upside stalled right around prior highs. But nope, there you go. The news-driven move here on multiple fronts pushing the major indexes forward. And it does seem like we are continuing to climb this wall of worry in various aspects.

5:20Ken Shreve:a lot of investors out there saying that, you know, we've gone up a lot and this is a pretty relentless rally. Yeah, well, I mean, we've been talking about how far, you know, extended the S &P 500 and the NASDAQ. Really, these two daily charts, you know, S &P 500 and the NASDAQ, they really do look very, very similar. They're not moving and, you know, they're really moving in lockstep here. They're really, you know, S &P is coming up against a round number here of 7 ,600. They're both quite extended from their 50-day moving averages. And again, the catalyst today, apparently there's more progress on some sort of, you know, deal between the U.S.

6:07and Iran. And apparently there's, again, it's a bit nebulous. There's some sort of 60-day memorandum that is being put together for a ceasefire and a framework to begin talks. Obviously, still a lot of discussion that is going on between Iran and their nuclear weapons. And there's still this blockade that's going on and the Strait of Hormuz. So still a lot of negotiating going on. And, you know, but it was, again, a positive response by the market. But S &P and Nasdaq look very similar here, still holding above their 10-day moving averages. So, you know, they're both working on good winning streaks here.

6:50And, you know, but again, I think this energy inflation, oil prices were down again today. So, you know, oil is on a bit of a losing streak, even if we look at USO here, you know, again, down multiple days in a row. So if we start getting some relief from the pump here, and oil actually, USO did actually edge a little bit higher here, but you can see oil prices have come under pressure. So maybe we start seeing a little bit of relief from the pump, and that would be a bit of relief for consumers here. But, you know, higher oil prices eventually is going to probably weigh on consumer spending. And we'll have to see how that eventually settles out.

7:35But market is strong, still dealing with a lot of extended stocks. But, boy, this money coming in from the sidelines has just been relentless and very, very, very strong uptrend. I heard you guys talking on IBD Live this morning, and you just have to stay invested, and you just have to keep looking for the signs of distribution, because we know what market tops look like, and we're just not seeing any signs of a top yet. So until we see the signs of a top, we just have to keep staying on the right side of the market, which is stay invested.

8:19Ken Shreve:Exactly. All right. Let's talk about a hot stock from today's session in the solar group, and that is First Solar blasting out of a base of 11%. So a lot of power here, Ken, coming up the right side, and especially today for this stock. We've talked about the broader sector in recent weeks. Here's the TAN ETF representative of the group. It's been on a tear. Look at that relative strength line. So a very powerful move. This episode is sponsored by Morgan Stanley's Thoughts on the Market. Today's financial markets move fast. Morgan Stanley moves faster with their daily podcast, Thoughts on the Market.

9:06Ken Shreve:Thoughts on the Market covers daily trends across the global investment landscape with actionable insights from Morgan Stanley's leading economists and strategists. And with most episodes under five minutes long, staying informed has never been easier. Listen and subscribe to Thoughts on the Market wherever you get your podcasts. From First Solar today. I know, you know, Justin Nielsen and Mike Webster, our senior market strategists, these guys have been all over the solar trade for a little bit. But First Solar, you know, really just was a beautiful breakout today. This one has been in rally mode for a little while, but this was a nice breakout from, you know, a really long cup base here.

9:50First Solar is a U.S.-based solar giant. Obviously, China is a big, big player, dominant player in the solar business in the world. I mean, they're a worldwide leader in solar production. But First Solar is a U.S.-based solar panel manufacturer and, you know, a legitimate kingpin and a fundamental leader in the industry. So just a beautiful breakout here. We could swing over to the weekly chart here and just take a look at the big, big old base that it broke out of today. and we actually put this in the leaderboard model portfolio. The relative strength line moved into new high ground. We like to see that on the breakout.

10:39So the relative strength line got a blue dot. You can see in the first quarter when they reported earnings, had a nice turnaround quarter. For the second quarter, when they're going to be reporting earnings next, you're going to see earnings going to be flat to slightly lower. So it's probably a one-off because you can see their annual earnings this year and next are going to be nicely higher. So that's a positive for First Solar. Interesting, we were kind of complaining about the lack of base breakouts, but here we are more than a month into this uptrend. And now today we're starting to see some base breakouts.

11:21So First Solar was one today, and we took the opportunity to put this on the leaderboard model portfolio today. So we'll see how this one works. But it looks like a stock that's under some nice accumulation here, and we'll see how it works. But it's been a longtime leader in the solar group and like the fundamentals here and like the look of the breakout today.

11:46Ken Shreve:Yeah, very powerful and some nice acceleration on the top and bottom lines there. Okay, next on the list, let's go ahead and take a look at Eli Lilly. Also with an attempted breakout today closed just below that traditional buy point, but it did get above the bulk of the base here, going back to even a little prior base there around that$1 ,100 area. Ken shares up 4 % on the day, some volume behind the move. So Eli Lilly finally coming back to life here in recent weeks. What do you think, Ken? Yeah, kind of a similar look to First Solar, a stock that has been consolidating for a long time, coming up the right side of a long base, really has been consolidating for about Not the same time as first solar, but kind of the same type of setup here.

