Small Caps Jump Amid Cautious Tech Rally: Dell, Chime Financial, Cactus In Focus

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0:39Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Wednesday, September 2nd. It's Alyssa Coram along with Ken Streep here. And the right bounce at the right time? We'll see. We've got a lot to discuss today, including the broad market action and a couple of compelling names. One, Ken, that went on quite the roller coaster ride today. Yes, indeed. Had a great day for small caps today, Ali, and modest gains for the rest of the broad market and a great day for Dell. So, yeah, we'll talk about Dell and two other stocks on my radar today. One is a fintech called Chime Financial, which competes with Dave.

1:26And then another oil and gas name called Cactus, which trades under the ticker WHD. And a bunch of earnings reports after the close, seeing some mixed reports, but a nice report from Snowflake, it looks like. So lots to talk about.

1:43Ken Shreve:OK. OK. We'll check in on those after hours movers. First, a closer look at the major indexes. Here's the NASDAQ composite up a half a percent on the day. The S &P 500 had a similar gain on the day, up about a half a percent closing right around that 21-day line. Meanwhile, blue chips up about six-tenths of a percent. We're holding the 50-day line, trying to bounce. It does look like we closed roughly mid-range or so there. And then looking at small caps, the Russell 2000 leading the day for sure here up 1.2 % on the day. We'll check out the Treasury. So even though we're seeing some pressure from the bond market, small caps doing okay today after a notable couple of days of a slide, Ken.

2:36Yeah. I mean, this is I think this 10-year yield at 4.8. I think the 10-year yield hit 4.8%, highest since November 2023. So, yeah, we're getting up pretty lofty levels for that 10-year Treasury yield. Still a little bit unsure whether the Fed is going to raise interest rates in a couple of weeks at that September 16th meeting. But I think the market is leaning towards, yes, that we're going to get a quarter-point interest rate hike. But we'll see. Still a little bit on the fence there. We had the ADP private payrolls today came in weaker than expected. You know, not a huge market moving bit of news there, but, you know, something that the Fed is watching.

3:29And we're going to get a jobs report at the end of the week that they'll be paying attention to. So, yeah, I mean, it was kind of an interesting day for the market here, Ali. You know, we had a nice earnings report from Dell. That price action in Dell was very whipsawed. Topsy-turvy. Topsy-turvy. You know, we were on IBD Live, you know, with Webby this morning and talking about the, I mean, look at the open for the stock. You know, it kind of gapped up and then it just went down and trading all over the place. But it ended up being a really, really bullish close for Dell, no doubt about it. It just kind of strengthened throughout the day and ended up being a really, really bullish close.

4:14And I would look at the percentage gain on the day ended up being 15 percent higher. So what was interesting is that the NASDAQ 100 ended with a gain of what, 1.1 percent, 0.2 percent on the day. So even though Dell had a great day, it really didn't do much to lift the NASDAQ 100. It was a really bad day for software stocks. I saw some really ugly selling in the software sector after a really bad day yesterday. Chip stocks really didn't see a whole lot of action in the semiconductor sector. Chips were up, what, eight-tenths of a percent. Almost 1%. Almost 1%, but still kind of a weak technical picture for SMH.

5:03Had a nice day for NVIDIA today. That had a really nice day of outperformance. But just overall, you know, just outside of Dell and NVIDIA, not a whole lot of great action in the tech space. You know, the rest of the market outside of the Russell 2000, which did really well today, had a nice day of outperformance. You know, the Dow S &P 500 and Nasdaq ended with gains, what, right around about a half a half a percent or so. So not a bad day for the market, but just another kind of strange, strange day. I would have thought that was such a nice close for Dell might have lifted some other tech stocks a little more.

5:41But, you know, NASDAQ holding right above this 26 ,000 level, right at that, you know, 50-day moving average. So, you know, NASDAQ's really holding at a really strong level of support here. So as we head into the Labor Day, you know, weekend, was talking with my, you know, colleague Dave Chung here at the office. And we're thinking we're probably going to be kind of holding here right at 26 ,000. And as people come back from the Labor Day holiday next week and people return from vacation, we'll probably get a better idea of what the month of September is going to look like post-Labor Day. And volume is going to start to pick up in the market again.

6:27And we'll get an idea of what September is going to look like. But right now NASDAQ is holding that$26 ,000 level and, you know, not a bad day at all for the market here, even though I think technology stocks in general are still a little bit challenged here.

