Small Caps Race Higher After Breakout: Acuity Brands, ESLT, BX In Focus

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0:40Ken Shreve:good afternoon everyone and welcome to stock market today for wednesday august 13th it's alissa coram here and small caps rocking and rolling again today we're gonna check out the major indexes and joining me now to do just that and take a look at a couple of stocks is my colleague, Ken Shreve. Ken, what's on deck for today? Well, you mentioned the Russell 2000, another big percentage gain after a strong move yesterday. Blue chips also outperformed. Now's decking S &P 500 lagged. But let's take a look at a few stocks here. I want to take a look at Acuity Brands, AYI. Also in the Aerospace and Defense Group, we'll do Elbit Systems, ESLT, And then asset manager BlackRock, BX.

1:26Ken Shreve:Sounds like a plan, Ken. You know, BX is Blackstone, excuse me. Blackstone, BX. Good catch. All right. Sounds like a plan. We'll get to those stocks. But first, let's take a closer look at the major indexes. The Nasdaq today up a little more than one-tenth of a percent. The S &P 500 up three-tenths of a percent on the day, getting closer to 6 ,500. Meanwhile, the Dow up 1 % on the day. Some outperformance, as you mentioned there. But really, the big bright spot now. Two days in a row here. Very notable action in small caps with the Russell 2000 up another 2 % today, bringing the weekly gain so far to 5%.

2:13Ken Shreve:That definitely stands out, Ken. Yes. Well, there seems to be this growing consensus that there is going to be a rate cut in September. The odds have been kind of dancing around there, but they're well into the high 90s at this point. We had that reading on consumer prices earlier in the week where core prices on a year-over-year basis were slightly hotter than expected, but the rest of the data was mostly in line or even a little better than expected. So you have small caps outperforming on these on these rate cut hopes and, you know, beautiful move for the Russell 2000 yesterday and just a classic follow on breakout today.

2:53Yeah.

2:54Ken Shreve:And so I guess the question now is, will this rotation stick, right? Or are we going to see more participation, a little bit of a catch up game with the Russell, which is still well off highs, but no doubt really significant outperformance in recent days? Yeah, yeah, no doubt. It's been, you know, it's funny. The breadth in the market today was pretty strong. You know, that RSP, you know, nice test of that 50-day moving average. But sometimes you get these rotations and you think, okay, well, I'm going to follow the market and rotate into this area. And then it goes back to, you know, what was previously outperforming.

3:40So we didn't do a whole lot on leaderboard today. We increased one position slightly. But yeah, it was just kind of a tricky market. But RSP, very, very solid move today, up 1.4%. I mentioned the S &P 500 was maybe up three-tenths of a percent for the day. So we look at advancing and declining stocks. It was about almost three to one positive on the NYSE and about two and a half to one positive on the NASDAQ.

4:12Ken Shreve:Yeah, and impressive performance from that RSP equal weight ETF today. The S &P at highs, even though not quite as big of a move. Let's also take a look at the NASDAQ. It did finish in new high territory once again here and getting closer to 22 ,000. And what do you make of it, Ken? At one point during the session, we were at risk for a little downside reversal. Looks like we did recover. We were able to finish in positive territory for this bleeding tech-heavy index. Well, it looks like this is a stalling, another stalling session, something that we've seen a little bit on the NASDAQ over the past couple of weeks.

4:57It looks like that closes in the bottom half. We'll have to read the big picture later and see what happens there. But you had higher volume on the NASDAQ, not above average, but it was higher than the prior session. And that close in the bottom half of the range, the NASDAQ wasn't able to hold a bigger intraday gain. So we'll see if it's stalling or not. Right now, we just have one stalling day on the NASDAQ on 8.7. And maybe we can point out that stalling session recently, August 7th on the –

5:35Ken Shreve:August 7th. August 7th. There it goes. Yeah, right there. There you go. Yeah. So August 7th, that was another sort of stalling session where the NASDAQ gave back a big intraday gain, closed in the bottom half of its range, and volume picked up the pace. So, you know, stalling is a minor form of distribution. But this market is still looking pretty strong here. You know, NASDAQ is going to probably rendezvous with the 22 ,000 level, which is a round number that we'll watch, see if it gets some resistance there. But, yeah, a lot of money kind of rotating out of growth stocks today. I was surprised that FFTY, which is basically the IBD50 ETF, actually was flat on the day.

6:18So it actually showed some strength today. We had some stocks in the leaderboard model portfolio, some big winners in recent months that were down 3%, 4 % today. So a lot of growth stocks under pressure, but FFTY held up pretty well today.

