Nasdaq Undercuts Lows In Market Sell-Off; Sandisk, Vertiv, Equinix In Focus

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0:25Ed Carson:good afternoon everyone and welcome to stock market today for thursday march 26th it's alissa quorum here and a pretty ugly day out there in the market with the nasdaq undercutting a notable level and joining me now to discuss that and more is my colleague ed carson ed Good to see you. Good to see you. I want to take a look at Sandisk, Vertiv, and Equinix. Okay, we'll take a look at those stocks. But first, let's take a closer look at the major indexes, if we must, even though sometimes it's hard to look, right, Ed? It was a difficult day. Exactly. All right. Let's take a closer look here. Ugly day for the major indexes.

1:08Ed Carson:As you can see, that bad bar there for the Nasdaq, down 2.4 % by session's close. Definitely the worst index action of the day. The Russell 2000 was down about 1.8 % on the day. The S &P 500, a similar decline there, basically down one and three quarters of a percent in today's session. Then you had the Dow down 1 % on the day. So different levels that we're watching here, paying really close attention to the NASDAQ composite and the S &P 500 in particular. But zooming in here, we had a rally attempt, Ed. And now with today's action, you can see here with the NASDAQ closing at lows, very bearish day here.

1:57Ed Carson:So now we are no longer in a rally attempt. Yeah, we basically capped up twice this week and we're at lows. I mean, and so there we are once again. So this is why we talk about not not being interested in one day, you know, two days, even three days. You really want to see real sustained. And this was this was ugly. Trump comments on Iran. He sounded frustrated on Iran as after sounding more optimistic. And we'll see what tomorrow brings. But it's just like it was, you know, stocks sold off, oil jumped, yields jumped. The Nasdaq is below there. So the rally attempt on the Nasdaq is dead. And there's not really anything, there's not really clear support levels.

2:39I mean, it's already gone through everything. Doesn't mean, you know, the S &P just avoided it by a few points. I mean, it was very, very close. So technically that's still in, but it's the lowest close, you know, in six months or so. And, you know, and it hit resistance. The Dow's hit resistance at the 200-day line. Just really ugly. There are pockets of strength, but even the pockets of strength are difficult to play because they might hold up over time. But we're going to look at one stock that we're looking very strong, and it can all go away in a few minutes. So it's not a market that you want to be playing with.

3:17It's just not – you want to be preparing. Yes, you want to be looking at these stocks, but it's a watch-don't-touch kind of market, I'd say. It just isn't really working. You can't fight this. To try to jump in and out. This is really trying to get pennies from a steamroller. And, you know, it just doesn't work out very well.

3:41Ed Carson:Right. And we were saying that when you go below the 200-day line, that's the black line on the chart here, your odds of a more prolonged, at least chop and volatility type period are raised with that. That's not always the case. And especially in a news-driven environment, things can turn on a dime. But our historical research shows that you do have that increased odds of more pain potentially before things get better. But at least it gives us a sort of a guide for when to be cautious, when to get aggressive. But also, like you said, waiting for that follow through day. That's our dip the toe in the water signal.

4:27Ed Carson:And we definitely have not gotten that yet. So we've got to hold our horses. Yeah. And technically, the S &P 500 or Dow could have a follow-through day tomorrow. That's true. And given this volatile market, it's almost inevitable that we'll have a follow-through day, it seems like. But it won't. I mean, barring a really strong day for the S &P, we're not getting over the 200-day line. So it would, I think, and given the fact that it could just be switched on another headline, I think, you know, it would be a dip your toe, but very ready to come back out. I mean, because there'd be a lot of reasons to be skeptical.

5:02It might work. It might be the reason. It might be the time. But I think that, you know, with such a news-driven market, yeah, exactly, we can go up or down. I mean, literally, I mean, I joked about it a couple days ago. Uh-huh, we could have something happen. And then Trump did make a comment. And futures were up almost a percent by the time we were done with our video. So it's like you just, there's no way. I don't see how you can have an edge to the upside or downside in this kind of environment. Yeah.

5:29Ed Carson:So right now, the S &P, about 2.4 % below that 200-day line, just to give folks a frame of reference. And so we would be looking potentially for a gain of 1 % in volume heavier than the prior session. But in addition to that, we want to get back above that 200-day line, like you said, Ed. Then you have the 21-day. That's the green line. That's sort of specific to IBD. Mike Webster, our senior market strategist, started using that after a lot of studying with active trading signals. So we use that as well. And then we've got the 50-day. So it'll be a while before we get to that level, seeing as how the S &P is about 5 % below that level right now.

