Stocks Extend Pause; Apple, Google, Delta Air Lines In Focus

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0:38Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Wednesday, February 11th. My name is Ken Shreve. Well, interesting day for the stock market. Initially, a really strong reaction by the market to a better-than-expected January jobs report. We did give away early gains in the stock market today, but ended up being a kind of a calm day for the stock market. Small caps lagged for a good portion of the session, but the Russell 2000 did manage to close off lows. We'll get into all that in just a little bit, but let me bring in our news editor, Ed Carson, who, as usual, has got three stocks to watch.

1:23Ken Shreve:Good afternoon, Ed. Good afternoon, Ken. I want to take a look at Apple, Google, and Delta Airlines. Two large cap techs and airlines under some pressure today. So we'll take a look at Delta Airlines. But before we do all that, let me pull up a chart of the major stock indexes here. And we'll start by taking a look at the Russell 2000. You can see the Russell 2000. It was up close to 1 % intraday. We had the jobs report. We were looking for some much-needed good news. We've had a job market that has been softening, and we did get better than expected jobs data for January. Russell 2000 did come down and touch its short-term moving averages.

2:10Ken Shreve:It did close off lows. Settled for a loss of about a half a percent. And then the rest of the market, you know, NASDAQ composite here, it was volatile. It traded up almost up about nine-tenths of a percent. It traded near its low for the day, only ended with a loss of about two-tenths of a percent. Same with the S &P 500, not much movement there. That closed with a fractional gain. Looks like that's mostly unchanged, still near highs, just below that 7 ,000 level. And then the Dow Jones industrial average basically unchanged as well. So the major stock index is basically flat on the day, kind of swung back and forth.

2:59Ken Shreve:But the Dow basically flat slightly, just down about one-tenth of 1%. So we'll start with the NASDAQ. Ed still perched underneath its 50-day moving average. did get higher volume, but we're going to avoid a distribution day. We don't need any more distribution days on the NASDAQ. We've seen enough of them in recent days. Still an index under distribution. Obviously, kind of a bifurcated market here, seeing NYSE stocks doing very well. Had some decent earnings reports among some NASDAQ-listed companies today, but still stuck underneath the 50-day moving average here. Not too far off highs, but still probably the troubled index at this point.

3:44Ed Carson:Yeah, I mean, it shows we still have a divided market, and software was particularly weak today. I think chips were pretty strong overall. There was definitely some. So, I mean, the stronger part of techs were strong. So it wasn't as bad as you could expect. It was still sort of split, and that's just the way this market has been. And the NASDAQ has sort of been the laggard for a while. It's not just that it's gone sideways. The other indexes have hit new highs along the way. not at highs today, you can see the relative strength line has lagged basically since October. Not terribly, but yeah, so this is the weak part of the market.

4:20Ed Carson:And, you know, you just have to be aware of that. If you like fish in a particular pond and there's no fish there, maybe you go down the shore a little bit. I don't know. Yep.

4:31Ken Shreve:Yep. And here's the S &P 500. We say the S &P 500 just holding up near high, still holding above its 50-day moving average. And then, again, when you just look at that advanced decline line for the NYSE, you can see just at a nice strong uptrend here compared to its 10-day moving average. This is the advanced decline line for the NYSE. So take a picture of that. And then when you look at the advanced decline line for the NASDAQ composite, Well, it started to swing a little bit higher, but it really has just been on a downtrend for quite some time here. It's just really just a picture tells a thousand words here.

5:13Ken Shreve:And we've seen small caps outperforming here. Here's the Russell 2000 ETF up near highs. And then some of your broad-based indexes, the NYSE composite still hitting all-time highs. Look at that, up four days in a row. And then your mid-cap index, the Russell, excuse me, the mid-cap 400, that was down a little bit today, but still seeing broad-based strength underneath the market. We had breadth in the market today. At one point, the breadth on the NASDAQ was slightly more than 2 to 1 negative. That did improve as the day wore on. It ended less than 2 to 1 negative. Breadth was actually positive again on the New York Stock Exchange.

