Nasdaq, S&P 500 Strengthen After Jobs Data: ServiceNow, URBN, LPLA In Focus

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0:26Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Thursday, July 3rd. It's Alyssa Coram here. And in today's shortened trading session, we ended on a high note, and it was a great shortened holiday trading week for the market, a positive expectation breaker in some respects, given some of the intraweek volatility that we had, but that did not last long at all. And joining me now to break down the action in today's session and to look at how the week played out is my colleague, Ken Shreve. Ken, always great to see you. You too, Ali. Yes, strong, strong gains, more record highs for the Nasdaq and the S &P 500.

1:08Let's take a look at ServiceNow, NOW, a stock that had been left behind by this big market rally, but a nice breakout for the enterprise software giant today. In the retail sector, let's look at Urban Outfitters, still trading well after an excellent earnings report a few weeks back. And in the investment banking group, LPL Financial, LPLA.

1:30Ken Shreve:All right, we'll take a look at those stocks. But first, let's analyze the major indexes, take a closer look there. The Nasdaq today up 1%. Look at that. Looks like we have sort of an exclamation point here, Ken, on this week's action with that strong gain today. The S &P 500 up 0.8 % on the day, continuing into new high territory as well. Meanwhile, the Dow up almost 0.8 % on the day. And it, too, now closing in on all-time highs. Looking at the DIA ETF, we're less than 1 % from highs there. And the Russell 2000, here's the IWM ETF, continuing to make progress above that 200-day line, up 9 tenths of a percent today.

2:19Ken Shreve:So this action comes, Ken, after a strong June jobs report. What do you make of it? Well, it's a strong market that we've been talking about for several weeks now that just keeps getting stronger. I am a little cognizant of the fact that the NASDAQ is getting a little more stretched above that 50-day moving average. It's not an overbought market yet, but it's a little more than 9 % above its 50-day line. And that's an area where it wouldn't be surprising to see a pullback. But again, overbought markets can stay overbought, and the market is just really in a sweet spot here. The jobs report was quite good.

3:04I mean, it wasn't a blowout, but it came in better than expected. 144 ,000 jobs created in June. You also had upward revisions to April and May data. So unemployment rate unexpectedly fell. So there was plenty of good headlines for the market at 8.30 a.m. Eastern time when this jobs data came out. Indexes held well throughout the day. and we closed near a session high. There's another record closing high for the NASDAQ. And the one thing that I also wanted just to mention here is I checked the breadth. We always check in on breadth every day and we were better than two to one positive yesterday on the NASDAQ, right around the same today.

3:50But if you pull up NASDQ, I just want to give people just a visual representation of what this improving breadth looks like. Actually, no, I'm sorry, GMIAB, try.

4:07Ken Shreve:Sure, so advances versus decliners here. Yeah, there we go, there we go. So this is the NASDAQ advance decline line, and compared to its 10-day moving average, you can see how it is really shooting higher into new high ground here. you know you're seeing financials participate a lot a lot more so and it's really you know the there's XLF breaking out and if you do just go to look on the NYSE as well it's the same thing you're getting this really really you know strong breadth almost like a breadth thrust look at the look at the breadth really really ticking off on the NYSE as well so you know again we're just in a super, super strong market.

4:50Growth stocks have been right in the sweet spot here. So that's good for IBD readers that like to focus on growth stocks. So lots of optimism about the economy, optimism about tariffs. I mean, I'm sure we're going to see some volatile headlines in coming days and weeks. But right now, market just seems like it wants to go higher.

5:12Ken Shreve:Yeah, you're absolutely right, Ken. That doesn't mean we can be complacent here. We always have We have to adjust when we get signals from the market. But for now, we're seeing all systems go, it seems. Yeah, well, again, you want to be cognizant of the fact that the NASDAQ is more than 9 % above its 50-day line. It's gotten a little stretched beyond that in the past. And it's also gapped up today after already being quite extended here. So, yeah, you definitely want to avoid complacency. I've heard that term talked about in recent days, maybe investors getting a little complacent seeing their portfolio up every day.

