Nasdaq, S&P 500 Snap Lengthy Win Streaks; NBIX, Guardant, Axsome In Focus

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0:39Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Wednesday, June 3rd. It's Alyssa Coram here, and we did see the major indexes pull back, but the power trend is still very much intact. Joining me now to discuss the dynamics of today's trading session is my colleague, Ken Shreve. Ken, what do you have for us today that's of interest? Yeah, 1 % declines for the Dow and Russell 2000. Finally, a little bit of selling in the major stock indexes today, Ali, but lower volume. So we'll take that and a day of outperformance for some healthcare stocks. So let's take a look at a couple of biotech stocks.

1:19I want to take a look at NeuroCrim Biosciences, NBIX. Let's also take a look at Axome, A-X-S-M, and also Garden Health, not a biotech medical services firm. GH is the ticker there.

1:35Ken Shreve:All right. Checkup, so to speak, on medical stocks. Checkup on health. Yes, yes. All right. First, let's take a look at the major indexes. The NASDAQ composite down about three quarters of a percent or so. Actually, nine-tenths of a percent by sessions closed. It was the S &P 500 that was down three quarters of a percent today. The Dow, as you mentioned, down over 1%, some 1.2 % in today's session. And then we did have the Russell 2000 down about 1.3 % today, Ken. And that is tracked by the IWM ETF. So we've seen a very powerful move here in particular for the NASDAQ composite. So seeing a break here, not surprising.

2:26Ken Shreve:And with this kind of down day, we'll have to see what a test of the 10-day line looks like if we do continue to pull back. Also, I know senior market strategist Mike Webster is keeping an eye on the low from a couple trading days ago, 528. What are your expectations of what we could see from here? Well, certainly that 10-day is in play here, and that would be the first logical support level to hold. And then, Webby, certainly talking about that low that you pointed out there where the NASDAQ made that last nice move up there, that would be a low to check out as well. Obviously, the 21-day moving average is a little further down.

3:15That's the green line. And that is a fairly significant support level for the NASDAQ to hold here. So we'll see if support holds at the 10-day line. I would not call that a critical support level for the NASDAQ. It is a short-term support level that would be good to see the composite hold. But the 21-day line, I think the green line is a much more important support level for technicians. So we'll see. I think a break of the 10-day line would not be the end of the world. A pullback and break of the 10-day line would not be a meaningful correction off of the high for the NASDAQ. We were up nine straight days, and we finally got a pullback.

4:04The volume looks to be lighter than the prior session. We had a couple of fairly low volume gains in a row for the NASDAQ. So to see volume come in lighter than the prior session today, it was pretty good to see not much volume behind the decline today. The breadth on the NASDAQ, you know, not too bad. I had it, oh, it was two and a half to one negative. So not great, but it could have been worse. And it was about three to one negative on the NYSE. In terms of groups that got hit hard, I did not see a whole bunch of leading industry groups and leading stocks get creamed today. So that was good.

4:53Telecom Equipment Group, we saw Lumentum, L-I-T-E, under some selling pressure today. But in terms of leading stocks, Lumentum was up for two straight days. Nice retaking of the 50-day moving average. That was down. But you see volume wasn't too heavy in Lumentum today. So didn't see a lot of top-rated groups in the market getting creamed today. So for a down session and for the NASDAQ to end a nine-session win streak, the percentage decline today wasn't too bad. But really, the worst percentage declines today were in the Dow and the Russell 2000. So not too bad on the NASDAQ today.

5:34Ken Shreve:Yeah. And we had a previous pullback that was three days down. We'll have to see what this one looks like. Will we get that base case of the two and a half to three and a half days down in this power trend and potential buying opportunities on the other side of that? or will we immediately shake this off on the next positive AI-related headline or positive news perhaps related to the Iran war? But it was oil prices, right, Ken? Yes. Stocks today, that advance. Oil was up all day. I recently checked it. It was up 2.5%. That's right around where it settled, up 2.5%, right around$96 a barrel. And we had bond yields higher all day, not really higher all day, but it was up three basis points at last check, right around 4.49%.

6:36So, you know, the market, we had ADP data this morning that came in mostly in line with expectations. Not a big surprise there. I think private payrolls were around up 122 ,000. We've got a jobs report this Friday. We had a jolts report yesterday that was stronger than expected. So we still have this very, very tight labor market, which lends an argument to the case that rates could stay higher for longer. And there's still debate going on between at the CME FedWatch and the Fed Funds Future traders still debating whether or not the Fed may be forced to hike rates before the end of the year. That's still kind of 50-50 if there's going to be a quarter point rate hike before the end of the year.