6:02Ken Shreve:You can see RSP actually was up two-tenths of a percent today. So that was good to see. What about this jobs report? Earlier today, the economy created 130 ,000 jobs, and that was almost double expectations, I think. And the unemployment rate unexpectedly fell. Well, that resulted in a little movement in that 10-year Treasury yield after a precipitous drop in recent days.

6:31Ed Carson:Yeah, I mean, so a lot of things. It was 172 ,000 private jobs. So that was good. Almost all those jobs, once again, were in the health care and leisure areas, which are lower paying. And also a lot of that's reflecting the aging population, honestly. But manufacturing jobs did tick up. Yeah, it was a strong report, but it's also the yields went up a little bit. The Fed rate cut odds, which were starting to come into April, those got pushed back more towards June. But again, we have so many reports, CTI on Friday, but we have so many monthly reports before April, let alone June. I don't think, again, the whole market was sort of sideways.

7:09Ed Carson:I mean, RSP has been outperforming. One thing on S &P is that it would not take much of a game. We almost hit our record highs today, but we almost hit the 50-day line. I mean, and it was a very tame day. It would be easy. I could imagine an upside or downside reversal where we hit new highs, undercut the 50-day or do one or the other. We're that close. So it really wouldn't take much for the S &P to make this market look a lot better, a lot worse with really honestly a modest move. So that just makes it difficult, you know, all around.

7:44Ken Shreve:Yeah, yeah. You mentioned semiconductor stocks. It's interesting to see the NASDAQ below its 50-day moving average, but to see the SMH, the VanEck semiconductor ETF, still really a picture of technical strength here. Recent support at the 50-day moving average. This is up near an all-time high. We had a nice earnings report in the CHIP Equipment Group today from a little-known name, Advanced Energy. Nice gap up for AEIS, and you can see this CHIP Equipment Group number four out of 197. It seems every time you see an earnings report in the CHIP Equipment Group, it's a really nice earnings report.

8:28Ken Shreve:So lots of good news in the semiconductor industry just does not seem to be spilling over into the NASDAQ. But, you know, but I don't know if there are any other big movers in the semiconductor group today.

8:44Ed Carson:I mean, there was Micron, which is in SMH, which was just moving. The memory names were up. I think there might have been a price target height, but there was LSCC. Yeah, LSCC had it. That was a strong earnings move and a lot of similar chart pattern to honestly, sort of a little consolidation. Yeah, so yeah, a lot of things. There's software that's still bad. And again, some of the mega caps that aren't doing great. And so, but yeah, chips are still strong. Some of the AI infrastructure is looking pretty good.

9:15Ken Shreve:Global foundries. Here was another one in the chip making group. Yeah, global foundries up 16%. So some nice earnings in the chip space. And I know in the chip equipment group tomorrow morning, NVMI, this is another strong performer. They're going to be coming out with earnings tomorrow morning. And then applied materials, a big bellwether in the chip equipment group, they're going to be coming out tomorrow night. More earnings in the chip space to keep an eye out for. We did see financials lag quite a bit today. This was the worst performing sector, XLF, down 1.5%. This is testing its 200-day moving average, XLF.

10:02Ken Shreve:What's going on with the financials?

10:03Ed Carson:Well, we had that same problem. We talked about Schwab yesterday, and Schwab continued to fall. Most of that AI disruption fears continued to hit a lot of those names. So Schwab knows. But I also saw like J.P. Morgan and Wells Fargo. They had sort of modest declines, and they had a little bit bigger drops falling through their 50-day lines this time. So a little bit more damage on that front. Now, maybe there was a little bit narrower yield spread. There might be other things going on, but obviously they have big wealth management arms. There's just so much disruption fear. Again, it just changes everything.

10:38Ed Carson:We sometimes talk about bullishly, oh, when companies guide way up on earnings, and then the market is racing to catch up. It's like, oh, I just didn't understand the story. But sometimes it can go the other way. If you fundamentally think, well, wow, maybe a lot of this stuff is going to go away. That really changes the valuations of a lot of these companies that have really been relying on wealth management for growth. So, I mean, we'll see what happens. But I think that's the big thing that's hitting the financials this week.