5:58So you just want to be aware of potential pitfalls. But I know because of the percentage gain for the NASDAQ today, we wiped away more distribution days on the NASDAQ and we wiped away a ton on the S &P 500. So what looked like a kind of a daunting distribution day count for both indexes now doesn't I think we're down to one on the Nasdaq and two on the S &P 500 after the close today. So that's that's a that's a feather in the market's cap as well.

6:28Ken Shreve:It sure is. And I think this week's action also goes to show, once again, the power of a power trend and the rules that we use when we are in these powerful trending markets, Ken, getting support at that 21-day line, the green line on the chart for both the NASDAQ and the S &P 500. That was a key pullback and an area to press the gas. And that has paid off in recent weeks. Yeah, I mean, the first buy signal that we got, you know, was April 22nd, right on that day there. That's when we kind of started increasing exposure. And you can see after that follow-through day on April 22nd, the S &P 500 had just come down to that 21-day moving average three separate times and used it as a support level here.

7:24So we've come up so much on the S &P 500 and NASDAQ. You could get a pullback to the 10-day line and 21-day line, and that uptrend is still going to be intact. So on the one hand, a little market pullback will help some of these leading stocks pause and digest gains a little bit because there are a lot of extended stocks out there right now. We found a few today that still look pretty good. So you're still seeing, you know, buying opportunities, but probably a little more challenging now than it was back in late April, early May. You know, because early in the rally, there were a lot of stocks moving.

8:04There was plenty to choose from. Now we've been running for a while. It's a little trickier, but still seeing opportunities.

8:11Ken Shreve:Yes. Okay. Next on our list, let's quickly get your thoughts on blue chips and small caps. Here's the Dow. It was a lagging index for some time when it was trading down near its 200-day moving average. But you can see over the past couple of weeks, blue chips have really taken off. American Express, JP Morgan, and the Dow have been great winners on leaderboard and two outstanding performers in the Dow. So lots of broad-based leadership in the blue chip index as well. Yes, great job with those leaderboard trades there. Spot on entries. And we already looked at XLF. So strength in financials can notable here with a breakout this week and a potentially earlier pivot not all too long ago that I believe we were talking about as well.

9:08Ken Shreve:But it just seems like this is more evidence that you're getting more sector participation in this rally. A lot of these banks just earlier this week passed another round of stress tests by the Federal Reserve just to make sure they're financially healthy and can handle potential weakness in the economy. So the stress test results were very solid. A lot of financials took the opportunity to increase their dividends. JP Morgan announced a share buyback. So sentiment pretty positive in the financial sector right now. Yes. And before we take a look at those three stocks that we want to watch, since this is sort of our Friday episode for the week, I just want to take a look at the weekly percentage gains here.

9:54Ken Shreve:The Nasdaq up about 1.6 % on the week, and that comes after the prior week's gain of 4%. So continuing to see that move to the upside after the breakout to highs last week. Meanwhile, the S &P 500 for the week up 1.7 % after the prior week's gain of 3.4%. So when we're talking about individual stocks breaking out, we want to see a follow-up. And that's exactly what we got on the index level this week. Savvy investors understand consistent growth is built on scale, resilience, and trust. For more than 60 years, Medline has proven this, driven by an unrelenting commitment to their customers. Today, Medline is proudly NASDAQ-listed and is the largest provider of medical surgical products and supply chain solutions serving all points of care.

10:44Ken Shreve:With a focus on what healthcare needs next, Medline strives to make healthcare run better. See how Medline is woven throughout healthcare and learn more at Medline.com. Yes, indeed. I mean, it's just really, really all systems go. And, you know, I particularly like the S &P 500 when it hit that low of 4835. And you saw that week where it hit that low of 4835 and then reversed higher for the week. Look at the volume that it did it in at the bottom. Huge volume, upside reversal. This is the way, you know, index charts can just give you little clues about their underlying health. We didn't know that stocks were going to bottom when the S &P 500 hit that low of 4835.

11:27But we did look at that week of price action and say, you know what, this is what a support week looks like at the bottom of a base. You have sellers get get shaken out, hits that low of 48, 35, and then buyers come in, lift it off lows in very, very heavy volume. So that was a sign that at least the market was trying to bottom. And then you just continued, you know, pretty good price action after that. So, you know, daily and weekly charts, whether it's an index or an individual chart, can give you a lot of clues about, you know, what direction it might want to go in. But so the S &P 500, nice support week, you know, after undercutting that 5000 level.

