Stocks Bide Time Ahead Of Earnings Crush: Exelixis; Dynatrace, Zeta Global In Focus

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0:42Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Wednesday, August 26. It's Alyssa Quorum along with Ken Shreve here. And a little bit of a quiet before the earnings storm. A lot of big movers late, which we will get to. Ken, what else are we going to be taking a look at today? Yeah, just kind of sitting in a tight range here for the indexes, Allie. But yeah, busy software earnings after the close. So I wanted to take a look at a couple of software stocks. Let's take a look at Dynatrace, DT, and also Zeta, Z-E-T-A, Zeta Cloud. And then had a nice discussion of some biotech stocks on IBD Live earlier today.

1:26So let's take a look at a profitable one, Exelixis, E-X-E-L.

1:32Ken Shreve:Yeah. And at the end, we will do a little bit of a lightning round with earnings movers out late. We'll chat CRM, CrowdStrike, Okta, and of course, NVIDIA. So all of that to get to, let's first take a look at the major indexes. Here's the NASDAQ composite down less than 0.1 % on the day. The S &P 500's decline on the day was even smaller, just a fractional decline by the end of the day. The blue chips down about 0.2%. Ken, they're also 2000 also with a mild decline down just 0.1 % here. But perhaps some of these earnings movers could potentially provide a catalyst in tomorrow's session as we have this pullback at a critical juncture.

2:27Yeah, listening to comments from Scott St. Clair and Webby earlier this week on IBD Live, looking at the NASDAQ composite here sitting right on top of the 50-day moving average and kind of clustering right around the short-term moving averages. It feels like it's kind of right in a spot where it could go either way. But, you know, seeing a nice aftermarket gain for, you know, CRM, Salesforce, making a nice move. So maybe we can get a little lift for tech stocks tomorrow. So but, you know, Nasdaq getting support here. It's just been kind of sitting, sitting here waiting to hear what NVIDIA is going to say after after the close.

3:10We usually have to wait a few minutes for NVIDIA to report here. But, you know, the NASDAQ, after a pullback off highs, is just getting some support here and just kind of biding time and listening to see if this AI growth story still has legs. But lots of technology stocks, especially in the software sector reporting after the close, should get a pretty good idea of which way the NASDAQ wants to go by tomorrow morning. And we'll see here. But it's just a fairly, fairly quiet day of trading today. But we'll see what tomorrow brings.

3:57Ken Shreve:Absolutely. And I really do think it is a critical juncture, especially for active traders at the index level here. If we get a bounce, that's almost one of the more ideal buying opportunities and setups that you can have for an index, an uptrend, a little bit of a pullback than a bounce. Right, Ken? But if we do see more deterioration below that 50-day moving average, that round number of 26 ,000, that would not be good for the tech trade, of course. The S &P 500 has been holding up quite a bit better, Ken. What's your read on this index? Yeah, I mean, listen, the thing the market has really going for it right now is a very, very mild distribution day count for both the S &P 500 and the NASDAQ.

4:45Right now, we only have just one or two distribution day for each indexes, two on the NASDAQ and two on the S &P 500. So very, very mild, very mild distribution day counts for both indexes. So you have the NASDAQ kind of sitting on its 50 day moving average, but the S &P 500 still very comfortably holding above the 50 day moving average, just testing the 21 day line right now and sitting just underneath the 10 day moving average. So S &P 500, you know, showing, you know, more relative strength at this point than the NASDAQ. Not a big surprise after the sell-off in chip stocks and a lot of the big market leaders to see the NASDAQ testing the 50-day more so than the S &P 500 at this time.

5:42So S &P just testing some short-term moving averages. But again, you know, really is not going to take much for the S &P 500 to get back on a nice uptrend here, just sitting just underneath its 10 day moving average here. So, you know, we'll see if that that can get some some lift tomorrow as well. And just, you know, going back to the Nasdaq, that that is just underneath its 10 day line as well. And even though it's sitting just above its 50-day line, that would not take much either for both of these indexes to start trending higher again. So we shall see.

6:17Ken Shreve:Yeah. We'll have potentially a lot going on tomorrow, either which way, either on the buy side or the sell side. So watching very closely there. Let's also take a look at blue chips. Ken, what's your assessment? Really the same situation as the S &P 500 here, still comfortably above the 50-day moving average and a little bit of a downside reversal in the Dow today, but really not too bad. I mean, the Dow Jones really has a nice tech flavor these days. You've got a lot of large cap technology stocks. CRM did not have a good day in the Dow today. It was down sharply ahead of earnings. I think it was down more than 2.5 % in the Dow today during the regular session, but it has turned things around in the after hours session.

7:14The guidance from CRM was not spectacular. It was a little bit above expectations, not by much, but the market is cheering the guidance so far. But not a great day for Salesforce in the Dow, but I think the Dow held up pretty well considering.

