S&P 500, Nasdaq Hit Highs As AI, Chips Run; Caterpillar, Viavi, Twilio Flash Buy Signals

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0:40Ed Carson:good afternoon everyone and welcome to stock market today it's alissa quorum here and we have a new trillion dollar company in micron as chip and ai names led the rally today with a nasdaq and s &p 500 again at new highs. Joining me now to break down the action from today's session is my colleague Ed Carson. Ed, what do you have for us today? Yeah, I'd like to take a look at Caterpillar, Viavi, and Trilio. Okay, let's take a look at those stocks. But first, a closer look at the major indexes. Some bullish action to discuss. The Nasdaq composite up 1.2 percent, but it wasn't the strongest index of the day, Ed, it looks like small caps led on the day with the Russell 2000 up a powerful 1.8%.

1:30Ed Carson:Meanwhile, the S &P 500 up six-tenths of a percent. The Dow was down on the day by about a quarter of a percent. So a tech-led rally here for the most part. Once again, a lot of notable movers, including a nearly 20 % gain from Micron, Ed. Yeah, we're not going to take a look at Micron, really, because it's so extended at this point. But yeah, a lot of strength in AI, chips, memory, and Micron weighs up there. It's now a not-so-dirty dozen of 12 companies with trillion-dollar market caps. Yeah, market looks really strong. Breath was strong. I mean, the Dow was down. It just seems like bad luck on what stocks are in there.

2:11We're going to look at the best one today. But it was just down, but it was after hitting a record high. So boo-hoo. You know, but the small caps hit a new high, S &P, NASDAQ, all the new highs, a lot of strength out there. I think one thing is that there was an opportunity to buy some stocks and there's still some stock to buy. But I think that the number is going to come down. I mean, you can't have a four or five day rally, especially with the amount that we've had off of short term levels in many cases and still have a lot of things and buying opportunities. But everything is sort of textbook.

2:48I mean, yes, there's various news reasons why, but there's a reasons, you know, three days down or something like that. And then boom, boom, boom. It doesn't often – textbook often doesn't happen. But this was really nice to see this. If you didn't do anything this whole time, you're happy. Even if you sold some, you're probably still pretty happy, you know, all in all, because things have – you know, your overall portfolio is doing really well. So it just continues to act well. Obviously, there's the tailwinds of lower oil prices and lower treasury yields. A lot to like about that. Crude oil, actually, honestly, if we had traded on Monday, then today oil would be up.

3:28So oil is higher than it was on Monday because Brent crude was traded both days, almost got back to 100, but still big drop from the last few days. And, you know, maybe a ran deal doesn't happen right away, but people feel like it's still going to happen. And there were some more super tankers that made it through the Strait of Hormuz. And it is what it is. And it's positive. That's a big tailwind. And that's really driving yields down as well. So, again, yields were really surging up. Again, in some ways, you could say the market held up remarkably well, given how much treasury yields rose. And oil rose.

4:05It was only those last few days that the market said, oh, it's just getting to be a little bit much here. but here we are at record highs and yields have given up yes some of their gains i mean a big chunk of that game but it's not you know over the last month or so it's still up a lot so the market just you know it's been a bit of a balloon looking very strong out there uh yeah just a lot of a lot of positive things about this market right now yeah a powerful power trend we

4:34Ed Carson:have that pullback the 21 day line the green line on our chart very key for the power trend on the major indexes and it's been a great guardrail so far. We haven't had a test yet down to that level. Like you said, that three-day pullback, we did come below the 10-day moving average. And then if you're also talking about a lot of the leading stocks, sort of the same thing, maybe they did come test the 21-day, but that was an area to bounce. And to your point, buying opportunities, right? Or an area to add to position. So almost like a blink and you miss kind of moment, Ed, because it was a very short digestion, as it turns out, before we got back to new highs.

5:18Ed Carson:But there was that chance. And we were talking about that. Yeah, and this is what you want to be engaged. Either way, if the market had sold off, there would have been more reason to start selling because things would have been breaking through the 21 days seriously. So when you get down to these levels, you really want to be paying attention either way. And in this case, It was like, no, we're going. Maybe you should think about buying. But yeah, this is why you need to be, you know, stay engaged. That doesn't mean every day be completely glued to the screen, but you should be paying attention and keeping track with your watch list.

5:48So are there things I want to buy? Tracking your portfolio? Are there things I want to sell on these things? And just be ready and prepared. Keep a cool head. And so then when things happen, it's like, okay, well, maybe I can act.

6:01Ed Carson:Absolutely. Okay. You mentioned breadth. So let's quickly compare QQQ and QQQE. So here's a look at the Qs. The NASDAQ 100 up 1.8 percent. So versus the NASDAQ composite, you can kind of see there where the strength is. And then QQQE, let's check out the equal weight, up 1.5 percent. Look at that action in the last couple of days, Ed. Yeah, so it barely went through the 10-day line, and this one really didn't give much of a chance. Once this got going, it got going fast. So outside of a few names, some of the mega caps, which have been okay. I mean, they haven't been terrible. Yeah, boy, the techs are really strong.

