Stocks Rally On Hot Micron, Cool Inflation; Reddit, AppLovin, Eli Lilly In Focus

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0:25Good afternoon, everyone, and welcome to Stock Market Today for Thursday, December 18th. It's Alexis Garcia here. And the major indexes rallied today as Wall Street cheered on hot micron earnings and cooler than expected inflation numbers. and here with me to help break down everything you need to know about today's trading action. Ed, you know, I got to say it's cooler than expected. Ed, Ed Carson, IBD News editor here with us. That's right. Yeah. Well, it was sort of a McDLT market. There was the cool side inflation and the hot side micron. But I want to take a look at Reddit, AppLovin, and Eli Lilly.

1:06All right. Well, we'll get to those stocks. But let's just check in on how the major index is finished. The S &P 500 up over 1 % today. The Dow up about four tenths of a percent. The Nasdaq leading the charge up 1.4 percent and small caps up seven tenths of a percent. So, Ed, I'm going to get my charts going here. But as you said, hot and cold day, somewhat in the market. But the Nasdaq gaining today, but hitting resistance at that 50-day line. I think it was pretty much the same story for the S &P 500. Again, holding on to gains, but hitting resistance at the 21-day line. So what are your thoughts on the current market action?

1:47Yeah, it was a much-needed bounce. We needed a bounce after some heavy selling. Most of the indexes had been down for four straight days. So it was not – so definitely positive in that regard. The key is that the S &P got above the 50-day line. That is good to see. I think the real question is next. Look, if we have a bad day tomorrow, the S &P falls below the 50-day line, you know, we won't really remember too much Thursday's action, you know. But if we follow on and gain, it wouldn't take much of a gain for, again, the NASDAQ to get above the 50-day line. The fact is it keeps on doing that. It's like, you know, it's getting close around there.

2:25But it wouldn't take much. If we do that, then all of a sudden, oh, OK, a lot of things might start looking better. you know, the S &P would probably also be getting above the 21-day line, you know, in that situation. So it's just, you know, today's, you know, if this is a one-off and we go back down, then it's just a blip, you know. So, but if we move higher here, so it's really, today's action really depends on tomorrow to see how good today really was. I mean, is what I'm getting at. We saw some stocks show some really strong action. You know, some of them faded like the market. and we'll look at some of the stocks we're going to look at faded.

3:03And I do think that investors should be looking for things that are above their 50-day line. Yes, there were some stocks that made solid moves, but a lot of them were below their 50-day line. I think you just want to be on the right side of the tracks, especially in this market. And let's just take a quick look at the Dow. This one also up today, but holding above its key moving averages here, Ed. And then small caps also gained today, but right at that 21-day line. Yeah, I mean, it's nice to see that get up a little bit. You know, just want to see some more strength there. I mean, the Dow and Russell didn't rise as much, but they were also hadn't fallen as much.

3:45So, you know, that's just want to see that, you know, continuing on getting above these levels. All right. How about we take a look at ARK-K? That's the ARK Innovation ETF. ETF, this one was up about 1.2 % today. But again, as we saw, those early gains fading at the close, but still looking to retake the 21-day and the 50-day line. Yeah, still needs to get above those levels. That's with a lot of growth names, especially the AI kind of plays, crypto plays. They have resistance, and you want to get above that level. Not that getting up with a 50-day line is a guarantee, but there's just a lot of resistance here right now.

4:27Today was an inside day. So, you know, inside days we usually don't think of as too meaningful ultimately. So, yeah, I mean, nice to see it go up, but it needs more. All right. How about we take a look at SMH? That's the semiconductor ETF. This one up about 2.4 % today. Ed, flirted with that 50-day line here. So thoughts here. Yeah, I mean, it's a little bit like the NASDAQ. It needs to get above that level. I mean, nice to see some strength. Obviously, Micron was probably a huge factor here because some of the other big names are all below their 50-day lines. So Micron was a huge factor. That was obviously a huge driver of the market AI.

5:07And obviously, on the other side, it was the cool inflation. There's some people questioning. There was some weirdness about this data, partly because we didn't collect October CPI data. but cool inflation, hot micron, you know, lifting the chips up, lifting the market up, but needs to get above. Want to see that. Want to see other names in the chip space, like the Taiwan semis, the Broadcoms, and NVIDIAs get above there. You know, they could, they're not too far away, but they're not, you know, at least Taiwan semi isn't, but, you know, want to see some other names in there to get up above. I'm Steve Booth, CEO of Baird, an independent wealth, asset management, and global capital markets firm.