6:14Ed Carson:But one day at a time. And so we'll have to see what tomorrow brings. And Ed, you know, a lot of investors, even though we're active investors here at IBD, a lot of us, we don't like playing. We don't like dancing the hokey pokey. Right. You know, that's not a very fun time. It's not. You're going trying to try to buy it when you try to, you know, even if you buy it on the first day of strength. Just look at this market. if you bought on the day one or day two of any uptick, you're going to be losing money pretty quickly in most cases. It's just really tough. You have to be so nimble. And even then, you're often going to lose.

6:53There will be a rally at some point. It could be next week. It could be next month. It might even be next year. Who knows? But there will be that rally that will be so much easier where there'll be big gains quickly, having that tailwind rather than all of this. Right.

7:09Ed Carson:And I think, you know, you and I know from experience, and I'm saying this for myself too, it's just so much better investing when you have the market conditions in your favor. You know, even making small test buys here and there is fine. but the time to really be aggressive is when you do have a favorable market and that's why we're paying such close attention to things on a day-by-day basis because we don't want to get caught flat-footed whenever that does happen but that makes things a lot easier and that's when you can really generate that outperformance in your portfolio in a meaningful way right Ed?

7:51Absolutely. Okay.

7:53Ed Carson:Moving on, let's take a look at a couple of other charts to give us some added perspective on what's going on underneath the surface out there. Here's RSP. This is the equal weighted S &P 500 ETF. It's holding above the 200-day line. So can we take, you know, some small solace in that, Ed? A little bit, but it's also, this is an index that is, or an ETF that's even gotten above its 10-day line for about a month. I mean, this is one of the stronger parts of the market, and it just keeps on getting turned away. Yeah, I mean, so this is a relative winner, absolute loser still, and that's just not what you want.

8:35Ed Carson:Exactly. Okay, and you mentioned oil, so let's give our audience a little bit of a recap of what we're seeing here still at sky-high levels. Yeah, it's still very high. And look, I mean, oil is around like$94 now. You could easily spin a scenario where it's at$150 in a week or two, or it's down at$70. And since that's what's going to drive stocks, where's your variance? I don't know where it's going. I just know that it's probably going somewhere, even if that's up and down. And that's also driving treasury yields, which is another headwind on the stock market. That's the highest close since late July.

9:13So that's pressuring things. You know, we've turned from rate cuts to maybe rate hikes, almost certainly rate hikes in Europe, unless we get a very quick change in oil prices. So a lot of headwinds and volatile headwinds. And don't get excited if the 10-year Treasury World falls three basis points tomorrow or the oil falls$2. I mean, those are just minor moves. They're just little things that just don't – it's these – you know, we have to have – honestly, we're going to probably get a resolution to the Iran war. in some regard, whatever that is, to have some of these kind of major moves quiet down.

9:51Ed Carson:All right. Let's check in on the chip sector, which, taking a step back, has been a group that has outperformed the overall market. And when you're talking about the AI technology landscape, has been a source of strength there as well from that lens. But if you take a closer look at the recent action, Ed, it is a little bit concerning. And today, down 4.6 % after struggling to recover. Not a good look. Yeah, I mean, this is why how that next day really changes things because Wednesday morning, it was getting above the 50-day line. And it's like, yes, it had struggled, but the market wasn't great.

10:39Hey, the relative strength line was coming back up. And it was like, you could spin a tail. It's like, hey, if I want to get back into chips, this might be the way to go. Right. Right. And, you know, we'll look at Sandisk in a moment, but that sold off. And that's not necessarily in this ETF, but a lot of the memory plays and then a lot of chip gear makers and NVIDIA, everything sold off today. So this is where some of those times where the 50 day line, why we care about it, because the 50 day line can sometimes be a buy signal, but sometimes it's almost a shorting signal. I mean, that's why we care.

11:09If resistance levels weren't resistance sometimes, we wouldn't call them resistance levels. It would just be like, okay, you know, we wouldn't pay attention. But they do matter. And, yeah, really, really disappointing day for a lot of stocks in chips and any hardware that had been doing well.

11:28Ed Carson:Yeah. And I think it also speaks to the point that you're going to emphasize more throughout this episode is that you can have an area of strength until it's not right in the worst markets. Even the strongest of stocks have a really hard time holding up. And let's forget about yesterday. I mean, what's your reward from holding on to this during the Iran war? I mean, like it was at record highs and it was down. It was still down. It was still down, say, 5%. That's your reward, you know, at that point, you know, as opposed to just getting out and then coming back in when things get better. And now, of course, it's really coming down.