6:44Ed Carson:They really are. Okay, let's zoom in on tech even more. Let's take a look at the chips and that performance today up 4.5%. Ed, I think that this is a great example of exactly why we look at that relative strength. This sector right out of the gate in early April when we had the follow through day was leading. We knew it was a relentless run. It's continuing to be the leading area. Yeah. And it really didn't lag. I mean, you know, it did pretty well, even during that whole stretch of October to until April. I mean, the market really didn't do very well during that stretch, but chips, they just kept on moving.

7:22And so, yeah, the moment things were going, it was already at a high. And so they were showing really, this is why relative strength, it's good in bull markets, it's good in bear markets or in corrections, because you can see what's leading. And yeah, there was no hesitation. I'm sorry, I do own a position in this. Of course, this pales compared to DRAM. And if you want to get into the memory plays, I mean, those things, it's a brand new boy kind of thing. And boy, oh boy, that one's flying.

7:50Ed Carson:A dramatic move here. Very good. All right. And then Micron just briefly up 20 % new highs. So with the strength in chips, Ed, yeah, I mean, focusing on that relative strength, looking for some sort of pullback. I mean, clearly I already had a line marked here on the chart that support at the 21 day, even the next day, the bounce, right, could have been a potential opportunity versus waiting till today to act on something like this. I completely agree. Yeah. Okay. Well, let's also take a look at IGV, the software sector, continuing to see some improvement, though that declining 200-day still looms large.

8:40Ed Carson:is this is a situation where you want to look underneath the surface and see, okay, well, what are some of the winners that look in a little bit better of a position than this broader index or some of the larger names here that are still well off highs? Yeah, you want to see the whole sector do better, you know, for those leaders. But yeah, you really want to be focusing on the leaders. And a lot of important earnings reports, Some of them are leaders and some of them are laggards, but they're still important reports over the next seven, eight, seven, eight days.

9:37Ed Carson:agentic defense for the enterprise. Learn more at ReliaQuest.com. That's R-E-L-I-A-Q-U-E-S-T.com. Okay, we will watch for that. But let's take a look at that best performing or best looking Dow name of the day, and that is Caterpillar, the machinery giant, up 3.3%, clearing some recent highs after a pullback to its 21-day line. And so actionable today here in a bull market, we're using the 21-day as an opportunity to initiate positions. But this is also traditionally an area where you could add to an existing position. Maybe some folks were looking at that early April gap up as a place to initiate and then maybe today add to some shares.

10:31Yeah, there have been a few chances to maybe add shares along the way. Definitely today. On a weekly chart, it's still working, I think, on a four-weeks tight, unless I'm confusing the stocks.

10:41Ed Carson:Nope, you are right on the money. And so, I mean, that would be another place you could add to it. Or maybe this forms into a base, so it would need several weeks for that to happen. And, you know, I like the fact that it actually paused for a few days around the 21-day line because there are some – it can be a little trickier when the stock comes right back up, especially if it's an inside day. And it's just like, is that really decisive? It's just nice to get a little bit of separation from that drop. It's like trying to run back up a waterfall. I mean, you know, if you can climb up that, go ahead.

11:12But it just seems a little tougher odds. Yeah, so nice action here. The volume wasn't tremendous, but this has just been another one that, you know, it doesn't have an enormous ATR. And, you know, some of the crazy, you know, not crazy, some of the really big names like Micron, they're already gone. You know, so that's another thing. I mean, so it's harder to find those names. But this has been real strong. This is an AI play. The earnings are just turning around. It just finally picked up in this last quarter, like seeing real growth. And it's supposed to be strong, I think, for the next several quarters.

11:46So, again, as those generator sales and other things, it's hard to move the needle on this big company, even with a lot of generator sales. But this is coming up. So, yeah, a nice possibility for investors.

12:00Ed Carson:Yeah. And then the other reason that we like looking at moving averages to initiate or add is because it's a great place to manage risk, especially when you're seeing a lot of stocks flying all around. Well, what if it goes against you? You don't want to lose too much before you know you're wrong, where you're breaking below recent lows, breaking below a moving average. So buying off of a bounce is a good thing. Okay, let's move on and take a look at Ticker VIAV. This is VIAVI Solutions. Had a gap up on earnings a couple of weeks ago. And for an ATR of 8%, I would argue a relatively orderly pullback during that time.

12:48Ed Carson:Today's move, 8.6 % to break the downtrend. Yeah, and it actually had extra issues last week. I mean, there was a pullback to start the week, but it also had a share offering. So that combination, you know, put some pressure on it. But, you know, at the lows, it got close to the 10-week line. It didn't quite get there. But so that, you know, sort of nice sort of semi-test of the 10-week. It came off lows that day, came off lows for the week. So pretty bullish performance overall, even though it did fall for the week. So today came up nicely, breaking the trend line there, getting above the 21-day line.

13:28So there were definitely opportunities to get in there. Earnings are out of the way. There's always more. There's some other optical plays over the next several days. There's always more earnings. But that's also nice to have that out of the way. And so, yeah, this one, again, it's about as good of a spot as you're going to find in a market this strong. You know, that's just something. And I think you read a good point about the 21-day in a growth market. That's a place where you can take new positions as opposed to maybe less exciting markets. You know, that's more of an add-on point. I think that was a really good point.

