Stocks Suffer Ugly Downside Reversal; Nvidia, Sandisk, Walmart In Focus

0:13Good afternoon, everyone, and welcome to Stock Market Today for Thursday, November 20th. It's Alexis Garcia here. Well, I wish I could say it was a good afternoon, but stocks suffered an ugly downside reversal today, that after the NVIDIA rally after earnings fizzled. And here with me to help break down everything you need to know about today's market action is IBD News Editor Ed Carson. So Ed, we'll do our best not to fizzle here, but what do you have on tap for us today? It was a pretty rough day. Pretty rough day. And obviously, NVIDIA was a huge part of that. That reversed lower. SanDisk, big, big loss there.

0:54And Walmart, that was probably the standout stock of the day. All right. So we'll get to those three stocks, but let's check in on the major indexes. The S &P 500 finishing the day down 1.6 percent, the Dow down 9 tenths of a percent, the Nasdaq down 2.2 percent, and small caps down 1.7 percent. So let me get my charts up, But talk to me about what happened today. Again, ugly downside reversal. We can see the S &P 500 now trading well below this 50-day line. Yeah, there was so many things that went wrong with this. You know, it's like we opened higher on NVIDIA and that. We'll get into all that selling off.

1:37But it was sort of hanging near the 50-day trine there. And all the major indexes got above their 50-day lines to start. A lot of stocks started flashing buy signals. and then boom, came down. And so came down, the S &P and NASDAQ fell below their, closed below their October 10th low. That was the big reversal from like a month and a half ago. So right there, undercut that. And, you know, because it was right around these key moving averages, we've been in a pullback where our moving averages, it's sort of like the difference, you know, not only was the downside reversal always bad, but doing it here, it's so bad.

2:10It's like the difference between having an argument with your significant other, maybe in the car for a little bit, rather than having a full-blown fight in front of everybody at Thanksgiving. I mean, just one is just a little bit uglier. I mean, it just is. There was just, it was damaging and dispiriting. A lot of stocks suffered damage. So investors have to be defensive after this. Not good action at all. Yeah, and let's just quickly look at the Dow Jones Industrial Average, Ed, because this one also breaking well below the 46 ,000 level here. And again, small caps also heading lower, kind of undercutting the low of this flat base here, Ed.

2:51But, you know, this one has been struggling as well. It cut below the 50-day line a couple weeks ago. So any thoughts here on small caps or the Dow before we move on? Yeah, the Dow is like I've been hanging on and they have a lot of – there was medicals that are doing well, financials that were at least holding up better. But, you know, in a bad market, things aren't working. And there's a lot of other things. NVIDIA is a big component in there, too. But small caps, and if you look at other equal weight, the breadth was weak too. We've seen it with the IW, that's a three-month low. RSP, three-month low.

3:24QQEW, two-month low, and very close to not just a three - or four-month, but close to like a four - or five-month low. So, and again, you can just map it out for how any of these stocks look if you own stocks in the last three months or so. You know, new positions, those are probably not working. I mean, just in general. And it's, you know, so really ugly action. Definitely a time to be cutting exposure. And yeah, and I think there's a lot of stocks that looked strong. They were up 5 % and they closed down 5%, 6%. You know, that is really unpleasant. And let's take a look at the 10-year Treasury yield, Ed.

4:00This one taking down about 7 tenths of a percent today. But it seems like it just wants to hang out at this 4.1 level here. Yeah. I mean, we also had the jobs report and some other economic data that was today. And ultimately, it was sort of mixed. I don't think it really changed the picture. Fed rate cut odds for December rose a little bit, maybe more because of the stock market than the data. But it's still below 50-50. All right. How about a look at the VIX today? This spiking about 28 % today. So what is this telling you about sentiment in the market? Yeah, I'm not sure if it was quite that.

4:35Like, I'm seeing that percentage gain, too. I'm not sure if that is a high, but it is like it was almost to intraday. It almost intraday topped that high from about a month ago. And it is the highest close since late April. So when this happens, when you get a spike in the market fear gauge, it's sort of a counterintuitive thing that excessive fear can often mark a short-term bottom. But a few caveats. One, it doesn't have to happen right away. Any bounce doesn't have to last. And third, if the market isn't just in a pullback, but is in something, a real serious pullback, a serious correction or a bear market, fear can keep going and going and going.

