Stocks Mixed On China News, Powell. Walmart, Somnigroup, Astera Labs In Focus.

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0:41Good afternoon, everyone, and welcome to Stock Market Today for Tuesday, October 14th. My name is Ken Shreve, joined today by our news editor, Ed Carson. We had sort of a week open. NASDAQ was down 1.1 % during the first 20 minutes of session. It moved sharply off lows. And we had a tweet from President Trump late in the session that ultimately resulted in a distribution day for the NASDAQ. So, Ed, kind of a crazy day for the market, but you found three stocks to watch today. Yeah, three stocks, two that are doing well, Walmart and Somnigroup, which used to be Temper Seely, as well as Astera Labs.

1:22Astera Labs, very good. Okay, well, let's go ahead and find a chart of the NASDAQ composite here, and we'll get this show on the road. All right, here's a look at the NASDAQ composite again. It had made a really, really nice move off lows late in the session, but did end up with a loss of 0.8 % or so. You can see volume did pick up the pace from Tuesday. So that's a distribution day for the S &P 500. Take a look at the S &P 500. Selling not as intense in the bogey. It managed a loss of just over one-tenth of a percent. I believe the Dow actually closed positive. Dow Jones Industrial Average reversed higher after a nice test of the 50-day moving average, up about five-tenths of a percent.

2:18And small caps actually ended up having a nice day. This looks like an all-time high. Ed Russell 2000 up 1.4%, or at least pretty close to an all-time high here. Yeah, a lot of mixed action today, a lot of different things, cross-currents. A lot of sectors were doing pretty well. I don't know how they ended up, but a lot of them did well. We sort of had bad news on China at the beginning of the end. China did some more steps that just showed it was continuing to ratchet up things. And at the end of the day, President Trump suggested he might do some things in response to some of the things China's been doing, like about not buying soybeans.

2:58In between, there was a Fed chief, Powell, you know, didn't push back on and sort of reinforced rate cut expectations. He certainly didn't push back on the idea. And he said that maybe the Fed would stop letting its huge treasury holdings to run off. if you might. So that's sort of this quantitative tightening. So just ending that would be sort of a easing of financial conditions, even if, you know, it's not the kind of thing, not the headlines. It was just a strange day. Video was a real negative. There was definitely some mega cap weakness, you know, but it was hard to get your finger on it.

3:32And the major indexes are all right around their 21 day line. Yeah. NVIDIA, that was not a good close on NVIDIA. And there's news on that. Go ahead, Ken. It was not at all. I wanted to actually just to go back to the NASDAQ 100 just for a second. I want to just give some context for this price action on Wednesday. Ed, what do you think investors can expect when you get a really bad vertical drop? We did hold above the 50-day moving average Friday. But when you get a big vertical violation like this, it's not like we're expected to run off to new highs the next couple of days. How should investors interpret Friday's action?

4:10Yeah, I mean, and one thing is the market indexes, the Russell moved higher, but the other indexes and some of the ETFs we'll look at, they're still within Friday's range. They really haven't changed anything. So, yeah, one thing is when you're talking about geopolitics, you know, with one tweet, the market could surge. I mean, it could surge to new highs. There would probably be rumors ahead of time, blah, blah, blah. or it could go down just like that. So that makes it tricky, but that's always been the way. But we sort of got used to it. We got sort of, I don't know, complacent a little bit.

4:43Everything's going to work out fine. Absolutely. So it's just hard to know how things are going to go here. I think that it's not a good environment for buying new stocks. I think investors should be significantly to even heavily invest depending on their stocks. But when you have this kind of action, if you're buying on breakouts, I mean, we're going to look at a breakout or two that did pretty well. But it just goes up and down. It's hard to buy those things because there's such a good chance that you're whipsaw down. So it's just a different environment to really be active right now. It was a very, very quick sell off for the NASDAQ, too, when that Trump tweet came out late in the session.

5:22Did mention another impressive day for small caps. IWM had a sharp drop Friday through the 21 day line held above the 50 day moving average. but the Russell 2000 hit an all-time high today. Volume picked up the pace. It was light Monday because of the Columbus Day holiday, but Russell 2000 had an excellent day, and so did the Dow Jones Industrial Average. That actually came down, and it touched the 50-day line on Friday, and then it actually just breached it again today, but reversed impressively higher. So all in all, not too bad a day for the market. It was a little disconcerting to see the NASDAQ drop as much as it did late in the session.