6:47Ken Shreve:Yeah, which makes a move like the one we saw from Dell today challenging to handle, right? Because, you know, do you buy the strength out of the gate? Well, then, you know, it looks like, all right, well, traders who did that, you know, may have gotten burned. But then look, it climbs all the way back up and closes near session highs. So it's just the kind of environment that is throwing active investors a lot of curveballs, Ken. Yeah, yeah. Well, I could see why plenty of investors may have been sitting on their hands and waiting until the final hour of trading and saying, well, I'm going to wait and just see how Dell is trading late in the day.

7:36and if buyers are going to come in and push this thing to session highs late in the day, maybe I'll start a really, really small position late in the day and see how it goes. And those that did that, maybe they're sitting on a little bit of a profit here because it had such a nice close. But is the stock going to follow through tomorrow? Well, that's going to be predicated on how a lot of these companies are going to react in after hours that are reporting earnings because we have a lot of tech earnings report after the close. And how is the NASDAQ going to open tomorrow? So there's some risk buying Dell late in the session, even though it did have a nice close.

8:17And again, Dell was really one of, outside of Dell and NVIDIA, there were really only two technology stocks that, you know, I mean, there were more than that, but it was really not a day of technology strength today. I mean, you know, we had, you know, NASDAQ and S &P 500. ended with modest gains today, but it was not a day of explosive technology strength. You know, it just wasn't.

8:41Ken Shreve:Yeah. Well, the NASDAQ holding the 50-day and the S &P holding the breakout area. So we want to see those levels continue to hold. Let's take a look at RSP. This is one measure of breadth that we'd like to see. We've had a four-day slide bringing us down to the 50-day line, A couple of closes below that shorter term, moving average of 21-day. We really like that level for active traders. So a little bit of a concern there. But we know how strong of a support level the 50-day or the 10-week can be. So to see that hold is a good thing, Ken. But what are your thoughts on what we're seeing from the RSP?

9:25Yeah, I mean, it was not a bad day of breath at all. It was running 2 to 1 positive on the NYSE for most of the day. I think by the close, it ended a little bit less than 2 to 1 on the NYSE and a little bit less than 2 to 1 positive on the NASDAQ as well. So you can see RSP up about, what, four tenths of a percent, five tenths of a percent. It was RSP pretty much in line with what the S &P 500 closed at today. And QQQE, I think, might have even, I think that was mostly in line with the NASDAQ 100, which I think closed up two-tenths of a percent. And QQQE was basically flat to slightly lower. So that is struggling.

10:14Maybe it closed just a little bit below the 50-day. And the Qs, again, they were up slightly today. So maybe QQQE lagged just a little bit today.

10:29Ken Shreve:Okay, moving on, a couple more ETF shout outs before we get to our stocks that we want to cover today. Here's a look at USO oil. You mentioned the breakout yesterday, so holding firm today. How is this going to continue to have an impact on not only the energy sector, but the broader market? Yeah, I mean, it's just like we were talking about this morning. It's just it's a pretty significant headwind when you have oil prices rising along with bond yields. I mean, that's just going to be a headwind no matter how you how you slice it for the for the market. we were looking at that 10-year Treasury yield.

11:10I mean, that was a pretty significant rally for several days in a row for zero TNX. And then after five up days in a row for that 10-year Treasury yield, and it was down a little bit today, and it really wasn't giving back any of those gains. And then it ticked a little bit higher today. So it's really being stubborn about giving back those gains. So the fact that the market was able to close higher today, I think, was a sign of strength in and of itself because bond yields were stubborn about not going down. They actually edged higher and oil prices, too, were up again today. So we'd like to see yields and oil prices start to back down here.

11:54So the bond market has been relentless selling going on in the bond market, so probably a little oversold at this point. So we'll probably see yields start to back off a little bit here after such a strong rally. Hopefully that will be good news for stocks here. So we'll see. And oil prices, they've been rallying sharply too. So maybe they'll start to back off a little bit here as well, especially as USO starts to approach that high of 142 from several weeks ago. So obviously it's kind of a good start to back off highs here as it approaches that 142 high. So maybe we'll get a little relief here in coming days.

12:36Ken Shreve:Yeah, we'll see. Good point there. Okay, one more to look at, and that is the financials finishing up. Eight-tenths up a percent on the day was up as much as 1.8%. Ken, there was a breakout today from Wells Fargo. So a strong move here from a big name in the group up 2.6%. Financials continuing to look pretty good. Yeah, we're still holding on to XLF in the leaderboard model portfolio. We actually cut ties with our regional banking ETF yesterday, KRE. We took remaining profits in that as it went through the 50-day moving average recently. We were in this when it initially broke out of that consolidation over the 71 area, maybe a little bit after that.