11:08Ken Shreve:Yeah, J.P. Morgan, Wells Fargo, Bank of America, all top holdings of XLF. They all reversed lower below their 50-day lines today. Finally, let's take a look at Jets because this did not have a good day today. Airline stocks broadly lower. We do know that Frontier Airlines, ULCC, had a bad earnings report. I assume this weighed on the airline stocks, jets down 3.3 percent, had been showing excellent relative strength, including a very strong move on Friday. But jets under a lot of pressure today.

11:45Ed Carson:Yeah, I don't know if that's sort of odd because a lot of the bigger carriers are international flights to premium. So it's sort of not what Frontier does. And we saw cruise lines down, too. So stuff that you wouldn't have expected. I mean, ULCC stands basically for ultra low cost carrier. Yeah. So I'm not sure what's going on. But that also shows you just how the nature of the market is, is that you have to be careful. Things may show some movement. But man, I mean, you know, be incremental. Don't get too concentrated. And some of these things will work and then you can hold on to them, you know, with the market ups and downs.

12:21Ed Carson:But others, you might have to cut pretty quickly. You know, this was if you bought the breakout, you're down 4%. You don't have to sell. on RCL, but, you know, it's just, it's just unfortunate because it was like, it was looking really, really good, you know, just, just a day ago.

12:38Ken Shreve:When you want your spring break to feel like, and your kid's pool day to feel like, and your hotel bed to feel like, and room service to feel like, because at Hilton, hospitality feels like,

12:57Ed Carson:Your cabana's ready. Would you like fresh towels?

13:00Ken Shreve:It matters where you stay. Book now at Hilton.com. Hilton, for this day. Yeah, yeah. So, yeah, airlines under some pressure, jets under pressure today. Let's start by taking a look at Delta Airlines. That was one stock you wanted to take a look at today. Mentioned broad-based weakness in the airline group, DAL. Here is another stock that on Friday made a very bullish move, arguably actionable when it crossed that recent high of 73.16, but fairly sizable drop today down 4%.

13:42Ed Carson:Yeah, and again, we don't know exactly the reason why, but sometimes you don't know why. I mean, I don't know why it surged that day on Friday. People don't ask that question sometimes on the way up. They ask that more on the way down. Yeah, so people who bought, it basically came right back to the early entry. So a small gain has been wiped out. Or if you bought, say, the short consolidation, you're down, say, 2 % or 3%. You know, the 50-day line would probably be something where it might be a place where if it would be like, you know, that you might want to exit the position. I mean, that would be one possible place.

14:17Ed Carson:and just have to see. It's just that's sort of the site. When we have these up and down, when we have markets that go up for a few days, fall for a few days, different sectors move this way, overall a sideways trend, it's just hard because when you buy on strength, well, how far away is weakness? I mean, you know, it's just tough. Now, if you bought the breakout from November, it worked out pretty well. I mean, you know, there might've been a little spot where it came down close to the buy point, but sometimes they work. and then sometimes they don't. We'll see what this one does.

14:50Ken Shreve:Yeah, buying right helps. And the initial breakout for Delta, like Ed said, was in November, went across this high of 62.91. And it did very well since then. Did come down and test the 50-day moving average. Did not retest this 62.91 entry. Hit that low of 64.47 here. So anyway, Delta, see if it can recover. It did hold above some of these moving averages today, so we'll see if it can recover. That is Delta Airlines. Next, let's take a look at Apple, which just let the market know it is still selling a lot of iPhones. Had a recent positive response to earnings. Here is a stock that was up nicely today and did give back some gains here, ended with a gain of 7 tenths of a percent.

15:47Ken Shreve:What are we looking at in Apple here, Ed?

15:50Ed Carson:Yeah, and I've said this before. I just sort of poo-pooed Apple. What kind of growth is that? I mean, it just isn't. Now we've had a few quarters of accelerating earnings growth. It isn't world-beating, but hey, it's been accelerating, and revenue growth was the best in a while. And so, yeah, it helps. over the last few months, it's sort of gone sideways. The valuation's come down a little bit. I'm sort of okay with this. I mean, obviously, it's nice to close strong, but a couple more days, and it could have a handle on this cut base. If that could develop, I think that would be nice, especially if the market is going sideways.