5:15You saw that in April here where it's way above. So, you know, we're still at the PG-13, you know, kind of jump scare, maybe on the edge there, but nothing like the horror show from April. So it's not like a guarantee. It's just something to watch for. But I don't think you should hold out hope that, oh, boy, well, everybody's scared. I should get bullish. that's probably not the right mindset right now. All right. Well, let's take a look at a couple sector ETFs, starting with FFTY. That's the IBD50 ETF. This one reversing lower today, down 4.4 % and getting closer to that 200-day line. I mean, this probably helped a little bit because of the gold and medical stocks that didn't suffer as much today.

5:57You know, they're sort of like that. But aggressive growth is really, really hit hard. You can see that with ARK as well. And actually, you know, like Tesla wasn't down that much today, but you can see it's just like that's reversing lower. And, you know, but there's other positions like AMD was the second big. It still was down 2 percent. It wasn't a good day. But everything just ARK is, I mean, AMD is one of the like the number two position to cross ARK Invest. So just a lot, a lot of damage here. And then how about chips? SMH, that's the semiconductor ETF. We have this one down 4.2 % today, but breaking again below that key line here of the 50-day.

6:36Yeah, and you can see there's a lot of stocks that acted like this. Moving up, maybe either retaking or bouncing off the 50-day line, flashing buy signals, maybe aggressive buy signals, and then wham. And so that's a 4 % loss, but this was probably up. I didn't do the math, but it looks like it was up like 3%. And it's like when you have NVIDIA and AMD and Broadcom and Taiwan Semiconductor all up and coming down. So just a huge, huge drop. And what was looking resilient now looks really ugly. And what about IGV? That's the software ETF. Again, that's one falling to about 3 % today, but really undercutting this 200-day line here, Ed.

7:15Yeah. And the areas of strength in software didn't hold up very well either. I mean, it was just one of those things. Just this has been struggling for quite a while. All right. How about XLV? We talked about a potential bright spot in the market. Healthcare down about six-tenths of a percent today. But this one has been trying to really hold steady here, Ed. So thoughts here? Yeah, it showed relative strength. It was still a loser today. I mean, but yeah, if you had XLV, you'd be pretty happy all in all. But so we'll see. But if we are in a real correction, you know, a lot of things could come off here too.

7:52There were definitely names in here that have been leading that weekend during the day. All right. How about closing this out with a look at IBIT? I mean, Bitcoin has just been getting hammered here lately, Ed. And again, another ugly day down at 3.5 percent, breaking below that round 50 level. Yeah. So this is giving up almost all the gains. It's having like that. It's just an enormous since those April lows. I mean, it's given up the vast majority of that. I'm not sure. this seem to be a contributor or I'm not sure it's a chicken and egg. Does this fuel the sell-off or has it fueled the sell-off or is it just reflecting the sell-off in more speculative names?

8:30Either way, another negative sign. And it's just, there's just nothing. It's nothing, you know, rallies are temporary and just keep on falling. And yeah, and that happens. I mean, we fell like earlier in this year, we fell like 61 to 42. I mean, losing a third to 50 % of the value is something that happens often once or twice or three times a year for Bitcoin. And it's, I mean, maybe it rebounds right back, but this is what happens with this, this name. All right. Well, the thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand, but by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions slash repetitive tasks and freed thousands of hours for strategic work.

9:18Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Let's take a look at some individual stocks. Let's just dive into NVIDIA, Ed, because we had strong earnings. This one jumped early, retook that 21-day line, jumped above the 50-day line, but reversed lower down at 3.3 % today. Yeah. I mean, and look, this was looking so strong overnight, strong into the open. So it was all this time consistent, consistent, consistent. And it really much, you know, it really fell off pretty much from the get-go and certainly about 30, 45 minutes in was heading lower, like the market.

10:00And yeah, I mean, it started off making this real powerful move and ended up below the 50-day line, below the buy point. Again, it's not decisively, it's not as damaged as some others, but there's, this is also very much in character. We can look back to the last several earnings reports and this is what it does. You know, there it, it went in. So on this one, it, it faded to turn lower. It did close off lows, but then it fell for several more days. You know, it wasn't like it was over there. So this is what happens in the report was strong. It wasn't like it was a negative report. The prior one was probably the best one.

10:35It came off highs, but still closed with a solid gain, fell the next day, but then went on its rally. But keep in mind, this was in the beginning of the whole market rally. It was just like there was a lot of tailwind to the market going up. But go back to the prior one. Again, this was during the bear market moving in there. So there's some of that. But this one, it moved up and then immediately sold off and sold off hard. Again, And there are market conditions, but did that go back another one and the market was doing OK here? Well, it it came up to a new high and paired gains. And then the next day sold off and fell for several days.