6:35Ken Shreve:Yeah. And let's take a look at the 10-year yield with all of this rate cut talk, Ken. What are we seeing with the 10-year? Well, a little rally in recent days, but support looks pretty strong here, around 4.2%. So, yeah, that 10-year yield kind of moving on the Fed and, like I said, looking pretty likely that there's going to be a quarter point cut in September. Treasury Secretary Scott Bessent, I think it was yesterday, floated the idea of a 50 basis point cut. thinks that's what Jerome Powell and the FOMC should do. I doubt that market is not expecting that, but he's just kind of right in line with President Trump, who thinks rates should be a lot lower than where they are currently.

7:27Ken Shreve:Okay. And let's check out a couple of ETFs to give more color on what went down underneath the surface today. So speaking of rotation, One area where we saw a notable move is in the biotech space. So here's a look at IBB up 2.3 % today, Ken. Yeah, looking pretty good here. Almost looks actionable. You know, it's an ETF with a relative strength rating of 49. That tells you, you know, it hasn't done much over the past 12 months. Obviously, a nice rally off that low of 107.43. But, yeah, it just kind of popped over that recent high of 136.36 and, you know, looks actionable. So you had, you know, money definitely rotating into biotech stocks today.

8:16And then the building sector continues to do very well. It definitely saw money coming into the home builders just like it did yesterday. And again, this is just these interest rate sensitive groups. Lower rates tends to help business for the home builders. So nice move for XHB today as well.

8:39Ken Shreve:Yeah. And props to our very own Ed Carson, who pointed out the subtle signs of rotation here in builders last Friday on our Stock Market Today video. Before, it has become a little bit more obvious in recent sessions. Yeah. That's why that builder strength line can really come in handy. No doubt. Okay. And one more for you, Ken, and that's XLB, the materials, a strong day up 1.9%. Yeah, a little money rotating here as well. We mentioned the outperformance in the Dow. A big reason was Sherwin-Williams, which is a top-rated stock in the XLB ETF, SHW, is the ticker for Sherman-Williams. top-weighted holding of XLB, but also a member of the Dow.

9:28You can see Sherwood Williams also kind of in that building sector, not technically in the building sector, but certainly not seeing it for sure. Yeah, exactly. So up 3 % on the day. So definitely some money moving into certain areas of the market. The question is now, is it going to stick? So I think the rest of the week, Thursday and Friday will be quite important. So you see where this market is going to go. This podcast is brought to you by Federated Hermes. We put our investments through a ruthless vetting process because we don't like surprises and neither do our clients. Learn more at federatedhermes.com slash US.

10:10Investments are subject to risk and may lose value.

10:14Ken Shreve:Okay, next, let's check out those three stocks of note, starting with AYI. This is Acuity brand. So speaking of the building theme, this is right in there. Having a great week, up almost 7 % for the week. Yeah, mostly known for their lighting products for commercial residential markets. What I like about Acuity is that we do have a marked high here, 310.09, and that was a breakout over that entry. The stock came down, found support at its 21-day line. I look at the recent move as an alternate breakout. You really had an alternate handle entry here. So even though Acuity might look extended past that blue-shaded box based on that 310 pivot, But I don't think it's extended from that alternate handle entry right there.

11:10So still a name worth watching. The relative strength rating of 78 is a little bit below the threshold that we'd like to see. But again, if you want to try to capitalize on some building sector strength acuity, AYI still looks like it's in a buy zone here.

11:30Ken Shreve:Yeah, and we've seen some nice improvement to the fundamentals in recent quarters. In the most recent reporting period, seeing not only double-digit growth, but that 20 % plus growth on the top and bottom lines that we like to see. Absolutely. Yeah, fundamentals look pretty good. And again, there's been pretty good strength throughout. I know Ed talked about it last week, but yeah, some nice representation in this sector. And Acuity made a nice move today. And based on that alternate entry, still looks pretty strong here. Let's go to ESLT after earnings up 5.6%. Closed off highs, but what do you make of the action?

12:14Uh, it's, it's, it's interesting. It's interesting action because the stock recovered. It was down four days in a row. It looked like a really nice breakout from, uh, what we would call a nice tight flat base here for 76.04. It cleared that entry, but we didn't get any follow through. And then the stock just kind of came down, paid a visit to its 50 day moving average. And then they reported, uh, earnings. So, uh, the results were, were pretty good. Uh, bottom line up 55%. This is a company that does a lot of drone making. They kind of have a lot of tentacles in the aerospace and defense group, but they do a lot of drone making, like I said.