12:06But I'm just saying that even when it was holding up, it's not like you were winning recently. So this is why we talk about, you know, taking profits, cutting losses, getting out until things are really better.

12:19Ed Carson:Yes. Couldn't agree more. Okay. one more thematic chart we want to look at here, and that's the biotech ETF XBI. I'm going to go to the weekly chart here. That relative strength line is looking pretty good here. This area still holding up for now. And this is exactly, let's see what happens, because this could be like SMH tomorrow. It's like, look at it. It's struggling to get above the 50-day line, but it's the relative string line is surging. So yes, you know, if you get, again, even if the mark, it's hard, even this area, which has really nothing to do with a lot of this stuff going on, you can imagine this moves higher.

12:59I could see why people would make a pilot buys in here, but this could also be a place where we sell off. We'll see, you know, it, it held up, it's held up at various times and then, but struggled to get back, hold the 50 day line. So an area to watch and this one's especially, because there's not necessarily a lot of individual stocks that are setting up. This one is one that, you know, if you wanted to do biotex, this is maybe one of the better ways to do it right now.

13:25Ed Carson:Right, because sometimes the single stock risk in this area can be a little tricky to say the least because not only do you have the earnings reports, but you have other events, so to speak, in there as well that you have to deal with. All right. Let's take a look. This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed Sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate C. According to Indeed data, Sponsored Jobs have four times more applicants than non-sponsored jobs.

14:04Ed Carson:So go build your dream team today with Indeed. Get a$75 Sponsored Job Credit at Indeed.com slash podcast. Terms and conditions apply. Take a look. You mentioned SanDisk. So let's go there, SNDK. I trimmed back my position quite a bit here, Ed, as a reminder for folks out there. I was getting in on that reversal bar a couple of weeks ago when the NASDAQ was reversing powerfully off of the 200-day line. I wanted to see if it got support at the 21-day, which it did yesterday, but that became a line in the sand for me. So I definitely took action. Today shares down a whopping 11%. Not very fun. It is above the 50-day line, but this is looking more and more, Ed, like a failed breakout here.

14:55Yeah, and obviously the market's not doing very well. A lot of AI hardware stocks sold off, but memory's really gotten hit. And this was the area that was so strong. And it was a really good buy off the 50-day, 10-week line that you made. But now it's selling off. And it does seem like what happened is that Google is releasing and releasing widely. This news may have been out for a year, but I think Google is releasing widely some compression algorithm that supposedly will mean that you don't need nearly as much memory in AI. And so now that doesn't mean we'll see how that really plays out. Probably in the near term, you're not going to see any impact.

15:30But what's going to happen? Because the whole thesis is that memory is going to have like a multi-year amazing cycle, not like the boom bust for a year or two kind of thing. So if that changes, like, oh, wait a second, because this had a huge move just from the start of the year. I mean, this has basically tripled from the beginning of the year. Still, even with the big sell-off we've had, that's a big move. There's a lot that could come out of it. Again, so I think if it breaks down from here, like the 50-day, 10-week line, then people who bought in January, or even people longer, you have to say, well, where do I want to take some profits?

16:04You have to decide where I'm going to do that. This is always a tough thing. Where do you take a really big winner and say, I'm going to take some profits or where I'm going to hold on? Because if you want to go for those amazing runs, you have to hold on. But a lot of people say, well, I don't want that. I don't want that risk of amazing one. I want to take my big profit. I don't want to sit through a 30, 40, 50 percent correction, hoping that it bounces back. So, yeah, so it's just it's difficult. We're seeing this with all the memory plays. Sandisk is really at a critical level here, I think.

16:35Ed Carson:Mm-hmm. Yeah. Yeah. So one strategy is a decisive close below the 10-week line. Some of us view a decisive close as 2 % or more, but can take action intro week depending on how ugly things get. And I think today definitely qualified there. But if you do have a long-term huge gain on this, maybe, you know, you are scaling out with a little more patience, not taking no action, but you can do it a little bit more incrementally throughout the week. And maybe you don't blow out the entire position with that decisive close below the 10-week. Maybe you're down to half of your position. And then if it recovers that level the next week, then, you know, you still have a decent amount of your position.

17:28Ed Carson:There's a lot of different ways to handle a big winner, Ed, but that is one. We do know how important, though, that 10-week line is. So you definitely don't want to see, you know, ideally a couple weeks in a row below that level. You know, at minimum, the stock's forming a new base, but it could be the end of the move for a while if you do see that type of action happening. And again, this is with the backdrop currently of a weak market. Yeah, that does not help. That doesn't help. Okay, let's move on and take a look at another stock that was looking good till it's not looking good. And Ed, I guess you're picking all the names that I, you know, am not doing well with right now.