12:07And it has just been on a nice uptrend ever since.

12:10Ken Shreve:It sure has. All right. Now on to those individual stocks to watch. Here's ServiceNow, up 3.8 % on the day, and it closed just above a handle buy point, Ken. You know, a lot of people had given up on ServiceNow. You can see the stock hit that high of 1046, and as the market was ripping higher, ServiceNow was just kind of dawdling, dawdling around, not doing anything wrong. You know, it came down right to the 200-day moving average, and then it started to rally. But here again, this is a market that's been running higher for a while, but you're still seeing stocks breaking out. Now, ServiceNow does have a lagging relative strength line.

12:53That's not surprising. The stock has been moving sideways while the market's been going up. But this was a very nice technical move for ServiceNow. And I mentioned on IBD Live earlier today, Bill McDermott is running the show here. And he comes on CNBC every quarter when they report numbers. And you can see annual earnings, really outstanding, just a very, very steady track record of growth. A company that has been using AI to their advantage and using it in their software applications. And just a real steady grower here, outstanding fundamentals. And the technical picture is starting to look a lot better.

13:40Now, you know, a lot of enterprise software stocks have been running. ServiceNow kind of sat this rally out. So is it going to be able to really make meaningful progress from here? You know, based on its price action today, I would say yes. But, you know, it is a bit of a laggard in the group at this point. Nonetheless, you know, volume picked up the pace today and I think it gave a pretty clear buy signal for those that are looking to put some money to work.

14:05Ken Shreve:Yeah, and speaking of the volume, I would say somewhat notable to see it pick up, given that it was a shortened holiday trading session. Just a half session, yeah, so particularly impressive, I agree. Okay, let's now move on to Urban Outfitters. This is in the retail apparel space. We had that gap up on earnings a little while ago, mid-May, and now forming a nice orderly base, Ken. Yeah, you can see the stock gapped up when they reported results for the April ended quarter. And you can see, you know, we'd like to see growth accelerating. So you see earnings up 68 percent year over year. That was quicker than the 51 percent pace.

14:51and quick, you know, so you see accelerating earnings growth there. That is a positive. Revenue in the latest quarter up 11%. That was accelerating growth from 10 % and 6 % in the prior quarter. So this company is executing very, very well. I've been in several urban outfitters in the past just to see what they're up to. They've got a great location up in Santa Barbara, but But earnings report was pretty good. Anthropologie is one of the brands that they own. And same store sales there in the latest quarter, up almost like 6.5%, 7%. So really, that brand of theirs is doing quite well. In terms of the stock, we know fundamentals are pretty decent here, holding gains well after that gap up.

15:42And you can see it's just kind of forming another base here, kind of respecting that 21-day line. So I think this one still looks good. Just another example why you want to focus on the strong performers in an industry group because they can often continue to be strong. So great response to earnings here, setting up a new base that brings an alternate entry of 75-80 into play. So this one still is technically pretty strong and acting well on the heels of a good earnings report a few weeks back.

16:16Ken Shreve:Yes, on breakout watch. And let's round things out with LPLA in the financial sector. Maybe a trendline entry today, Ken, up 2 % with a pickup in volume, but working on a flat base of its own with that resistance right around that 390 area. Earnings growth accelerating here as well for looks like three quarters in a row. Revenue growth is not accelerating, but two straight quarters of 30 percent plus top line growth. You know, this is an interesting name, not a name that many people know of among investment bankers, but very, very liquid stock. Let's check the market cap here. I think it's, yeah, 30, 30.72 billion.

17:02That's definitely a large cap. Scroll down and just look at the fundamentals here as well. That top line growth has been very, very impressive, and the company has earnings have picked up in recent quarters. So another setup here in a healthy, uptrending market, this setup could yield a breakout after it came down and found some support at the 10-week moving average, basically retesting a prior buy area here. So I like the way this one is trading and fundamentals seem to be in check. And I'm going to keep a close eye on this one.