7:28That's still about a 50-50 chance. So we will see. But higher oil prices, higher rates today to see the NASDAQ and the S &P 500 moderately lower today, down well under less than 1%. Not too bad a day, really.

7:48Ken Shreve:Definitely not too bad. And with yields up, no surprise to see pressure on the small caps here. And then we'll quickly check the Dow reversing lower after clearing that 51 ,000 milestone in recent trading days. But it's also still above its 10-day moving average for now. Yeah. And I got to say that for the Dow, you know, to be just still above the 10 day, I mean, the Dow, the percentage declined down 1 % and 500 points. And you had IBM down 7 % today. I mean, there were some noteworthy decliners in the Dow. IBM and CRM were the two biggest decliners in the Dow today. But you did have, I mean, look at that.

8:33I mean, IBM up for, what, five days in a row. So that was due to come in. And Salesforce, nice rally off lows. Yeah, so those two stocks were down. And then healthcare outperforming. So Amgen was a nice gainer in the Dow today. So the Dow did have some nice gainers as well. But, you know, so that's where the selling was concentrated. You know, small caps because of yields going up. And the Dow, you know, you just had some tech names under some pressure.

9:04Ken Shreve:Exactly. So speaking of, we can take a look at software. We know that this is an area where a lot of money has been flowing into since April, and that accelerated in recent trading days until Tuesday and Wednesday today. So IGV, the broader software sector ETF, down over 4 % on the day. So giving back a little bit more of that acceleration that you can see that turn up that it's had. your thoughts on how this sector is acting as an area of potential new leadership. Obviously, it's gone up a lot. So some give back, not unexpected here. But what are your thoughts, Ken? Yeah, it just, it strikes me as like there's some fast money in this sector because it's, you know, two days of explosive gains and, you know, a really decisive move above the 200-day moving average and then it you know rocketed higher again and then you know fairly orderly declined two days ago it traded fairly tightly yeah right that day there it traded in a very tight intraday range closed in the middle but then you know today quite volatile uh down 4.3 percent and uh you know still held above the the uh the the 200 day moving average so i suspect uh IGV is going to start to calm down and trade a little more orderly here.

10:36But yeah, still seeing a lot of volatility in the software sector. It was so beaten down for a while there, and it started to come off lows. And I suspect we'll see the volatility subside that we've seen over the past four trading sessions. And we'll start to see some of these rocket ships that have come off lows start to calm down a little bit too. So I think they've made a pretty good case that they have bottomed. So I know that people that are playing the IGV, they probably want to see it hold above the 200-day moving average and see if it can kind of consolidate above the 100 level here. And so we'll see.

11:20But, you know, strong move off lows for the software. The selling was probably overdone. There are still a lot of software stocks that have pretty good balance sheets out there. and decent long-term fundamentals. So I think a good case has been made that the bottom has been put in, but I've got to wait for the volatility to subside here a little bit.

11:41Ken Shreve:And we can also quickly check in on the chip sector. Here's SMH continuing to act strong here, Ken, up nine-tenths of a percent on a down day for the broad market. Yeah, really just kind of following the NASDAQ. So we're going to watch how the NASDAQ reacts when it pulls back to its short-term moving averages. And we'll just watch the SMH when it starts to pull back here. It's quite extended from all of its moving averages, the 50-day, the 21-day. But just continuing to outperform here, a lot of these semiconductors are kind of getting used to a whole new fundamental outlook with this AI expansion.

12:27And a lot of these chip stocks are poised for very strong growth. So there's this whole kind of fundamental kind of realignment going on here. So another great day for chip stocks. NASDAQ 100 was filled with a lot of outperformance. And so, you know, again, extended, still outperforming here and tough to find actionable chip stocks when they've been running higher. So the market is definitely tricky when you're trying to find buying opportunities in the chip space. SMH is quite extended too. So it'll take a breather, but again, we'll watch how it reacts when it does pull back to the 10-day or the 21-day line.

13:12Ken Shreve:Yeah, an absolutely fantastic run here. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get The best of both worlds. Get the Unreal College deal. Everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox Game Pass Ultimate with a custom color Xbox wireless controller. Learn more at windows.com slash student offer. While supplies last, ends June 30th. Terms at aka.ms slash college PC. Or the chips. All right, well, let's check in. A little checkup on some medical sector names, kicking things off with NBIX, up 6.6 % today, blasting out of a base, Ken.