11:13And maybe it would have bounced back, you know, but it's like but came back a little bit, then sold off some more. So, again, and it did that with the prior report. So I know that's going on and on, but this is like now five straight quarters where NVIDIA either that day or the next day sells off. And in most of those cases, there was further selling, you know, at least for a few days. So it's just something to note. And again, this is why we talk about waiting. It did look okay about 35, 45 minutes, even an hour in. But, you know, once it really got going, the whole market just fell off a cliff there.

11:51And so, yeah, I didn't see anything wrong with the report, but obviously, you know, the expectations were high. Everybody knew the numbers were going to be strong. So that's just something that happens. NVIDIA has a history of doing this. Maybe next time people won't have their expectations so high because it'll really be beaten into them. But that's really, really disappointing. Not destroyed, but again, I think with NVIDIA or anything else, we could bounce here. But what, do you believe it? How many times have we bounced, not just on the video, but on the whole market where we bounced intraday or bounced for a day or maybe even two days, and then it goes up.

12:29So it's just I think we're at the point where we need to see more sustained strength from the market and leading stocks before really getting excited. All right. Well, how about we look at Walmart, Ed? This one was a winner today, up 6.5 percent, retaking that 50-day line. I guess you can say it broke a trend line here as well. But again, this one also jumping on earnings today. Yeah. I mean, this was sort of not done a whole lot this past year, but it delivered and it was solid earnings, or at least for them. I mean, it's still single digit. I don't want to go too crazy. E-commerce was strong.

13:04So I think that was probably one reason why there was encouraged there. And they raised the full year outlook. Again, a lot of that was based off of the Q3 beat, but at least they're not cutting back. You know, when, you know, it's probably a lot of people going, I don't know. How is this Christmas season going to go? And if nothing else, things are going to be okay. So it was actionable. You could say it here. This one has not had a history of big moves over the past several months, but it can go on runs, especially in uncertain times. So this one held up. It did not give up. I mean, I think it would have been perfectly understandable if this had given up half its gain or two-thirds of gain or even all of its gain.

13:44But this did not. And so that was encouraging for this one name. And some of the names in the sector, I would just point out, like TJX. I know that's sort of going off. TJX sort of a disappointing day yesterday on earnings. But today, maybe in part because of Walmart, had a solid second day. And, you know, so there is a little pocket of strength there. All right. Well, how about we wrap up with a look at SanDisk, Ed? And this one, again, taking a beating today, down about 20 % here, falling below that 21-day line. But we've seen the run that this stock has made. So what are your thoughts here?

14:25Yeah, I probably would have already sold some of it along like the last, you know, certainly along the way because it was going so vertical. And so sometimes I get out a little earlier or repair too much, but that's a little bit. But I think that especially if you held on to all of it, you know, it broke decisively below the 21 day line. You know, I think that's a place where you would want to have taken some profit just because this was such enormous one. I totally get why you'd say I want to still hang on to this because the growth is just absolutely enormous. The prices are skyrocketing for this.

14:57And just to give you an idea, this is really that is just, you know, a huge and it's really coming in at the end here. Because if you look down below, you don't see this enormous earnings on the quarterly. So it's just coming in in the next, you know, next several quarters are just going to be jaw dropping, you know, in the next several quarters. And it also means that you have a hundred P.E. ratio, but the forward P.E. is like 15. I mean, that's just like that kind of drop is just crazy. So I get it. There's real reasons. This is like the earnings are at least supposed to come in. I mean, that could always change.

15:31But I think you need to take some profits because where do you go? where do you wait to? Do you go all the way to the 50-day, 10-week line? I mean, that's a lot of things. I mean, that would be a place where you could sell some more and might decide to cash out, but that's an enormous drop. It's got up to like 270. You don't want to go and go all the way down to say 160 before you take any profits. At least that's how I do it. But if nothing else, it just shows you that even these huge winners, these enormous gains, they came for almost everybody in the growth sector today. All right, Ed. Well, thank you so much for your insights today.

16:04That'll wrap it up for this edition of Stock Market Today, but we'll be back with more. You can head on over to investors.com slash IBD live for all the details there. And we'll see you tomorrow after the closing bell.

16:44Thank you.