7:33Ken Shreve:It sure did. Since it was mentioned, I did just want to go ahead and bring up Salesforce since it is such a big earnings mover out after the bell. We have this recovery ongoing here, Ken, over the last couple of months after a lot of software names hit very hard. Right now, shares up over 11 % after hours. I'm also seeing headlines about an expansion of Salesforce's partnership with Anthropix. So investors apparently cheering that aspect as well. So could be good for the AI trade. Again, we still have NVIDIA that we are watching closely. But that was a look at the Dow, a little color there with the Salesforce earnings.

8:22A nice recovery for Salesforce, too, during the regular session because this stock was down most of the session. And I didn't even see the – it did recover to almost unchanged for the day. So this was obviously a late session rally for Salesforce to see it recover, mostly unchanged for the day because I was looking at it late in the day and it was still down pretty good. So, yeah, nice recovery. Yeah.

8:47Ken Shreve:And the IGV software ETF with a nice upside reversal at a key level. We looked at that this morning on IABD Live and that is popping after hours. So some potentially good news there for the software sector. And I do quickly want to take a look, Ken, at small caps. This is an uptrend that continues. Just a mild, orderly pullback here. Your thoughts on how small caps are performing, given all of the movement we've been seeing in yields lately? Yeah, I mean, the small caps are just really not much of a pullback off highs at all. I mean, this is a test of the 50-day moving average and really just underneath the 300 level here for IWM, yet just hardly a pullback off highs at all here.

9:43So testing the 50-day moving average, all of the short-term moving averages in the 50-day are pretty much all clustered together here. So small caps showing a lot of relative strength in the market here, holding near highs. This is technically a very strong index as well here. And I think this just looks great as well. So I think we're looking at a market here that is showing a lot of technical strength. And I mean, to see Salesforce really extending gains powerfully in the after hours session, this is encouraging for tomorrow. We'll have to take a look at the queues when we're wrapping up here and see how the queues are faring in after hours.

10:28Ken Shreve:Because I'm curious. So we'll just have to go there now. But we will go there then, too. Right now, up about 0.2%. Okay. And then we did take a look briefly here at SMH. Also, potentially could be on the move on NVIDIA earnings. We'll just have to see what direction that is. but in a weak position still, Ken. We're 17 % off the highs on this chip sector ETF and about 5 % below the 50-day. So some repair work needed. Of course, some in the group look better than others. So it seems like investors now, if they do want to play this space, they just need to be a little bit more discerning at the moment versus just the whole group catching fire and on the move like we did see in that April, May timeframe?

11:19Yeah, this is, you know, the technology sector overall is very, very tricky right now, because I think you have to look at the software sector in general as being sort of an area where you're seeing overall better action in general. Even in the semiconductor sector overall, it just has not been a great recovery. Yeah, there have been In some stocks, you might look at a name like MRVL that has been trading a little bit better, but still MRVL. You look, it's a good sign. It is back above its 50-day moving average, but this still looks to be the exception and not the rule. I mean, this is really one of the only stocks that I can look at in the chip sector and say, you know what?

12:04This one is still, you know, at least it's back above its moving averages. Most other former leaders, I mean, even a name like ALAB, A-L-A-B, this used to move in tandem with Marvell. These were the two big, big winners, but ALAB is just not even close to recovering like MRVL. So overall, chip stocks are really struggling. Even, you know, NVIDIA coming into earnings has not been, you know, certainly a pillar of strength. It did power back above its moving averages, came back down as kind of testing support here. So chips still look vulnerable here. Software, you know, looking a lot better, especially after Palantir's great earnings report.

12:50We looked at that upside reversal for IGV off of that short-term moving average today. So software looking better. Good news from Salesforce after the close today. And we're going to look at a couple of other software stocks in a bit. So things looking better in software at this point. I think chips are still a bit challenged here, but maybe NVIDIA is going to have some good news for us. We'll see.

13:16Ken Shreve:Yeah. Okay. Well, let's take a look at a couple of stocks, notable setups and movers from today. You said that you wanted to check out a couple of software names. So let's go there first. Here's Dynatrace, ticker DT, up 3 % on the day, outside day, upside reversal, forming the handle on a very large base here, Ken. We'll go to the weekly chart as well. Also, a three weeks tide and having a great week. So arguably actionable here. But what's your perspective? Yeah, this is just a software enterprise software stock that is basically cloud infrastructure management. You hear the term observability software with Dynastrace, but it's basically cloud infrastructure.

14:13They reported earnings not that long ago, just a few weeks ago. And just like how the stock has been holding gains after they reported earnings. If you go back to the daily chart, it had a really nice gap up on earnings. It kind of closed near its lows. Really powerful gap up. It was volatile after earnings, but it has come back here. This is a stock that's known for kind of volatile price swings. ATR is on the higher side. But this is a stock that's got outstanding fund sponsorship, and the fundamentals are outstanding as well here. So if the NASDAQ can get going here and stay on an uptrend, and again, with the outperformance that we're seeing in the software sector, I do look at Dynet Trace as one of the better quality enterprise software stocks.