16:22Ed Carson:It's one thing to sort of pause and hem and haw when the market is surging. But hey, one good thing about sideways markets is that you can strong stocks where we may pause and form nice little entries. And if it doesn't, if it blows by last week's high, that to me is a legitimate early entry, but it'd just be nice to have a full-fledged base. And the volume wasn't picked up a little bit today. It was just showing some solid action. Quietly, this has become the best-looking Magnificent 7 stock, which isn't necessarily, which is a low bar now, but it's, to me, looks, it's the only one maybe above the 50-day line, I think, right now.

17:04Ed Carson:And so it's, you know, have to take notice. And this is also not really too in the AI space. So, you know, this is something you can play without being super concentrated in AI either.

17:17Ken Shreve:Yeah, no doubt. And this is a great example, like Ed was saying, a great example of what sequential acceleration looks like. This is earnings over the past four quarters, and it is accelerating on a sequential basis. So 8 % growth to 12 % growth to 13 % to 18%. And then this last quarter ended in December, that 16 % revenue acceleration from 8 % for the September quarter. That's why the market was so enthusiastic, just to see that sharp acceleration in revenue from 8 % growth in the September quarter. And then the weekly chart for Apple, just a longer-term perspective. You just see a nice cup base taking shape here.

18:06Ken Shreve:A bit of an awkward-looking pattern because it took several weeks for the left side to form here, and then they reported earnings, and then boom, just a couple of weeks to form the right side. But still, Apple is a breakout candidate as the stock is back up near all-time highs. All right, let's start by taking a look at a stock that is – Yeah, sure.

18:27Ed Carson:One more point was just that this is a much smaller base. See, the prior base was sort of like – it was hard. Maybe you could have bought it near the 40-week or something. But by the time it got to the buy point, it was making sort of – it made a big move. So, you know, sometimes if you have a sort of an awkward looking base and then another base forms next to it or just above, that can be, you know, a little lower risk, you know. And so this is very common to see this kind of thing. It's only 16 % deep after a 35 % deep base. I mean, the RS line over time isn't great. That is a downside, but maybe it is ready to make another move.

19:01Ken Shreve:Yep. Yep. No doubt. All right. Well, thank you for that. And let's conclude by taking a look at Google, a name that we have had in the leaderboard model portfolio for quite some time. We put Google in the portfolio all the way back in early August when it was first starting to break out. But let's take a look at Google here and see that it's just a little bit below its 50-day moving average. Stock was down 2.4 % today, but looks like it's ready to take a breather here after a breakout attempt. But not in big trouble here, but what do you see with Alphabet here?

19:50Ed Carson:Yeah, I think people who bought the breakout, they're getting to that area. They're like down 5%, 6%. Really, if they bought maybe the top of that sort of like high handle, they're down 8 % or so. So there's decisions there. People who bought earlier, you know, you don't – yeah, this has been – even though the volume has been high, it still feels somewhat – the price movement has been violent. I mean, the most violent thing was the earnings move, and it closed up and almost closed up for the day. Obviously, it's continued to trend lower. So again, longer-term holders, no problem. I do think it's notable.

20:24Ed Carson:It's clear that the hyperskills are spending so much in Google's announcement, how much they're spending. It's really hard to comprehend how much these names. So Google's holding up the best among these names. But if I just look at Amazon, that sold off. Microsoft, that sold off on their CapEx. And Microsoft didn't even raise things up too much. It's just pretty strong. Amazon raised it by a crazy amount. And Amazon, you know, it's a little bit not as moving at Microsoft. And I think it's notable that, and obviously Microsoft also has the whole software thing going on too. But boy, it was just coming up to an interesting area and then foomph.

21:07Ed Carson:And then Meta. Meta, which had such a strong reaction initially, well, you know, that didn't hold. That did not hold. It's not terribly below where it was before earnings, but it's back below the Tuner Day line. So it's just something there. The good news is that a lot of AI infrastructure names are getting a benefit because they're just spending so much money. We're seeing some of those chips. We're seeing some of those infrastructure plays, the energy plays. They're doing well. But it could be that these hyperscalers, they're really digging into the cash. or at least it's cash growth. That is, even for them, they're spending real money.

21:46Ed Carson:And still have to wait to see the payoff for all those.