Stocks Fall Ahead Of Powell Speech; AppLovin, JPMorgan, Franco-Nevada In Focus

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0:25Good afternoon, everyone, and welcome to Stock Market Today for Thursday, August 21st. It's Alexis Garcia here. And after a wild Wednesday of market action, indexes slid lower today thanks to hotter-than-expected jobless claims and a Walmart earnings miss. and here with me to help break down all of the market action that you need to know about is our hotter than expected IBD News editor, Ed Carson. Let's get Ed on here. Ed, how's it going? Going all right. I want to take a look at AppLovin, JP Morgan, and Franco, Nevada. All right, we'll get to those stocks, but first let's check in on the major indexes.

1:06And Ed, S &P 500 down about three-tenths of a percent today, the Dow down about three-tenths of a percent. And the NASDAQ down also about three-tenths of a percent. Small caps leading the way here, the Russell up about one-tenth of a percent today. So let me start my screen share head, Ed, head, Ed, head. We can dive right into all the fun action here. So starting with the S &P 500, and that one's holding tight at the 21-day line. But tell us your thoughts here with the index action. Yeah, the S &P has fallen for several straight days. Most of the losses ultimately have been fairly modest. I mean, today's action, look, we didn't get to Wednesday's lows, but we're pretty close to the weekly lows at the same time.

1:53So depending on your perspective, there were some positives, some negatives. And honestly, does today matter when we're going to get Fed Chief Powell? I'll talk a little bit more about that. But it's like these little wiggles and waggles, probably not a whole lot if the market moves up or down a lot tomorrow. And let's wiggle on over then to the NASDAQ composite here, Ed. A similar action here. We saw that big sell-off Tuesday, tried to claw back on Wednesday, but down slightly here today below the 21-day line. Yeah, you'd like to get above the 21-day line on the other side. Wouldn't take much to get below the 50-day or especially the 10-week line.

2:33So, I mean, we're at a key juncture for the major indexes and a lot of leading stocks. Well, and we not only have PAL, but we also have NVIDIA earnings next week. There seems to be a lot of chatter about there being an AI bubble. So talk to me how you're kind of viewing things as of now and kind of maybe what you hope to see or what you're looking out for in terms of the market action. Yeah, I mean, that's part of the issue that, you know, if the market does really well or poorly tomorrow, there's still more going out there. I think a lot of what's been happening the last few days has been more to do about AI concerns.

3:08Maybe today has been a little bit of Powell cautiousness. But I mean, it feels like some of the stuff going on, the weakness, especially in the AI tech stocks, a lot of areas of the market, including areas that you might think would be might be hurt if you're worried about Powell, those have done better. So it does, that AI news is really important. So you're not going to get necessarily an all clear, you know, tomorrow or necessarily a horrible, it's all over kind of signal with Powell. So it just makes it a little difficult when you have these multiple, you know, news headlines ahead. And let's take a look at the Dow Jones really quickly.

3:44Again, this went down almost four tenths of a percent today, but trying to close in the upper half of that trading range. So thoughts here? Yeah, I mean, pretty good here. It's really close to all-time highs. Walmart was a drag on the Dow. I mean, it's not the biggest component, but, you know, it's still, that was a notable drop. So the fact that it held up reasonably well, you know, you're not really that upset about the Dow. All right. And then let's just quickly check on small caps, because that seems to be where the market is rotating to right now, up about three-tenths of a percent today.

4:19Looks like it's right at this pivot point here, Ed. So what are your thoughts here with small caps? Yeah, I mean, it always seems like if anybody holding their breath for small caps to really lead probably isn't around anymore. It's been so long, but it does look, this is a key air layer. You could see just a little more strength. It would look really interesting. It's right around six month highs. I don't know if it can go on a sustained run. We've been waiting forever for that. But definitely, because you see that RS line, it's just been going down, down, down, down, down, basically, you know, with very brief exceptions.

4:54But definitely, definitely just encouraging to see that and seeing some underlying strength in the market as well. Let's check in on market breadth. Let's start with RSP. That's the S &P 500 equal weighted ETF. That went down about four tenths of a percent today. Looks like it's testing that 10 day simple moving average, Ed. But what is this really telling you about the market right now? Yeah, this looks a lot stronger than the S &P, especially the NASDAQ. I mean, it's just like we're seeing, again, the weakness in the market has been in some of these AI stocks or growth stocks. Some of those have bounced back, but they're generally still down a fair amount for the week.