18:18Ed Carson:But VRT is down 8.6 % today. Also was actually was getting out of this one completely today. Just an expectation breaker with the recent action. I was buying this on that same reversal day. I'll let everyone know the date. 3.9. So after that failed move out of a shelf type, you know, ascending area with the decline closed below the 21 day, definitely a concerning signal. Yeah. And we'll see where it goes from here. I mean, look, this has been very strong. Its relative strength line is still, it was basically, it was a highs yesterday and today it's down, but this makes it tough. It was up, it was doing great in this market.

19:07And now it's down for the week. You know, it's like, and of course, the past couple of weeks have also been weak, but that's how the market's been too. I mean, so the relative strength line hasn't weakened. It's understandable what's going on. That just makes it so tough in this environment. You can have stocks that have the great fundamentals, that have the relative strength, that's doing that. It's making bullish moves, clearing levels that are flashing buy signals and they can make big gains. And yet in a few minutes, few hours, it can all be gone in this kind of environment. And there was a number of names.

19:37Like I was like, there was Powell that did something similar. There's comfort systems. These are all, and there's a bunch of others. There's a bunch that gave up most of their gains or all of their gains today, you know, from the last year, you know, just, and that, and if you bought on any kind of strength, you're probably down, you know, this week, if you bought this week and, you know, but it's, you know, karma, that was on earnings, but yeah, it broke out for a moment right before earnings and then, wow, it's just the environment. Stocks can look so good and then they don't. And that's the risk reward is just so out of your favor right now.

20:11And that's why I wanted to bring it up because like, oh, look at this, look at this. Just look at some of these names because you're going to see more buy signals. If the market goes up tomorrow, there's going to be something that's flashing a buy signal. But if you can't count on that going up and up and up, or if that's not the likelihood, you just have to be really careful. Right.

20:31Ed Carson:And I think that's exactly why the team has been emphasizing heavy cash positions, right? Our overall market exposure gauge right now is at that zero to 20 % level. And for individual buys, we've been talking about this a lot on IBD Live. If you do want to add some new positions, go small, make sure you're managing that risk. Use smaller position sizes. So it's definitely what I've been opting to do in this type of market. You know, know the type of market that you're in. Know the type of stocks that you're in as well. You know, even in a strong market, some of those high average true range stocks you want to scale down on.

21:14Ed Carson:Well, maybe scale down a little even more if you're in a rocky market. So that's what we're doing right now on the team. Yeah. Okay, let's go to EQIX Ed, Equinix, a steady Eddie name here. Yeah, I mean, it's a data center REIT. So it's a little bit of an interesting play that way. It's been doing well, it gapped up on earnings. And it's not, you know, it's going to be the funds from operations. And that's been doing pretty well. And it should be solid performer, it pays a 2 % dividend. I mean, most people aren't going into data centers to get a 2 % dividend, but it's holding the 21-day line. Relative strength line's hitting a new high.

22:00So, you know, I just want to be watching here. Again, you know, in a different market, if it were going above Wednesday's highs, I might be saying, yeah, go for it. You know, that seems like an early entry, short-term downtrend. I probably will not. I probably will not. I just don't. But I think these are the kind of stocks you want to be looking at. You need to cast a wide net. You know, it's great if it paused for a while because you can see there's some big, crazy moves in there. I mean, so let's be clear. It's very calm. It's relatively calm right now, but it can have some big swings around earnings or other things out there.

22:34But I just wanted to bring one up that was actually, because I was being all gloomy Gus and showing these stocks selling off. I mean, there are stocks that, and this still fell today, but it is showing some strength. And it's just one to be watching. You write your watch list in pencils, maybe when this markets turned around, this will be one that's still on that list and you want to, you know, you know, want it to consider. But just a solid, yeah, Steady Eddie type of name.

23:01Ed Carson:Yeah. And I think this is the time what we're doing as well is we're screening a lot of stocks. We're doing a lot of research. We're reading articles on investors.com, highlighting different setups, whether it's the columns that you write, Ed, or other team members as well. Well, and IABD Live, that's a great place, in addition to this show, to get a sense of the overall market, but how stocks are acting, how the leaders are acting, what kinds of stocks are setting up right now, different screening criteria for different market conditions. So I think that's the focus right now. Yeah. I mean, that's really what you should be doing.