Oil Rebound Limits Stock Market Gains; ASML, Ensign Group, Constellium In Focus

0:00Ed Carson: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. So go build your dream team today with Indeed. Get a$75 Sponsored Job Credit at Indeed.com slash podcast. Terms and conditions apply.

0:38Ed Carson:Good afternoon, everyone, and welcome to Stock Market Today for Tuesday, March 17th. It's Alyssa Coram here. And green on the screen on the St. Patrick's Day, but the gains were muted with oil up again today. And joining me now to break down the market action and take a look at a couple of stocks for your radar is my colleague, Ed Carson. Ed, what do you have for us? Yeah, I'd like to take a look at ASML, Ensign Group, and Constellium. Okay, we'll take a look at those stocks. But first, we want to take a closer look at the major indexes, and we will kick things off with a look at the NASDAQ composite, up about a half a percent on the day.

1:19Ed Carson:Meanwhile, the S &P 500 was up just a quarter of a percent in today's session, hitting resistance at that 10-day moving average. The Dow up just one-tenth of a percent. The strongest of the major indexes was the Russell 2000 with small caps up eight-tenths of a percent on the day. And we have some levels that we're watching on the upside, on the downside for all of the major indexes here, Ed. Let's start with a look at the NASDAQ composite as I clear my drawings here. Tell me what you are seeing on this chart and how the action is looking. Yeah, a few things. Just like all the indexes are below their 21-day and 50-day lines.

2:03And it's pretty obvious that you can see the 21-day line being a resistance area over the last several weeks. I mean, with only one exception. We have bounced this week. I mean, the NASDAQ off, you know, from the 200-day line, we're getting a little bit of bounce. But it's hard to make momentum when oil is rising. It's also just, you know, we're still trending lower. I don't feel like we've really broken this downtrend from the last several weeks, let alone this or the sideways pattern over the last several months. So it's just hard to really feel like anything's changed. It's been two days. What does that mean?

2:35Doesn't that mean it's time for the market to fall? I mean, you know, if oil rises, it's hard to see how this market, especially this market, could keep rising. I'm not saying that, you know, it falls, falls, falls, but it just feels like we're still in that same trend. And, you know, until that trend changes, investors should be very cautious about things, even though they should be paying attention. But it's just that there's not necessarily a whole lot to be not, you know, it's not a great market to be getting aggressive in.

3:07Ed Carson:So in terms of what a positive catalyst could look like, Ed, we do have some other newsworthy events happening this week. Might that be something that could get us out of this logjam here, potentially? Yeah. I mean, micron earnings are tomorrow. We also have a Fed meeting. I sort of suspect that'll be a non-event because they're not going to cut rates. They've made it clear they're not going to cut rates for a while. and whatever they're thinking, it's all based on stuff going on with the Iran war. In two months, I think we all feel like something's going to be different, whether oil's at 150 or oil's at 50.

3:44Things are going to be different from what they are now. So even if the Fed has a plan, that plan probably won't stay. So there's that. But micron earnings, a lot of memory plays are surging. We'll look at a stock that might also benefit from micron earnings later on. But yeah, these memory plays are really hot. But we'll see. I mean, it's heading right into earnings. A lot of these names are looking really good, but that's a big catalyst. Again, but that's for one section. It still feels like oil prices. If oil prices make a meaningful rise higher, it's hard to see the market rallying. If oil falls a lot and stays low, it's, you know, it's easy to see the market at least getting back to certain levels, you know, back up to the 50 day line or so on.

4:26Yeah. Oil basically, you know, basically at highs. I mean, yeah, we're not at the highs of Friday, but we're basically there. So you could argue that, you know, in some ways the market has been resilient. The market hasn't lost that much ground in the past couple of weeks despite oil prices surging. Obviously, the U.S. produces a lot of oil. It's not like the 1970s where we were so exposed. So in some ways the market is holding up reasonably well given what oil prices are doing.

4:56Ed Carson:Mm-hmm. Okay. And then just to reiterate some of the levels that we are looking at on the NASDAQ, that 21-day line, which you mentioned, Ed, we're all very focused on that up above the NASDAQ from the current levels and then below us that 200-day, very important. where there is a little bit of a gray area perhaps, and I'm sure there will be more discussion on Wednesday's IBD Live, was the fact that we are in this rally attempt for the NASDAQ. And in Monday's session, we had a gain of more than 1%. So as we are on follow-through day watch, I think there are some folks out there who are not using volume who are looking at that gain of more than 1 % as perhaps a signal to dip a toe in the water, while maybe others out there are waiting for that volume to come in for an official by the book follow through day.