14:04Yes, NBIX. And, you know, not a perfect stock here, but, you know, a beautiful technical breakout here is what it is. So, I mean, a good educational stock. The first thing I want to talk about here is the relative strength rating of 70. And so the breakout looked great. A very clear, identifiable pivot here. It's a cup with handle breakout, 162.39 buy point. Closes at 165.11, so it's well within the 5 % buy zone. You had good volume at the breakout. And you also have a fundamental leader here in the biotech group. Now, when you go to the weekly chart, what you have here is kind of a long, sideways-moving stock here.

14:58So what's going to tell us here that this stock is going to break out and actually move and trend and go on to a big gain? I mean, this stock really hasn't done anything. It breaks out and moves sideways. So that is a risk here. But again, we do have good fundamentals here. And so we're going to go with that. Neurocrin is a stock that is mostly in, they're in schizophrenia. They do a lot of psychiatric drugs, major depressive disorder. They're a little bit in epilepsy, even a little bit in Parkinson's disease, but they are very profitable. You can look up in the top left of the chart and see all of the annual earnings that they have produced.

15:47They've been very profitable for quite a long time. And you can see the top line growth that they have been delivering for quarter after quarter after quarter. So, you know, the fundamentals are there. We're going to give the stock the benefit of the doubt here with the breakout here. And, you know, again, the relative strength rating of 70 is not great. But you have some perspective on that relative strength rating of 70 because, you know, it just has just been kind of a sideways mover. But you can see when the stock gapped up past that 140 level, it has been showing some pretty good accumulation of late that has lifted the accumulation distribution rating of A minus.

16:31So the thinking here is that maybe the stock is in a new accumulation phase and maybe that's what could lift the stock to new high ground and maybe result in some sustained gains here. And if money is indeed moving into health care and biotech here, maybe this one could be in for a decent move. So love the fundamentals, love the technicals, like the breakout today. So maybe this one could work.

17:01Ken Shreve:All right, moving on to ticker GH. This is Guardant Health, a powerful move in recent weeks, I believe coinciding with an FDA approval of one of its products. So seeing some renewed interest in the stock here, Ken, and now going tight after that period of strength. Guardant Health, ticker symbol GH. And, yeah, this is an interesting one because you did have, first of all, better relative strength than NBIX. It's not a biotech stock. This is a company that does liquid biopsies for cancer detection. So what they do with these liquid biopsies is they're screening for cancer with a single blood draw.

17:58And it's basically just a better mousetrap than screening for cancer through tissue. And so they do it through a single blood draw. It's less painful, just much more efficient. And this is really resulting in excellent top-line growth for the company. It's not profitable yet, but this is a company where, again, if you have good revenue growth, Even though they're not making money, if you've got the good revenue growth and you've got good fund sponsorship, you've got good technicals, sometimes you can look past a lack of profitability and say, well, they're generating the revenue. They've got a lot of funds that are interested in this company's growth story.

18:48It's only a matter of time before they hit profitability. So like Garden Health a lot here, especially like the way the stock is pulling back after the breakout. Let's go back to the daily chart here and look at the breakout. And we know that stocks can revisit buy points, you know, a lot. And Garden Health is pulling back in light volume here. I like how that 10-day moving average is just kind of sitting just above the buy area of 120.74. So Garden right now is just in the process of pulling back in light volume. Look at how the volume is kind of drying up as it pulls back. So if this comes back and touches that 10-day line, it's going to be pulling back into that buy zone close to 120.74.

19:31So for those that missed the breakout, go ahead and put this on the watch list because it's a low-volume pullback right now. And if it can come back and touch that 10-day line and just kind of drift back into that buy zone and volume stays light, I just look for a little bounce and, you know, you can get this thing back in a buy zone. But it's a leader in the medical services group. It definitely has built a better mousetrap, as they say, in terms of, you know, cancer screening. The revenue growth is there. It's accelerating. The fund sponsorship is there. And it looks pretty good here. So Garden Health is definitely a name to watch in the health care space.

20:12Ken Shreve:And then rounding things out with a look at AXSM. This is AXM Therapeutics. This is in the biotech area, and it is generating revenue. We have different phases that we look at, and this is in the revenue-generating group that we have. An impressive upside reversal today, Ken, right at that 21-day shares up 5%. Saw a lot of stocks finding support at the 21-day moving average, And I want to show you one more after Axome, not a biotech, but just saw a lot of great leaders finding support at their 21-day lines today. Axome, like you mentioned, is a biotech like NBIX that we just looked at. Axome is sort of similar to NBIX.

21:04They also do central nervous system conditions. So they also do drugs in depression. They're also involved. They do some migraine headaches, narcolepsy, which is excessive daytime sleepiness, also do some work in Alzheimer's disease. So they are not profitable yet, but they're going to turn their first annual profit, not this year, but next year. You can see$5.52 a share they're expected to earn in 2027. So not making money yet, but they will be profitable in the not-too-distant future. but generating meaningful revenue. You can see revenue in the first quarter up 56%, 189.4 million. But love the earnings breakout here over the 200 level.