5:31So this is still holding up. And again, Walmart is going to weigh in on something like RRSP more so than with S &P, where you've got these giant mega caps that have, you know, but still holding up really near highs. And let's just check in on QQEW real quickly. That's the NASDAQ 100 equal weighted index. Again, this went down about five tenths of percent today, broke below that 50-day line on the 19th and is still down there. But what are your thoughts here? Yeah, that shows you there's some tech weakness. It's interesting because it seems like a lot of the growth leaders above the 50-day line, the mega caps are generally doing better.

6:08So it's not exactly clear why this has been so weak. But it does show you that there's some issues, software and some other areas that are just not doing as well. We'll talk about software in a minute here, Ed. But let's just take a quick peek at the 10-year Treasury yield. That up today, about eight-tenths of a percent. And again, we're all waiting for Powell to speak tomorrow. But what is this telling you? Yeah, I mean, it's bouncing the last couple of weeks, but it's still sort of in a downtrend where it's the last month, last couple of months, last several months. I mean, depending on you, like, so we really haven't broken that kind of trend.

6:44I mean, mortgage rates are still much lower than they were back in January. Look, Fed Chief Powell is going to speak tomorrow. He might give some hints saying, well, maybe the labor market data is a little weaker, because it was. I mean, after the last Fed meeting, we got that negative report and big revisions. He might still want to hedge his bets and say we're still data dependent. We have a lot of economic reports. And he's right. There's a lot of economic reports coming out before the Fed meeting. So he may not give that all clear. And so will the market, you know, accept that? Because he may not want to give a definitive step.

7:15The one issue for the market is beyond AI is the fact that the odds of a rate cut have gone from a virtual lock to under 75 percent. Still likely and maybe even tentative hints will be enough to make people feel comfortable about that. So it'll be interesting. But ultimately for investors, it's the market reaction. Whatever Powell says, you know, you could probably, you know, some pundit could spin positive or negative about that. But it's ultimately the market. Right. Well, let's take a look at some sector indexes here, Ed. And I know this wasn't on your list, but you did mention software. So let's look at IGV really quickly.

7:53And again, we can just see this one getting hit the last few days. So how is that playing into, again, the tech underperformance that we're seeing and some of the rotation in the market? Yeah, I mean, software's been really hard hit. And that was somewhat propped up by things like Palantir and Oracle. And they're off their lows, but they haven't had a good couple of weeks. And so that's part of it. So IGV was propped up. But there's been some weakness in software for quite a while beyond what IGV is showing. Just a lot of stocks that were selling off before, you know, while Palantir and Oracle were still hitting new highs.

8:30So that's just a concern. There's various things out there, you know, in the tech space. Again, that's just maybe a little rotation. Maybe they're taking a break. It's just something investors have to be aware of. Still some software names doing well, and we're going to look at one of them, or at least one that may be doing well, but it's not great. All right. Let's look at the FFTY. That's the IBD50 ETF. This went up about 1 % today. Again, rebounding off of this 50-day line, Ed. So what is this telling you about how growth stocks are faring in the market? I mean, this is just so tough. And it's like, look, it's great that it bounced Wednesday and then it continued on today.

9:07Obviously, tomorrow will make a huge impact. I mean, if we surge 5 % or fall 5 % tomorrow, that's going to be a much bigger deal for FFTY. It's just tricky for buying something like that. You can see how it is if you bought near the lows or even if you bought at the 50-day line. Well, so far you're up, but you just don't know with these kind of things. It's hard to bounce off where's the right time. If you're going to be really trying to buy one of these things, you have to be really ready. What is your exit strategy? How am I going to avoid not getting hurt if this trade doesn't work? Because sometimes they will not work.

9:41Yeah, and let's take a look at a gold ETF. That's GLD. That's the Spider Gold Shares ETF. This one down about three-tenths of a percent today, looking like it's trying to hang tight here at all these conjoining moving averages with the 50 and 21-day line. But talk to me what's going on about gold, because it seems like, you know, with all the Powell expectations, gold can move up, but it can also move down very quickly. It could, and it could be a big move tomorrow. And I don't know. It really depends on how interest rates and the dollar react to Powell. So it is interesting because definitely some gold names, including one we'll look at, have been acting well.

10:20But gold is just itself has been sort of going sideways for some time. Again, maybe this is the time when it'll go up. But yeah, this is just sort of marking time. And I think some of the tariff uncertainty is out of the way. So the dollar seems to be it just feels a little more certainty. It doesn't have to be necessarily great news that we're getting. It's just that at least we have some idea what the news is and what the news will be. Makes it a little easier to trade. So I think that's taken a little bit away from the gold trade. 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.