17:40Ken Shreve:All right. Well, as we wrap, just want to get your thoughts about your game plan, Ken, for the week ahead. It was a holiday trading week, but a strong week of price action. We're continuing to see stocks setting up and break out, as you mentioned, and in the financial sector. that's continuing to improve and add to the basket of stocks that are looking quite interesting here with that breakout to highs. So continuing to see an improvement in market breadth, which you mentioned as well. So heading into next week, something that I saw investors in our IBD Live audience asking about is, well, what should we be thinking about ahead of July 9th?

18:25Ken Shreve:That's when we could see some more headlines around tariffs. You know, we had this couple month pause. Could we see volatility come next week on the tariff front? I would say we always take things one day at a time. And if you think about the headlines that we've seen in recent months, I mean, think about when mid-East spheres were at their worst and how resilient the market was. So we've been in a strong market. Will that continue if we do see some headlines that could spark renewed concerns about the economy? We'll have to see. But right now, things are looking pretty good. What say you? Yeah, I mean, we had headed into today, we had five distribution days on the S &P 500.

19:11We wiped away three of them today because of that strong move for the S &P 500. the 0.8 tenths of a percent gain today. Basically, it moved after today, it moved 5 % past several of these distribution days that were in the count. So now the S &P 500 just has two. But I think, you know, I think you're right. I think we'll see some volatile headlines. I don't know if they're going to come next week or the following week. But it's always just important to watch how the market reacts. And we're going to continue to monitor distribution days in the market. That's the best indicator to us as to what institutional investors are doing in the market.

19:56So, you know, one or two distribution days is not going to halt a rally. But if you see them start to cluster, you know, you get three or four, four or five over a few weeks time. That would be, you know, a sign to play some defense. But President Trump on Wednesday reached a deal with Vietnam. I think they're our fifth or sixth largest trading partner. So imports from Vietnam are going to get a 20 % tariff. And that was more than half of what was initially planned for Vietnam. So still a lot of optimism that deals are going to be reached with the Eurozone. And, you know, we had a good performance from some of these software design companies today that now that restrictions were lifted on companies like Cadence, CDNS and Synopsis.

20:51So this chip design software, they're going to allow, you know, back into China. So looks like they're making progress with some sort of China trade deal as well. So I think the market's optimistic about that. That doesn't mean we're not going to get some volatile headlines. Still going to be watching inflation numbers. That seems to be contained. But there's still a fairly large camp out there that's thinking it's only a matter of time before prices are going to start to head higher again. So we're going to just keep our eye on that personal consumption expenditures index. Make sure that doesn't start going in the wrong direction.

21:31So lots to chew on here. But what we know, you know, right now is that market is market is strong. We know what to look for in terms of signs of weakness, but individual growth stocks are acting fine. And final thing I'll say is earlier this week when we had that nasty, nasty sell off in growth stocks, you know, we had 18 stocks in our model portfolio. We only ended up getting rid of one of them because all of our other holdings were holding above their 10 day lines and their 21 day lines. So really, you know, didn't really cause much damage at all in the model portfolio. So, you know, even when we had that growth sell-off, we didn't get any sell signals in a lot of our holdings.

22:14So we like that.

22:17Ken Shreve:Yes. And it looks like growth stocks finished on a high note this week as well with FFTY up 2.2 % on Friday. And that nasty down day down about 2.9%. But we've recovered and up 2.5 % for the week in terms of this FFTY leading growth stock ETF. So really resilient there, shaking off that weakness. Great visual representation of how well, you know, growth stocks have been trading. And a lot have been rallying because of strong, you know, fundamental backdrops here. So, you know, great to see the FFTY with that relative strength rating of 80. It has certainly come back to life in spades. It sure has.

23:04Ken Shreve:All right. Well, thank you so much, Ken. Appreciate it as always. And also want to flag, if you missed it, in case you missed it, check out this week's podcast with Ken and Justin Nielsen that aired last night on our YouTube channel. and you can check out the recording there as well as at investors.com slash videos. Ken did a great job explaining what's going on with the IPO market and more importantly, how investors should ideally be trading these stocks, the strategies to use when handling hot IPOs. So check that out in case you missed it. Thanks everyone for tuning in today. That is it from us this week.

23:46Ken Shreve:We hope everyone has a wonderful 4th of July. The market is closed on Friday in observance of Independence Day. So we hope you enjoy the long weekend and our team will see you back here next week. Happy 4th, everyone.

24:18Ken 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.

24:45Thank you.