13:29But we took remaining profits yesterday, took a small gain. We're still in XLF. We were looking at Bank of America today. We're still looking at BAC as being a big leader in the money center group. That gave back some gains. But XLF is still looking good here. It was up 1.8 % today. It did give back a lot of that gain, but still seeing a lot of strength in the financial sector. So as tech stocks still look a little bit vulnerable here, seeing a lot of rotation going on. So financials are still showing a lot of strength here. So even though we lightened up on our regional banking exposure, still holding XLF.

14:15And we're close to increasing either XLF or maybe adding a B of A or a Wells Fargo, something like that. But we held off as it just kind of backed off highs here. But we're still keeping an eye on this area of the market to possibly increase exposure.

14:33Ken Shreve:This message is presented by KPMG Private. We bring together audit and assurance, tax and advisory services designed specifically for private companies. With experienced professionals, advanced technology, and the reach of a global network, we support progress at the pace your business demands. Okay. Moving on, let's check in. We already looked at Dell. Do we have anything else to say about Dell? Well, just in terms of the earnings report. Yeah, I mean, the earnings report was really a sight to behold. The top-line growth, it was just another quarter of tremendous growth. And, you know, the revenue guidance for fiscal 27 was about$25 billion above what they were expecting.

15:21So, you know, it was just a tremendous earnings report. And the AI server demand continues to be very, very strong. So, you know, just a great earnings report. And even though the stock stuttered at the open and there was kind of back and forth buying and selling, I think the market eventually rewarded Dell for how well it is executing in this booming AI infrastructure and hardware market that the company is doing very well. Okay.

15:55Ken Shreve:Well, next stop, 500. We'll see for the stock if this momentum can continue. And now let's go to CHYM. This is Chime Financial, up 5.5 % on the day. Talking about explosive moves on earnings, this one just did that a couple of weeks ago, Ken. Yeah, we're keeping an eye on this one for leaderboard. We have been watching Dave. Dave had a nice move today as well. But Dave had a negative reaction to earnings not that long ago. It gapped below the 50-day moving average. It's trying to rally back. Still below the 50-day line. Had a good day today. But Chime, we're kind of keeping a look at because it had actually a very positive reaction to earnings.

16:43And, you know, I talk about this a lot, Ali, when a stock, you know, jumps on earnings and then it's really stubborn about giving back gains. You see it's got a couple of ants, those little two dark spots there. Really, really strong volume. So it's a stock that's under accumulation. and holding very, very tight at the 10-day moving average. So this one is just showing it's still under accumulation here. And we put this on the leaderboard watch list because we think that it's a good chance it could give us an alternate entry here. So as long as it can hold above the 21-day moving average here, which we expect there's a pretty good chance it could do, we'll keep an eye out for a base to form here.

17:32So, again, this is a company that competes with Dave. So it's a fintech, a neobank. It's not an actual bank, but it's basically just it operates basically an app like Dave. So they offer free checking, free savings, basically digital mobile banking services. Even with direct deposit, you can access that money a couple days earlier. So they basically cater to maybe lower middle class, lower income people, Gen, Generation, Gen X, Gen Z. but it's really kind of a growing area in the market, these neobanks. So it's just an area that is growing well, and Dave and Chime are kind of like your two neobanks that are seeing great growth right now.

18:34So very positive response to earnings. Fund ownership is growing very well at Chime. So we could take a look at the weekly chart here and just take a look at that. Yeah, take a look at that perspective here. And we just really like to see that those those those those tight, tight weekly closes there on the on the weekly chart. So as long as it kind of trades sideways here after that big weekly earnings gain, maybe holds below that that recent high, you know, like the way it's trading here. So we're going to just keep an eye out with a stock that's under some pretty clear accumulation here. And fundamentals are outstanding and I like the way it looks.

19:18Ken Shreve:Yeah, I feel like this, you know, 35 area or so is going to be key for the stock. I love, you know, looking at the weekly chart here. Just shy of 35 is where it closed on its first week of trade, Ken. And then, of course, the high from the first week around 45. So I think 35 is going to be key on the way up as well as that 45. Let's see if it can get to new high ground, build a new base from there, too. But I like the tight weekly action for now that you pointed out. So that expansion with the relative strength looks notable. The volume that we're seeing coming in coupled with the outstanding fundamentals, one to watch.

20:08Showing some good potential. And again, Dave has got potential in this group as well. Just kind of going off of the fact is you had two companies that just reported earnings and they were just going with the fact that Chime is technically acting a little better at this point. And then when I look at the estimates for Chime for 2026 and 2027, you know, they lost money last year. But you look at the profit for 2026 and 2027, I mean, they are really going to be ramping up their annual earnings. So Chime is really in growth mode here. So we'll see.