10:56Learn more at federatedhermes.com slash US. Investments are subject to risk and may lose value. All right. Well, Ed, let's hop on over to some individual stocks then. Starting with App 11 and this one up about 1.5 % today. A nice move above the 21-day line here. We saw this breakout back on August 7th. Pulled back. But what are you liking here? What are your thoughts here on this chart? There's a few things here. One is that knowledge, it rebounded from what was sort of the early entry. You know, undercut. There was that short, like, four days or so that it broke above when it had earnings. And that was when you could have done an early entry.

11:38That was the best place to get it. But even so, it round-tripped a pretty decent gain. So that was tough. So I completely understand if people sold out. Certainly people who bought the buy point certainly would have wanted to have been lightening up just because it was becoming a significant loss. Now, maybe it did quickly rebound, so maybe you held on to some of it. Now, today, it got above the buy point again, and it even sort of broke a trend line. You could treat the last several days as either a high, as sort of a handle to this whole consolidation going back to, say, February if you wanted to.

12:11So I do think, I mean, it would be actionable if it got above today's high again. I think, you know, it was nice. It's just difficult here because it did move. It was like, oh, here we go, here we go. And then it backed off. So anybody buying it at the old buy point, and that was a perfectly legitimate move. It looks, here we go, here we go. Well, they're down 2%. That's fine. That's fine. That's not bad. I mean, it's just something to watch out for. You just have to know, where am I going to step out? Am I going to step out at Thursday's low or am I going to step out all the way down to 400, say, which is sort of where the early entry, I'm not sure if I'd want to go all the way to Wednesday's low if you bought near the top today.

12:44But I mean, there's just find where your action should be and it doesn't have to be all or nothing, but your scale out as well. And it's just, there were definitely stocks like this with names that, you know, yes, if it all works out, you'll look great. If it doesn't, we'll make sure that you don't have the losses that are that are high. All right, Ed, well, let's take a look at J.P. Morgan. This one down about three-tenths of a percent today at that 21-day line. So talk to me here about J.P. Morgan and how financials are doing. A lot of financials are doing well. Some insurers are picking up today.

13:16Some of these banks have been trading pretty tightly. The 50-day line's caught up. If you go to a weekly, I'm pretty sure this is a three-weeks tight or a four-weeks tight. So, you know, if it popped off of here, like of these levels, you know, I think that would be actionable on Powell, say, because, you know, earnings are out of the way, you know, that Powell and the NVIDIA earnings are less important for something like JP Morgan. So this would be really, you know, that could be actionable. Well, obviously, if people own it and the stock sells off decisively below the 10-week line, then people who bought it certainly recently, maybe at the prior buy point, may have wanted, maybe want to scale out or at least pair the position if it's a real decisive move.

13:56But yeah, this is something I think that people who are looking at things like, you know, there's definitely been the last couple of weeks have shown. I mean, look, there's been people who bought a lot of AI stocks in April and May were really had a lot of great gains. It's just that one of the downsides is when a sector all falls together, you can really feel the pain. There are some other sectors, growth, I mean, defensive growth and defensive sectors. This is sort of defensive growth that investors should at least be considering right now. Right. Well, let's wrap up with a look at Franco, Nevada.

14:28That's the gold play you mentioned. This went up almost 2 % today, peaking above this cup by 0.179.99. thoughts here Ed on the chart yeah I mean this was actual today it paused sort of nicely sort of formed something like essentially a handle even though it peaked above doll high so that's why it's not showing up as a handle it is interesting again like a lot of gold plays are just running up even when gold has gone sideways I mean it's not really when you look at from where it was three months ago I mean it's sort of sideways I mean in some way you could argue well it's not really going crazy outperforming gold but just lately there's been gold miners have come up after coming down.

15:10The risk here is that, you know, if you didn't buy it yet, I mean, you probably want to wait until after Powell gets in, you know, the market really figures things out because this could have a big swing. And then sometimes you might miss it. It might end up surging four or 5%. And you might decide, well, now I can't buy it. Well, that happens sometimes, but it's better than buying it and then seeing it, you know, the stock come down for generally when you have some kind of news like that. All right, Ed. Well, as always, thank you so much for your insights today. We'll be back with more market analysis starting tomorrow morning with IBD Live.

15:45You can head on over to investors.com slash IBD Live for all the details there. We have Leif Sereda joining the team tomorrow as our special guest. So you won't want to miss that. And Justin Nielsen and Mike Webster will be here tomorrow after the closing bell to give their special extended version of Stock Market Today. So be sure to tune in. And thank you so much for watching. We'll see you next time.

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