15:11Relative strength at 79 isn't perfect, but the stock has been trending very well. I think the relative strength line poking into new high ground here is very bullish. And I think this one has a chance of breaking out if the NASDAQ can start powering higher here. So Dynatrace is on my list as a possible breakout candidate here after that positive response to earnings. So had a great close today, a little bit of volume. So we'll keep an eye just below that pivot point. But has been a longtime fundamental leader in the enterprise software group. And, you know, I think it's just a name to keep an eye on here after earnings.

15:58Ken Shreve:Sounds like a plan. Let's also take a look at Zeta, Z-E-T-A, any enterprise software group. This is a stock that broke out on earnings the other week. Saw a little bit of power coming out of that breakout and then an orderly pullback here. Ken, this hasn't even come down to touch that 21-day line. It's sitting nicely above the breakout area still. Yeah, and I'm watching to see if it is going to come down and touch the 21-day line because if it does, it's going to pull back into that buy zone. And so that would put it back into an alternate entry. Zeta, I just often think, I don't know why I want to say this is a China stock, but they're not a China stock.

16:43I believe they're based in New York. They basically just operate a marketing cloud platform. So it's kind of an advertising marketing type company. But I just like the way it's holding gains after the earnings breakout here. So really tight, tight action after the breakout. So we're going to watch and see if this is going to come down and actually touch and test that 21-day line. If it doesn't and just continues to trade tightly, we could just get an alternate entry here. And maybe it just kind of traverses and holds that 10-day line. And then you maybe get a little mini breakout over a trend line here.

17:21So either way, this is a fundamental leader as well in the enterprise software group. You just look at recent growth, especially over the past two quarters. So again, just a marketing sort of ad agency type of company here. You know, great, great move two weeks ago on earnings and holding gains quite well. I like that tight action over the past couple of weeks here. Relative strength line up near highs, trading very tightly and pretty good sponsorship as well. So still seeing a lot of good action in the enterprise software group. And again, in the technology space, I just think that software stocks are kind of saying, look at me right now.

18:04This is where the relative strength is in the market. I think semiconductor stocks in general are just a little too challenging right now, at least in terms of price and volume. And, you know, the real relative strength in the market just seems far and widespread in the software sector here. Mm-hmm.

18:25Ken Shreve:Okay. Yeah. Triple digit growth on the bottom line, the most recent quarter, quite compelling. And some of the forward-looking estimates also really interesting with earnings growth accelerating. So we'll have to dig into that. But let's take a look, Ken, at EXLS in the biotech space before we move on to some of those. Oh, did I give you the wrong ticker symbol? BXEL. Yes. That's what we want. Yes. So forming the right side of a base, trendline breakout brewing here. Tell me more. Yeah, I just like the way this base is setting up. And, you know, as a stock forms the right side of a base, it's good to see some accumulation here.

19:19Also, a really good shakeout as this stock came down and, you know, undercut that. I think it was the 50-50 level there. Yeah, it was just a nice shakeout here. So Excelexis, I was pronouncing this company's name for so long, there's an extra I in there. It's Excelexis. Excelexis, yeah. So anyway, this is a company whose main flagship drug treats kidney cancer, the rarest form of kidney cancer. They also have a pipeline looking into a drug to treat colorectal cancer. And they're also involved in neuroendocrine tumors. So very much an oncology-based company, but very profitable. And again, I think this has been a longtime leader in the biotech space.

20:19And I just like the base setting up here. So you've just kind of rebounded up near highs here. And it's at a point where it was down today. So maybe it's going to start to drift lower. It was a low volume decline today. So we have an eye on Excelexis here as a breakout stock. So maybe today this low volume decline is going to be the start of a little handle here. There's still just been a lot of money flow into biotechs. It's going to stop at some point and biotechs are going to stop leading the market and money will rotate into a new area. But I think biotechs are still leading and there's still just a lot of biotechs working out there.

21:01So Excelexis is setting up for a possible breakout try. And this rally over the past three weeks has been pretty impressive. So setting up for another possible breakout. If we could just switch to the weekly chart here and just take a look. This base is forming after a nice prior uptrend. Anytime a stock takes a breather and consolidates gains, We usually like to see it do it after a nice prior uptrend. And that is exactly what ExcelXIS is doing. Relative Strength Line is starting to get back closer to new highs. And, you know, just a great fundamental leader in the group. And name I've been following for a long, long time.

21:48So we'll see if it can muster another breakout try here.