12:54So the question is, it held support on earnings. Is it going to be able to re-break out here over this 476-04 entry? So I think today's high is going to be important to watch. And as long as the stock holds above the 50-day moving average, this positive response to earnings means that this might still be worth watching here because it could try to make another run at that 500 level. So we'll keep an eye on it.

13:22Ken Shreve:Okay. And let's go to BX Blackstone in the financial sector making a turn here in a handle. So perhaps an early entry getting triggered this week. Yes, yes. Yes, and I did call them BlackRock earlier. So it is Blackstone that we're talking about. BX is the ticker. So this is an asset manager. Again, kind of a lukewarm, middling relative strength rating here, but pretty clear entry point here. This is a cup with handle base with a 180, 132 entry. And if you're seeing money and looking at areas that are getting new attention, sometimes Sometimes you can be a little forgiving with what looks like a weak or kind of lukewarm relative strength rating.

14:12The bottom line is if there is going to be a, you know, sort of a turnaround here in money moving into different areas, you want to pay attention to bases like this because it is setting up for a move over that 181.32 level. So another one that we're watching here, you saw the second quarter earnings that Blackstone reported. Really, really strong top line growth. You can see 26 % on the bottom line. And yep, there you go. And 33 % on the top line. So a little choppy in recent quarters, but still a compelling growth story here. And, you know, it's a cup with handle base. So we always like keeping an eye on these.

14:54Ken Shreve:That we do. Okay, before we go, let's check out Cisco. Let's see if there's any action here with earnings out after the close. Ken, it looks like the early reaction shares down about 4.7%. Your thoughts? Yeah, this is what makes this market tricky because it was a very clean breakout for Cisco last week. I think it was on Friday, and then the stock reversed lower on Monday. Couldn't hold on to gains today. So we'll see what the numbers look like here, but down more than almost 5 % in the aftermarket. We'll have to see, but this is a breakout that looked promising. I also wanted to give a shout out, Allie, to Bullish, that IPO.

15:42I meant to mention Bullish at the top of the show, but BLSH, you can see quite a volatile day of trading. But this was supposed to originally go off between 28 and 31 a share. Then they raised the price target again, 32 to 34. And then it priced last night at 37. And it ran all the way up over 100 during the first few minutes of trading. But boy, just a lot of selling here. So it was a strong open for bullish, not a great close. But it did price at 37. So it closed at 68, well above that, well above the pricing last night.

16:23Ken Shreve:And yet another example of why we like to wait at least a couple of days, if not a couple of weeks, to see if some sort of pattern can develop. Because you often see this, that initial excitement that fades. We could see a chart pattern form in the coming days or weeks, but only time will tell. Yeah, this is a company that operates the popular crypto website Coindesk, Coindesk.com. And it's basically a crypto exchange. So in a good industry, kind of a disappointing close. But like I said, priced at$37 and closed well above that pricing. So, but we love keeping an eye on recent new issues just to see if they can form, you know, IPO bases.

17:13So this is one to watch and we'll do a little more work on the fundamentals here and make sure it's a compelling growth story. But definitely, definitely one to keep an eye on. Absolutely.

17:24Ken Shreve:And just really quickly for a frame of reference, another recent IPO that debuted well above its initial offering price, Figma, F-I-G. So still early days here. So this is what can happen too. Even if you have a lot of excitement and a huge day one, you still could have some time for the dust to settle and a pattern to form. Yeah, I mean, this has followed a very similar route to bullish, a strong open, and now it's come under some pressure here. So trying to find a new home above 80, it was down 4 % today, but there were a lot of growth stocks down 2%, 3%, 4 % today. So we'll see if this one can round out a little IPO base, another good IPO to watch, especially when you see that top line growth alley at the bottom there.

18:20Company's really delivering some nice revenue growth in recent quarters. And we don't have estimates in for this year and next year, but looks like they're on the verge of profitability. But the top line growth is impressive, so we'll keep an eye on this one as well.

18:36Ken Shreve:All right. So some bonus tickers there for everyone. We always like that, Ken. Thank you so much. And thanks, everyone, for tuning in. That is it from us for today from this show. But we have our weekly Investing with IEBD podcast with host Justin Nielsen today at 5 p.m. Eastern live on our YouTube channel. This week's guest is John Bollinger of Bollinger Band fame. So looking forward to getting his take on the market and some tools to help you in your trading. Check that out live. You can also check out the recording later tonight at investors.com slash videos or listen wherever you get your podcasts.

19:18Ken Shreve:Thank you so much, everyone, for tuning in. And we'll see you back here tomorrow.

19:27Thank you.

19:57Ken Shreve:Learn more at MassMutual.com.