21:57And this was a nice reversal today above the 21-day exponential moving average. So sometimes stocks aren't going to pull all the way back to their 50-day moving average. And a lot of these leaders are going to just come down to their 21-day lines and find support. So I found this to be a decent opportunity to pick up a leader for the first time when it's pulling back. So, again, seeing a lot of leading stocks in recent weeks and in recent months, for that matter, finding support at their 21-day lines. Another stock I saw today, Vita Coco, you know, that coconut water company, VITA, I think is the symbol.

22:37Yeah, there it is. Yeah. And, you know, a beautiful breakout here. COCO is the symbol. Yeah. Beautiful earnings breakout here, too. Look at this pullback to the 21 day line today. Snaps a four session losing streak, rebounds in higher volume. So I don't like that 21 day line pullback. It's a lot of strong performers like to pull back here. So AXSM in the biotech group, nice reversal off the 21-day line. And same for Cocoa today. So, you know, nice action in both of those stocks today.

23:15Ken Shreve:Yeah, definitely something that we look at because what can this potentially turn into? Well, let's look at another recent 21-day bounce or a case for support. You know, obviously, you do get some news-driven elements to some of these things. But look at a Twilio here, right? powerful breakout on earnings, pull back to the 21-day, then power's higher. So the type of setup that we really like keeping an eye out for. And thank Webby for that 21-day line. Webby came back to IBD, I don't know, several years ago. I remember he wasn't in the office for more than a few weeks and we were talking about that 21-day line.

23:55So that 21-day line is one of the first things he introduced to us when he first came back to IBD several years ago. So that was a good tip that he brought along.

24:06Ken Shreve:Yeah. 21-day exponential moving average. Exactly. Yeah, he's been using that a good long time. All right. A couple of things to look at after the close with earnings, I believe. Yes. Got a big one from Broadcom. Looks like that's under a little bit of pressure, down 4 % on earnings. Again, another stock that had rallied bigly ahead of earnings up for four straight days. And we've seen so many stocks in recent weeks rallying so hard ahead of earnings and very few that had been selling the news. Palo Alto did it yesterday. So maybe seeing Broadcom doing it today. I have no doubt that the numbers were super strong.

24:55Looks like they did miss revenue. Ah, they missed on revenue. Okay. Yeah. Well, we'll have to take a look. This has been a nice winter on leaderboard, but we'll have to look at the numbers and see what happened. It brought come under some pressure. We also had CrowdStrike, CrowdStrike after the close.

25:19Ken Shreve:Also taking a hit, I'm seeing shares down over 8%. But to your point, what a big run. Even a bigger run. Even a bigger run than Broadcom. Yeah, so CrowdStrike had been rallying furiously, just like Palo Alto did yesterday. So CrowdStrike under some pressure. And then Five Below has not been in the news recently, but it has been a big winner in retail. And kind of had been underneath the 50-day, had been trying to reclaim it. But this is not a great after-hours earnings session, Allie. What's going on here? Five below? Yep, that's under some pressure, too. Exactly, yeah. Wish we had better news here.

26:01Ken Shreve:Yeah, yeah, same here. But I think it also shows how strong of an earnings season it's been. You know, this stands out as a day where you're seeing these stocks under pressure. It hasn't been the norm this earnings season. And the first down day we've had in a while, too, in the market. Right. And CrowdStrike and Broadcom, as you mentioned, they've seen stellar gains in recent days, weeks and months, especially Broadcom. More recently, you know, seeing that money flow back into software for CrowdStrike. So we'll see how these stocks act tomorrow. Overnight action doesn't necessarily always translate to the following.

26:48Ken Shreve:regular session. We'll see what the conference call calls are like for each of these stocks, what the overall consensus is, what the digestion is for names tomorrow from analysts and investors alike. Sounds like a plan. Thanks so much, Ken. We appreciate it as always. And thanks everyone for tuning in. That's it from us for today, but we will be back with more tomorrow morning on IEPD Live, investors.com slash IEPD Live for all the details. Also, it's Wednesday, so make sure you check out the Investing with IEPD podcast with host Justin Nielsen, joined by Mish Schneider, talking about the latest dynamics with her economic modern family.

27:38Ken Shreve:So you can check that out live today at 5 p.m. Eastern on our YouTube channel or wherever you get your podcasts. Thanks for tuning in. We'll see you back here tomorrow.

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