6:07Again, it's going to be most likely a distribution day for the NASDAQ. That's going to raise the count up to six. But let's take a look at the equal-weighted RSP. This is the equal-weighted S &P 500 ETF. Friday had a bad break of the 50-day moving average, rebounded above the 50-day, but still maybe getting a little bit of resistance here, Ed. But nice recovery for RSP today. Yeah, and I don't think we got the finals, but the advantageous, decliners in general were like 2 to 1 in the NYSE. Pretty solid, maybe 3 to 2 or so on the NASDAQ. Yeah, I mean, all the major indexes and RSP are basically all around the 21-day line now.

6:46But at the same time, they're pretty close to testing or undercutting the 50-day line. You know, it would not take much to go to new highs. It would not take much to start breaking lower and looking really bad. Yeah, here's the QQEW, which stopped short of its 50-day line on Friday. It rallied Monday with the broad market. And again, nice rallied today, but closed off highs with the composite up about two-tenths of a percent. We've been talking about the outperformance of growth stocks. FFTY has been outperforming, really bullish relative strength line here. outperforming the broad market. And this is what a lot of individual stocks look like today.

7:3250 touched the 21-day moving average and then closed slightly lower, but up near session highs. Pretty resilient performance here too, Ed. Yeah. Also, we're seeing the more volatile growth and speculative growth doing quite well still. That is doing in general. Semiconductors as measured by the Vanek Semiconductor ETF SMH. That is still holding its 21-day line, not far from highs. Gold just continues to be a pillar of strength in this market. And people are wondering, what does it mean? We've seen gold normally a defensive trade, but seeing gold just continuing outperform here. GLD up another eight-tenths of a percent today.

8:22Financials kicked things off this morning. Not a great response to earnings from JP Morgan, but Wells Fargo did very well here. XLF trying to regain the 50-day moving average. JP Morgan, former leaderboard stock, we cut ties with this at the open when it broke sharply below its 50-day moving average. Decent closed for JP Morgan, but we decided to lock in a profit here and raise a little more cash. Wells Fargo, big gainer in the same industry group as JP Morgan. This money center up 7 % closed off highs, but a very, very strong technical move here as well. And then, Ed, you also wanted to take a look at XRT.

9:07This is the retail ETF consumer stocks, kind of a mixed bag, But XRT, nice gain today, up 1.6 % and trying to break out of a downtrend here, it looks like. Yeah, I just wanted to show that there was a lot of strength outside of certain areas. I mean, again, showing the breadth. Walmart obviously is going to be a big factor in that. Yeah, yeah. Well, why don't we go to Walmart now because that's the first stock we want to... This podcast is brought to you by ReliaQuest. Cybercriminals are constantly attacking. They want your data. They want your identity. They want your innovation. ReliaQuest fortifies your business with Agentic Defense, AI that detects, contains, and eliminates cyber threats in minutes.

9:46It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next. ReliaQuest, agentic defense for the enterprise. Learn more at ReliaQuest.com. That's R-E-L-I-A-Q-U-E-S-T dot com. Talk about this. It seems like a lot of stocks benefiting from open AI news lately. Lately, we had the news from Broadcom. I think it was yesterday, customized AI chips. I think Arm Holdings was up for at least a little while today on maybe some open AI business. And Walmart, I think, was open AI related as well. Yeah, they're going to be the latest company, retailer, that's going to use ChatGBT.

10:27Now people can buy directly through ChatGBT. So that opens that up. This rebounded from the 50-day line yesterday, 21-day line today. back above a buy point. This 106 also could have been used because it was a few days away from being a new flat base. And it's been going sideways, but the RS line, obviously, with the market being a little weaker, defensive growth, this is doing well. Markets don't seem concerned about China tariffs here for whatever reason right now for Walmart. But a lot of strength here today. And this was added to swing trader as well and our stock of the day. Yeah, and stock of the day.

11:07Yeah, good move. I think 106.11 is a legitimate entry here. You could also use 104.72, but after this pullback to the 50-day moving average, and the goal is to avoid chasing extended stocks, but Walmart is an example of a stock that's not extended yet, still holding in this blue shaded area in the 5 % buy zone from 104.72. But again, 106.11 looks like an alternate entry as well. Let's take a look at a new name here. S-G-I and Somni Group. Is that as in Insomnia, Somni Group International, SGI? What do you got here, Ed? Yeah, this is the former Tempur-Sealy, for those who are familiar with that.

11:54Okay, there we go. So this one rebounded from the 21-day line. It's sort of this week been rebounding from the 10-week line, cleared some short-term highs. You know, that might be a closing high. I haven't, I didn't check to see, but that was going to be, that might be an all-time closing high today. Looks like a good day, yep. Yeah, so, provided you could have been taking a position here today on this, I think. Just a nice action. It's been fine support 10-week line, but bouncing off this week. The growth isn't so great this year, but it's supposed to be picking up again next year. They digested.