12:47Eli Lilly has been coming up the right side. There was some news that fueled the heavy volume in Eli Lilly today. CBS, the national drugstore chain, they actually made a decision to restore coverage. I'm not sure what went into the decision why they didn't or why they stopped or weren't carrying Lily's weight loss drug, ZepBound, the injectable drug. But they restored coverage of ZepBound today. So people are going to be able to go into CVS and get that drug through their medical coverage at, yeah, I think like 25 bucks through CBS. So they're going to restore coverage of ZepBound as well as their new oral weight loss drug, Fondeo, I believe it's called.

13:37So that's going to open up another big market for Lilly and their weight loss drug franchise. So that's what fueled the volume in the stock today and fueled the breakout. They've also been making a lot of acquisitions lately. So this is a company that's kind of a serial acquirer and made a lot of acquisitions recently, kind of expanding their pipeline. So lots of interesting stuff going on at Eli Lilly. Obviously, their weight loss drug franchise is making a lot of money. And growing. Yeah, and growing.

14:17Ken Shreve:Right, with Red and True Tide, the crazy gray market for that before this even gets FDA approval. But Lilly does have the license for that. Absolutely, absolutely. And again, just making a lot of different acquisitions and kind of expanding that pipeline beyond weight loss. But, you know, so it's, you know, I like to see these stocks breaking out. Relative strength rating as the stock was consolidating, 67, not great. Relative strength line lagging as well. But you know what? We're going to make some exceptions in this market with so much money coming in from the sidelines. Because, you know, some of these lagging relative strength lines are still working.

15:04So sometimes you get to make exceptions. And we were a little bit lightly invested. So we're going to take a shot on a high-quality company like Eli Lilly and a high-quality company like First Solar. You know, we'll put these on the leaders list because we know they're outstanding companies. And we're going to give the breakouts a chance to work in this nice uptrending market.

15:27Ken Shreve:Exactly. All right. Last but not least, let's go to AAON, an upside reversal today. Shares up 2%. A couple of weeks ago, this stock blasted out of a base on earnings, and it's been able to trade sideways from there, digesting the big gains. What do you think of this potential setup brewing, Ken? Yeah, just really like, you know me, Allie, I like how these these stocks that, you know, gap up on earnings and then how they just kind of trade nice and nice and tight and hold on to the gain. So really nice action on the the weekly weekly chart here. Big, big weekly gain on on earnings to really tight down down weeks.

16:16Now the stock is starting to move this week. So I would say if it starts to move and break out from its high from a few weeks ago, I would still look at this stock as actionable. So you go back to the daily chart when the stock pulled back. It was just a pullback to its short-term support level, the 10-day moving average. Loved how the stock came down to the 10-day. It was down pretty good on a percentage basis today. But, you know, stock reversed off its low, closed up near its high, almost 2 % higher today. So still showing a lot of strength and support after that earnings gap up. This is an HVAC heating, ventilation, air conditioning.

17:02So obviously seeing some data center business. They did make a data center-related acquisition a couple of years ago. So it's not a huge part of their business, but it is a growing part of their business, as are a lot of these HVAC firms. So you look at the annual earnings estimates here. You know, they made$1.35 last year. They're going to make$2.20 a share this year and then$3.38. So really wrapping up the growth here. And you can see the bottom line and the top line growth in recent quarters really, really strong as well. So like the fundamentals and technicals here, the building construction products group is still, you know, ranks in the top quartile of our industry group ranking.

17:49So fundamentals and technicals measure up here. Just seeing still a lot of a lot, a lot of healthy technical action in this market alley. And you've got the fundamentals right alongside the technicals here. So AAON looks pretty healthy here as well.

18:04Ken Shreve:It sure does. So what would you view as the proper buy point here, Ken, just to reiterate? We had that powerful move. It tightened up. I mean, some traders this week might opt to initiate a position, but where would be the preferred entry for you, Ken? You know, I would say even if it could move above yesterday's high, you know, I think you could take a shot over yesterday's high. Some people will just see if it can just move above that high from several days ago. 149 is it? Almost look at it as like a three weeks tight pattern where it's just going to almost look at it as a little bit of a shelf here.

18:50So you can look at yesterday's high or you can just look at that left side high of 149, just the last level of resistance. So just look at it as a mini little base, you know, little shelf area.

19:09Ken Shreve:All right. Well, thank you so much for that, Ken. We appreciate it, as always. Thank you. And thanks, everyone, for tuning in. That's it from us for today. But we will be back with more tomorrow morning on IABD Live. And we will be joined by special guest Viva Jha. She will update us on her strategy for trading TQQQ and some other stocks on her radar. And it's going to be very interactive with the audience. She'll be answering all of your questions about how she has made some huge trades with the leveraged NASDAQ 100 ETF, which, full disclosure, I do myself own. So it'll be great to get her take on how to handle that in light of the current raging bull market.

20:00Ken Shreve:So we'll see you there in the morning starting 10 minutes before the opening bell. Investors.com slash IABD Live for all the details. We'll see you there. And then Senior Market Strategist Mike Webster and I will see you right back here tomorrow to close out the week.

20:41Ken Shreve:Thank you.