5:46At Baird, our 5 ,000 plus employees are united by an unwavering commitment to excellence and a genuine passion for helping our clients and each other succeed. As a privately held, truly employee-owned company, we treasure our independence since we can focus on delivering results to clients and taking care of our people throughout the cycles in our serve markets. Learn more at rwbaird.com slash WSJ. All right, Ed, well, let's take a look at some individual stock names starting with Reddit. This one up 1.8 % today, but again, a closing in the lower part of this trading range. But thoughts here? Yeah, I think this is a lesson for why investors should be careful about, you know, or at least know what they're getting into.

6:30This is one reason we're talking about waiting at least five minutes, 10 minutes, 30 minutes. But sometimes, especially when there's sort of a big bounce and the market's right around key levels, it's like, well, Well, you know, it isn't that much of a shock to see some of the stocks come off the market. The index has hit resistance. So they did, too, because the short term high is actually a handle and it's actually marked on a weekly chart. It probably should be on a daily, but it's not. But you can see that it did get above a buy point, you know, so it was above there. You know, so we'll see.

6:58It did make progress, but needs to get above there. I think, you know, for much of the day, it was still at least above. There's sort of a downward sloping trend line from the top of the base, 282.95 and just scrolling down. But I think by the end of the day, to the top of that handle through there, yeah. But ultimately, it closed below there. So it needs to at least get above that, I think, before people wouldn't take on action. Look, the fundamentals are strong, strong earnings growth, turning profitable this year, revenue growth very strong. So a lot to like. It's not directly in the AI space.

7:32Some of the services use their material, but it's not the same situation. It just needs to show a little bit more. All right. Well, how about we take a look at AppLoving next? This one up 5.7 % today, Ed. And again, breaking back above this 6.75 % buy point. Yeah, this one was one of the more impressive names. And the volume was a little light. So you would have liked to have seen some more volume there. But the price action bounced off the 21-day line, held most of its gain, where a lot of other things faded above the 675. But we're actually in here. It is not going to show it, but this is also a handle.

8:13So this recent high from a couple weeks ago, that is also a legitimate entry at this point as well. You could use that. I think you could definitely be using today, especially sort of broke the downtrend of this handle. It's above the buy point. But maybe you could use the high from a couple weeks ago as an add-on place. But yeah, there is still the overhang of a possible SEC investigation. So I really, you know, that came out a couple of months ago and nobody ever confirmed it. So I'm not quite sure. But this one, I like how it tightened up because when it came up, it was like, this is, you know, a little bit extended from the 50-day line.

8:49It had run up a bunch of days. So, you know, it seemed like a pullback was due. And it was due, but it didn't pull back that much. And now I think coming above 6.75 this time looks better here, you know, in that regard. All right. So we'll be keeping an eye on that 7.26.83 as an alternate entry point for app love in there. How about we hop on over to Eli Lilly, Ed, this one up 1.4 % today. Yeah. Again, when it got above short-term highs, I think that was a place that was a really nice spot. You could still be buying it anyway because it's bounced off the 21-day line. I mean, that was sort of saw that as a trigger.

9:26So it's still in the last several days, it sort of got above that area. And, you know, it was a place to buy or add shares. Today, there was some positive news. Basically, they came out and said, hey, you know, patients who took the experimental obesity pill, if they switched over from like the Eli Lilly drug or the Novo Nordis drug, they can maintain the weight loss. See, the pill isn't supposed to help you lose as much weight. But for people who have lost some weight and they're like, I don't want to get these injections. I'll take a pill. They can maintain that weight loss because that's a big concern with some of these things.

10:01So, again, this is one of the stronger names. It's back above a trillion. Finally, back above a trillion market cap. Just barely. You know, I do think and I showed a couple of tech names. Those were non-AI names. But this one here is something out of tech. I think investors should definitely, you know, their watch list and their portfolio should probably reflect the fact that market. Leadership is fairly broad and is, if anything, rotated out of tech a little bit. So definitely a lot of other areas people should be looking at. And Eli Lilly is definitely one of those. All right, Ed. Well, thank you so much for your insights today.

10:37And that wraps it up for today's episode of Stock Market Today. We'll be back with more market analysis tomorrow, starting with IBD Live. You can head on over to investors.com slash IBD Live for all the details there. and we'll see you right back here tomorrow after the close.

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