14:00There's time and a place for aggression, and this is more of an aggressive time.

14:04Ed Carson:Yeah, well, when you're in a powerful power trend like we are, we're pulling out that playbook. Also want to point out the nice improvement in the fundamentals here, particularly the acceleration in the revenue growth. We've seen some quarters of triple-digit earnings, so you don't have too many quarters of acceleration on the bottom line, but still very strong double-digit growth. And the estimates for the next couple of quarters, to your point as well, on the stock we previously looked at, looking good here too. All right. Let's take a look at a name out of the software sector, and that is Twilio.

14:52Ed Carson:We had a powerful breakout about a month ago, taking a closer look at the daily chart. What do you know, Ed, an upside reversal at the 21 day? Yeah, upside reversal. It was an outside day. Yeah, I mean, it's a little close. Again, I would listen. I was just like Caterpillar and did this a few days later. And just, but, you know, I can't be too upset because this made such a powerful move, too. I mean, it's more where Caterpillar is a little bit more. That was a strong move. But this one was a huge move. And so it's like, well, where can I get into this name? Because I don't tend to buy gap ups.

15:27But then it's like I kept on going. It's like, where am I getting into this thing? I didn't get into this. But it was added to Swing Trader today. So is Viavi. Both of them added to Swing Trader. But yeah, nice action here, a place to get into it. This is one of the software leaders. Again, there's been this vibe shift with software, but especially certain ones like this one is doing well in part because if it's AI voice assistant, you know, for a while software names were getting hit because AI is going to destroy them all. And, you know, that thread is still out there. But certain names, AI is working for them right now.

15:59I mean, I'm not an AI expert. I don't know what's going to be there right now, but the market's telling us that Twilio is one of those that is an AI winner, not an AI loser. And that's just a fundamental shift that investors have to take note of. So I definitely think it's actionable here. I think you could probably wait also if it went above the 10-day line or if it paused. You didn't have to. It's not gone. I mean, I don't think it's gone yet by any means. It's not really that far above the 21-day line. But definitely one that you should be considering, especially if you have a lot of hardware, a lot of chips and a lot of things.

16:34I mean, this is still in the AI space. Don't get me wrong. But, you know, because it's been somewhat of a narrow in terms of leadership, in terms of stocks actually breaking out and making moves, you want to be looking for things that are a little bit different from what you might have already have.

16:50Ed Carson:Exactly. Exactly. And then maybe, you know, to your point, Ed, you want to wait for the 10-day or you want to wait for a trend line or a move above. We also like round numbers, right? So 200, maybe that's a trigger for some investors. Those also can be add-on areas if you did initiate today and you want to scale into this. Okay, we want to take a look at some after-hours movers. So let's go to Zscaler, also in the software sector, but not moving in the right direction. We've talked about a number of names in the cybersecurity group that were looking really compelling. Looks like Zscaler is not among that bunch, down 17 % after hours.

17:37Yeah, this is going to be more on the Z-grade as opposed to the A-grade stocks. It beat views. It just seemed to have mixed guidance. I mean, not horrible guidance, but maybe just a little light. So it's something to note. So, yeah, it's more about the other names like CrowdStrike and Palo Alto, which we'll report next week. And they're down a little bit. That's just something to note because we wanted to get a sign here. In some ways, it could be a positive. Maybe you form a handle or a shelf. I mean, so you can spin a positive tale how this works out for them, you know, provides a buying opportunity or at least a real aggressive one.

18:09But it's just something that, you know, these are all going to be looking at next week. Yeah.

18:14Ed Carson:And with the relative strength that we've been seeing in these names that you mentioned in the group, I think it'll also be a tell to see how they close tomorrow. You know, is this bad news? Are they going to get dragged down with it? Or, you know, are they just going to get see that minimal damage, like you said, and go on to form add-on entries? And then we also want to take a look at SMTC Semtech in the hot, hot chip sector. Already up, let's see here, 70 % from its cup breakout area in early April, up another 5 % after hours, Ed. Yeah, and a lot of these analog or mixed signal chip makers have really come on recently, and this is extended.

19:02Another name that's out is Matthew Modine, Modine Manufacturing, M-O-D. This one had a big news earlier in the day on some cooling sale. So it's down a little bit, but also had a huge move. I believe it beat views. So I didn't see any negatives out there. It just also, it already rose 13 % during the regular session. So a couple more AI hardware names that have been doing well.

19:35Ed Carson:Sure. Thank you so much for that update, Ed. That's it from us for today, everyone. Appreciate your thoughts, Ed. We'll be back tomorrow morning on IABD Live, investors.com slash IABD Live for all those details. So we'll see you there starting 10 minutes before the opening bell. And then we'll also see you right back here tomorrow after the close. Thank you.

20:29Ed Carson:unpacks the stories making news in Washington right now and how they may affect your finances and portfolio. Listen at schwab.com slash Washington Wise.