12:30They've done some mergers, including buying Mattress Firm, which is when they did their name change earlier in the year. So if you scroll down, the private revenue is going to jump up if it hasn't already. And that's the reason why. So it's not like they suddenly, you know, that. But it's going to slow down again. But there's still expectations that this is going to bolster profit going forward, too. So this is a new company, and it's a combination of Tempur-Pedic. Tempur-Pedic bought Tempur-Sealy, and they became Tempur-Sealy. And then this year they bought Mattress Firm, and now it became Somni Group.

13:05So now it's just a big, big party with three companies all grouped together here in Somni Group. If you're going to the mattresses, I guess you're going to Somni Group. Exactly. Exactly. Well, when a stock consolidates after a breakout, as Somni Group did for the past five weeks or so, this is about as clean a flat base as you can ask for here. Very shallow pullback of 8 percent, tight orderly trading, and the stock still could be in the early stages of a breakout here. So Somni Group looks strong. What doesn't look very strong is ALAB. And Ed, I have not seen any headlines as to what is causing all of these heavy volume drops here.

13:49But gosh, it almost seems like somebody knows something. Who knows? But there's a lot of institutional selling in this stock, including today a 19 % dive in very heavy volume. Yeah, and I also want to mark is that while it wasn't nearly as dramatic, yesterday's fall to the 50-day line was notable because the market's rallying and this thing is falling to the 50-day line. I mean, this one could have easily, oh, if this rose 7 % yesterday, nobody would have blinked an eye. Okay, here we go. I think there's two pieces of news. One is that NVIDIA, by going into more, it's trying to do this proprietary networking kind of thing where it would all be sort of good stuff.

14:27The Ethernet switches. That's hitting the rest of networks. And that doesn't directly go at Astera, but it would sort of like, Astera is more in this multi-vendor system. And so that's hitting it. The other piece of news is that I believe Astera and Broadcom compete to a certain extent. Broadcom released some new products or is going to release some new products. So the combination there. And so this is one reason why Astera has these huge moves up and down. Because on the downside, you go, man, they're just going to get crushed by NVIDIA and Broadcom. And then when the momentum changes and you go, aha, no, there's this enormous market.

15:03Look at their growth. And their growth has been tremendous. Don't get me wrong. But you can see how very quickly the bullish to bearishness, it's not just their growth will slow. No, their market will go away. No, no, no. Their market will triple. I mean, you know, it's like so you can see how. But that's also why you have to be careful with stocks like this. You can get excited, but you don't want to get wrapped up into bull case. The bull case may be completely accurate long term for the business. I am not going to say that at all. But this stock has, regardless of the news, it's just this. It's broken through the 50-day.

15:35It really hadn't not seriously broken the 50-day line for a long time, not since April, not in that area. It's way below that. It's below everything. Even if there wasn't any news, you should probably – people who bought it 102, and let's be honest, you couldn't really buy it on the breakout until you got to like 110. It went up to 262. That's given up two-thirds or 60 % or so of the gain. I mean, at least you have to just preserve profits. This was a huge winner, and it's now a solid winner. But if you bought at 110, you need to be taking some serious action. That is just extremely ugly action after a great move.

16:15Here was the last breakout area. So, again, people who bought here and participated in this huge rally certainly got a sell signal today with this bad break of the 50-day moving average. I think another stock maybe down in sympathy would have to be Credo because this is another provider of connectivity solutions, at least similar to Alab. And this was a bad break as well. So, again, kind of fishing in the same pond here between Credo and Alab. Yeah, and that's just something you have to watch for. No doubt about it. All right. Well, that will do it for today. Ed, thanks so much for the additional color on the stock market.

17:03We appreciate it as usual. All right. Thanks, you, Ken. All right. Well, thanks very much for watching, folks. That's going to do it for today. I will be back here tomorrow with Ed for another Stock Market Today video. I'll also be hosting IBD Live tomorrow morning, starting just before 6.30 a.m. Pacific time. We go for about an hour and a half up until 8 a.m. Pacific time, talking about the market leading stocks, what investors should be doing at this juncture. So have a lot of good insight tomorrow morning. If you haven't checked out IBD Live, just go to investors.com slash IBD Live, and you can find more information.

17:47Hope you join us. Until then, we'll see you tomorrow after the close. Have a great afternoon, everybody. Take care.

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