5:57Ed Carson:So we're keeping a close eye on that as well this week. Yeah. And I'm more in the latter camp, especially because again, this market's volatile. It's not hard to get a 1 % gain, honestly, here and there. We've had a lot of 1 % gains in this downtrend, I mean, over the last several weeks. So it doesn't feel like the market's really locking in on uptrend. Now, maybe this is the beginning. I mean, and maybe we could have a true powerful follow-through day, maybe Thursday after Micron earnings, maybe the S &P and Dow, they could have follow-through days on Thursday. So, you know, anything can happen.

6:32You have a big powerful day or a few days and all of a sudden, a lot of people who are like, oh, I'm not feeling good about it, they'll get more aggressive. But we're just not, there yet. This is day two of a rally temp, not super powerful. But again, I think you'd like to see it get at least above the 21-day line. And then you'd want to see further confirmation. Is this really breaking the downtrend or is this just a couple of good days in a bad to best mediocre market?

6:59Ed Carson:Right. Okay. Let's take a look at the 10-year treasury yield. Since we do have a Fed meeting this week, Ed, you know, even if it is sort of a nothing burger type meeting, a lot of eyes are going to be watching interest rates, which we've seen the 10-year treasury yield come up quite a bit recently. Yeah, it is interesting. A lot of, I mean, markets are just sort of reacting pretty strongly to what's going on in Iran. So a lot of this will depend here. I mean, it's hard to know how this will go. I'm not sure because you could see this spike be, there could be a lot of things going on because the dollar has been strong.

7:37You would have thought that would make the treasury yields fall, especially if you think that the economy, the oil is going to drive inflation, at least temporarily, but it also suppresses economic activity. So you can imagine a lot of different scenarios how this plays out if it lasts. If it doesn't last, maybe we just drift off again back toward 4%. And that would be another possible tailwind, along with obviously oil prices.

8:02Ed Carson:All right. We'll keep an eye on that. And then one more chart to look at before the three stocks we want to highlight, and that is SMH. You mentioned Micron earnings. We also have the NVIDIA GTC conference that is ongoing this week. What are you seeing with SMH, this chip sector ETF. Yeah, this is still holding up reasonably well. It's just below the 50-day line. And I think you'd want it to get over the 50-day line, but this is another, you know, we're going to look at stocks. There's a lot of individual chips that might move on Micron, but this is another way you potentially could play it, especially with some of those memory plays really extended.

8:41This could be a way, especially if Micron earnings, for whatever reason, it gets NVIDIA finally moving. You could really see SMH make a solid move here. So, yeah, this is holding up pretty well. It looks a lot better than most of the indexes or broad ETFs out there.

9:20Ed Carson:Matters where you stay. Book now at Hilton.com. Hilton for this day. And that's a great segue to take a look at ASML and the semiconductor equipment group here, Ed. The chart looks quite similar. It does look quite similar. And again, the memory plates are extended, but a lot of chip equipment makers, there's ASML, there's LAM Research, there's Applied Materials, KLA. they're all sort of a little bit over the 50 day line right now. They've pulled back, you know, but their memory exposed, a lot of their, a lot of chip equipment spending from memory players and those are companies are trying to expand.

10:02And so these have been moving in part with the whole memory push, not as strong, but these are all, you know, you could see a solid move off of micron earnings and you could definitely see a lot of these names be actionable here. And I think that's just something that people would want to wait on. because, you know, I could obviously, the report could be negative. They could say, I mean, presumably Micron earnings will be really strong, but will they be strong enough? Just like with NVIDIA. Everybody's so sure that there's this endless boom. How do you get more excited? Again, how does I say on like the Spinal Tap reference, how do you go to 11 when you've been going so high already?

10:42Again, I'm not saying that Micron could easily go on another run. I just sort of like that. But it's just something that investors have to keep in mind. It's going to be a strong report. It should be strong guidance, but at least, you know, I don't know all about my expectations. But, yeah, ASML, those chip equipment makers, they're picking back up. They've had a nice run. They're sort of pausing here. You know, it'd be nice to see their growth pick up a little more. This is not the growth rates we're seeing from Micron or SanDisk or even NVIDIA. So you'd like to see that pick up. But there is some solid growth here, and this has been a really, really strong group in individual stock as well.

11:20Ed Carson:Well said. And one more thing on Micron, because clearly that's a focus this week for many reasons, the impact of the stock. But it's been a winner in this market, Ed, that breakout around$120 or so last August, September around then. And now it's currently trading around$460. So what a move here. And even just in the last week or two, right, it's had this explosive move. It was up another four and a half percent today. And last week's gain was also quite strong as well. So it's running up heading into this report. Expectations are high. So yeah, I think we should definitely be on watch for all the movers in the chip sector.