21:53Ken Shreve:All right. Well, we have stocks that we want to take a look at moving in both directions on earnings. We already looked at CRM. Salesforce definitely a winner, Ken, out of the software sector now up 14%. Let's go to security software. CrowdStrike strikes again. Shares up over 11%. seeing headlines about here too, AI fueling demand. So this is the story, which is so interesting because it wasn't all that long ago that there were fears on Wall Street about software getting killed by AI. And now we're seeing this rotation back into the software sector and that really being a nice tailwind. So a huge move here for CrowdStrike brewing.

22:48Ken Shreve:Ken, Okta, also a big earnings winner at a security software. This one's up even more. Look at this, Ken, up 19%. This is encouraging and good news for technology investors. Both CrowdStrike and Okta, I would not call these kind of gentle pullbacks to the 50-day moving average. CrowdStrike came down and actually gave up support and rallied pre-earnings, but still below the 50-day line. But this is obviously going to, right now, looking to be a really nice gap up tomorrow. So it looks like it's trading at 210 right now. I don't know if that's going to gap up to an all-time high, but it's a - Not quite.

23:35Not quite, but very positive response to earnings. This one has long been viewed as one of the leaders in the group. And even during the chip sell-off and the fiber optic sell-off, it was the cybersecurity stocks that were kind of shining bright and one of the last groups left standing during the technology sell-off. So these names are still outperforming here. And here's that security software ETF that's making a good stand right at the 50-day moving average here.

24:08Ken Shreve:Exactly. Hack. There's a couple. There's Hack. There's CyberCIBR that we've looked at. And then the broader IGV, of course. And Ken, I think that this is interesting because you don't always have a setup like this at the thematic or sector level when you have some of these explosive individual names. So, you know, if traders want to be more aggressive, go after some of these earnings gaps. We've talked about strategies for how to handle earnings gaps if you want to be aggressive there. But I'm kind of compelled by the sector trade here, Ken, whether using the IGV or something like a hack or a cyber because the positioning of it looks so good.

24:57Ken Shreve:Yeah. The setups here. No, absolutely. It's quite compelling. And again, when you have that, just kind of the harsh selling that we've seen in semiconductors, because again, they were the big, big leaders in the market. and to see another area of technology where fundamentals are still quite strong in software, not only in enterprise software, but security software fundamentals are still quite strong there. I will say we did see quite a bit of selling in Rubrik yesterday, RBRK. That stock was down sharply yesterday. yesterday that the sell-off amounted basically to a test of the 21-day moving average yesterday came in higher volume.

25:48The stock did rebound today in lower volume. They're going to be reporting earnings in the security software group tomorrow. So a little bit of volatility in Rubrik, but this is another stock that's got pretty good fundamentals. So we're going to be listening to what Rubrik has to say. We had this on leaderboard not that long ago, got shaken out, but we're still watching it. Don't own it currently, but we'll see what they have to say tomorrow when they report earnings.

26:18Ken Shreve:Okay. I'm going to breeze through about six more reports and then we'll get your take on NVIDIA, but just really quickly looking at some of the reactions here. Pure storage in the computer hardware group looks like it's down about two percent right now on earnings hpq we also want to look at that one briefly down this in the same group as the one we just looked at this one's down about 11 let's go to nutanix ntnx this is in the enterprise software another big mover here in software up 11 to 12 percent let's go to viva medical software up eight percent some nice tight action after uh run above the 200 day we'll also take a look at ticker a agilent medical research firm seeing shares up about uh oh well was up about one percent now down a little less and 1 % urban outfitters after a nice move in the regular session up nine and a half percent now down a four percent or so so let's go to nvidia looks like it was a beat but we know how high expectations are here ken as of right now and of course we'll have the conference call we'll get color from management but as of right now nvidia down one and a half percent your thoughts yeah Yeah, so just a muted response so far.

27:49And I know there was expectations that the stock was going to move 5 % or 6 % on earnings, and sometimes there's a delayed reaction. So we'll see. It was kind of a pullback to the 50-day moving average and just sort of a muted response here. I don't know. they typically are going to beat on the bottom line and top line, and their guidance has typically been above estimates by a certain amount. So we'll just have to see what they're saying. And there's been, you know, so many moving parts to NVIDIA's reports and, you know, concerns about this, the circular financing and how they've become sort of a financer for, you know, all this AI financing and data center financing.

28:38And just, you know, they've just become such a dominant player in this whole AI infrastructure build out. So their conference call will be important. And their conference calls have been very, very similar in recent quarters. I think probably over the past three or four quarters, the stock has been down. the uh you know nvidia probably has finally grown into its evaluation a little bit for many quarters in a row it was kind of selling it at a you know a fairly cheap valuation you know but uh it's finally you know grown into its valuation a little bit so we'll we'll see kind of a muted response uh so far the stock has been lagging you know uh lagging its peers for sure the relative strength line has not been in good shape for a while.