20:56Ken Shreve:Yeah, maybe it'll be time for some Chime. Time for some Chime. Okay. Yeah. We'll accept that rhyme. You didn't pay me a dime for that. Okay. Moving on. Let's go to WHD. Can you tell I have a 12-month-old child that I entertain with rhymes? Here's a look at Cactus. WHD, nice-looking weekly chart. Let's take a closer look at the daily. And, of course, we know oil and gas. This has been one of the places to beacon outside day, upside reversal on the day for Cactus. Yeah, and it's not really easy finding stocks in the oil and gas sector that have really good-looking relative strength lines. It's just not easy.

21:45And Cactus, this kind of drew me to Cactus because it's got a pretty bullish relative strength line pointing up near highs. And Cactus is in the machinery and equipment group. They supply to oil and gas drillers. They basically do wellheads, pressure control equipment for oil and gas drillers, good fundamentals. You had a great earnings breakout here from a cup base. And again, the pullback to the 21-day moving average and then rallying off the 21-day line and kind of retesting highs again. So, you know, I don't think it's viable right here, but I just like the relative strength that the stock is showing here.

22:31So the recent five-day rally has come, you know, volume has picked up the pace here. So I'm just going to watch and see how the stock consolidates around the 21-day line here. I'd like it to spend some time below that recent high, below 74. Ideally, I'd just like to see it consolidate a little more below that recent high here. But it's a really, really strong stock with great fundamentals, accumulation distribution rating of B plus. But just like the way it's been trading since that strong earnings move. So technicals look very, very strong here. And again, relative strength line, one of the more bullish relative strength lines I've seen in a very big sector.

23:18This is in the machinery and equipment group. A lot of the drillers have been acting well. So again, seeing financials and a lot of energy stocks starting to outperform here as well. So machinery and equipment stocks acting well. I think Cactus is one of the better names in this group. So a name that we're watching as well.

23:43Ken Shreve:All right. Well, let's now take a look at the earnings movers. Ken, let's see where we want to start first. I know HPE is of interest given, you know, we just had the report from Dell. Here's HPE. Right now I'm seeing shares down about 1.4%. Yeah, kind of a muted response and tracked in the same, well, not tracked in the same industry group. It could be in the same industry group as Dell because they're kind of very, very similar business. Enterprise, IT, servers, storage. They really are a competitor with Dell. So we'll see how it trades here. Not much of a response so far coming down and really almost an identical looking price and volume chart to Dell coming down and testing the 50-day moving average.

24:43And, yeah, we'll see how the stock responds. But I don't know if the numbers have come out yet. I know that NetApp has reported and some others have, the numbers have come out for HPE.

24:59Ken Shreve:Well, no, I was looking at NetApp and that down move there. While you talk about this one, I can check in on HPE. Okay, HPE did report. So HPE is down just a little bit. Their revenue did beat, and it looks like they did raise their forecast as well. So HPE is just down a little bit. NetApp, on the other hand, is down. This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day. But what policy changes should investors be watching? Washington Wise is an original podcast from Charles Schwab that unpacks the stories making news in Washington right now and how they may affect your finances and portfolio.

25:49Ken Shreve:Listen at schwab.com slash WashingtonWise. Quite a bit. Nine percent or so. Yeah, down nine percent. This is in the same industry group as Dell. NetApp also competes with HPE and Dell servers, storage, IT enterprise. So this was a stock that tried to initially rallied with Dell. You can see it, but it actually tried to get back above its 10-day moving average and then reversed lower, down 1.3 % on the day, and obviously not having a good reaction to its earnings report here, trading down to 164. So this looks like it's going to be a gap below the 50-day moving average. So something in this earnings report the market is not liking at all.

26:42So this looks like an earnings sell-off for NetApp and a stock that actually did very well the last time it reported. Earnings had a very, very, very big gap up in price. Not this time, though. This is going to be a gap Gap below the 50-day line, it looks like.

26:58Ken Shreve:Yeah. All right. Well, let's take a look at Broadcom. Seeing shares down about 4.4%, another big chip bellwether. Negative response so far. Yeah. A chip designer like Marvell, this is a company that competes with MRVL in the chip design group. Tracked in the same industry group as NVIDIA as well. but Broadcom really competes more directly with MRVL. Not a great technical pattern at all headed into earnings, despite really, really strong growth prospects. I mean, you look at Broadcom, and they are on a very strong growth trajectory as well. But on a downtrend, headed into earnings with a very weak relative strength line.