12:09Ed Carson:And I think it's nice to see a lot of those stocks in uptrends, but around their moving averages. They're not extended headed into this report. So perhaps some ideal buying opportunities, but it all depends on the reaction, right? Absolutely. Okay, let's go to ticker ENSG. This is Insign Group, and this is in the medical sector. Speaking of earnings, we had a pretty explosive breakout here for this stock going back a couple of weeks ago, beginning of February, and some orderly action after that. The stock holding the gains after that breakout. Yeah, I can understand. And certainly I didn't jump on this.

12:54You know, big move. It's like, I wanted to see it pause. It didn't really pause. It just sort of kept going up. And sometimes that happens, but now it's taking that pause and now it's paused for several weeks and it's sort of maybe working on sort of a de facto flat base, you know, maybe another week in the 10 week line catches up there. So it's definitely just strong action here. The numbers, you know, pretty, pretty decent growth here. I mean, it's had the growth rates are supposed to slow later this year, but, you know, 20 percent or high teens, that's pretty good growth here. So, you know, it's just nice to see this name, you know, out there.

13:31Definitely one people can be playing in because not a lot of things are working. And some of those memories, like, and I don't think, say, I'll just load up on memory chips and I'll just, you know, this is a way to get diversified, but with something that may not have that huge volatility either. I mean, it's been trading pretty tightly, had that big explosive earnings. But other than that, this is one that doesn't have really big moves, or at least it hasn't. So I think that would be comforting, something that you could own that's showing relative strength, that has some decent fundamentals, but isn't going to be prone to major market or sector swings in that same regard.

14:11Ed Carson:Exactly. Totally agree. And this group is pretty strong, Ed, ranked number 21 out of the 197 groups that we track. So that's attractive as well. Absolutely. And let's round things out with a look at our stock of the day. Ed, you're always so great about including the stock of the day on the Stock Market Today video. So here's a look at ticker CSTM Constellium, a new one to me, but in the steel specialty alloys group. Really strong bottom line growth here, Ed. Yeah, really strong growth. and you know this does value-added aluminum products and so it's just it's been it's just been trading well and it's easier to see on a weekly three weeks tight yeah it's a little volatile but honestly it's a you're it's hard to find pristine bases you know in this kind of such in this environment the fact that it's holding tight ultimately uh it bounced off the 10-week line i think you know so it's got the three weeks tight i think you could buy it off of from the high from a couple of days ago, going back to a daily chart, because that would be sort of clearly above some short-term highs without being too extended from the 10-week, 21-day line there, or even just Friday's high, just getting above just a little something while not being too far extended.

15:31That would be a way that you could get in. Obviously, there was some volatility around earnings, but it's been trading very tightly since then. You could even treat, because we did pop to new high a couple of weeks after earnings, but it didn't get above the left-hand side. So it is sort of getting close to what that still can count as a flat base. It's not there, I think. I think it needs another week, but it's getting close to being a flat base with that being an entry as well, not just a three-weeks tight. Again, another one that's a little bit independent. I mean, some of the aerospace-y type plays have struggled, but this one is showing a lot of strength, accelerating growth.

16:07Yeah, just a lot to like.

16:09Ed Carson:All right. Sounds like a planet and earnings season, at least for now, has died down a bit, except for Micron. It seems like that's the biggest report. Are there any other earnings we should be thinking about this week? You know, Alibaba has earnings this week, but that one's fallen off and it'll be important to see how that one does. But Micron, it's one of the hottest stocks in the hottest sector. you know, as you say, it's, it's, uh, you want to, yeah, this is, this is one that you're really, this one, this one's on it right now. So, uh, yeah, this is, this is the big earnings report, uh, for, for the market.

16:46Ed Carson:Okay. We'll have to see what comes tomorrow. All right. Thank you, Ed. We appreciate it as always. Thank you, Ellie. And thanks everyone for tuning in. That's it from us for today, but we will be back soon for our next installment of Swing Trader Status Update. That's coming up at the top of the hour. So tune in for the show with Justin and Webby live on YouTube. Don't miss it at this key juncture in the market. It will be really interesting to hear what they have to say. And then we'll see you tomorrow morning on IEBDLiveInvestors.com slash IEBD live for all the details on that. Of course, we've got you covered tomorrow here after the close.

17:30Ed Carson:And then we've got our weekly podcast with Justin coming up as well tomorrow afternoon. So lots to, lots to discuss this week and we'll be with you every step of the way. Thanks for tuning in everyone. We'll see you back here tomorrow.

18:23Ed Carson:Transcription by CastingWords WSJ.com slash take on the week to subscribe now.