Stocks Up But Not An Uptrend Yet; Sandisk, Dell, Karman In Focus

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0:19Alissa Coram:Your cabana's ready. Would you like fresh towels?

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0:40Justin Nielsen:good afternoon everyone and welcome to stock market today for monday march 16th it's alissa quorum here and the major indexing x indexes rebounding to kick off the week i guess it's so exciting i'm even tongue-tied there's a lot going on this week between nvidia's ai conference also micron earnings. And we've got a Fed meeting, a lot to parse through for individual investors as the indexes give us some mixed signals. Joining me now to break it all down is my colleague, Justin Nielsen. A very interesting day because of some divergences that we've had in the major indexes and gains of one plus percent to kick off the week.

1:24Alissa Coram:Yeah, so there's a lot to kind of parse through here in terms of, as you said, not exactly the look that we're looking for when you are looking for a follow through day. And we can go over the rules behind that a little bit. But we'll also talk about some of the stocks that were looking decent. And to be honest, they're kind of few and far between. But Sandisk and Dell, both were looking like breakouts today. I do have a position in both of those. And then also, Carmen was our stock of the day in the aerospace defense area. So that's another one that we can talk about.

1:56Justin Nielsen:All right. Well, check out those stocks. I do also have a position in Sandisk. But first, let's take a look at the major indexes. And I'm going to kick things off with a look at the NASDAQ composite because the rally attempt still intact here. Even though we had solid losses on Friday, sending us below that 200-day line, We didn't undercut that powerful upside reversal to kick off the prior week. So on follow-through day watch. So that's notable about today's session. And like you said, we can get into what all is involved in that. But the Nasdaq up 1.2 % on the day and hitting a little bit of resistance around some recent highs.

2:43Justin Nielsen:Meanwhile, the S &P 500 starting a new rally attempt today up 1 % on the day, the Dow up 0.8 % and the Russell 2000 up 1.1 % on the day. So I think as of right now, Justin, perhaps the most important index to look at today in terms of its impact is the NASDAQ. So tell us what today's action means for this rally attempt.

3:15Alissa Coram:So as a reminder, when we say follow through day, it's a it's a term we bandy about quite a bit, especially when we're in a downtrend or pullback or correction. And basically what we're looking for is evidence that the trend is changing. So the concept here is that once you get a rally starting and that can start with a up day, any up day will do after a pullback. And that can be your day one. Now, sometimes we will count a day where you close in the upper part of the range, preferably high in the range, even though you were down. And so that's what we call a pink rally day. But the idea is that you're starting to rally off your lows.

3:55Alissa Coram:And while that can excite a lot of people and kind of bring in some bottom fishers, we tend to be a little bit more patient with our buys. We say, OK, day one, that's that's fine. That's great. But what can you do? What can you do to build on that? So that's where the follow through day concept looks at. So we count that day one. We start counting day two, day three. once we hit day four, then we start saying, okay, if we can get a day of power here, that could be a sign that the index has kind of changed course. So what do we mean by power? Well, our typical description is that you have a gain of 1 % or more and volume is heavier than the day before.

4:38Alissa Coram:Now, volume is a little preliminary right now because we just closed. It's looking like it might come in a little bit higher. And since we have the 1 % gain, this would technically qualify as a follow through day because we didn't undercut, you know, if that's the case, volume coming in higher. I also like to look at dollar volume in addition to trading volume, because sometimes you can have these tiny companies that can really skew things in terms of volume. There were a few days there over the last couple of years where you had two companies that were, you know, trading at a nickel per share.

5:13Alissa Coram:And they had, you know, half the volume of the entire NASDAQ composite. And that's like, well, that's not really heavy volume. That was two companies that got traded a lot by algos probably. So what does that mean if we have a follow through day? Does that mean, hey, it's all clear, water safe, you know, go in? Not necessarily, because in terms of power, there's a few things that I think are lacking with this. Number one, it wasn't a great close. We were pretty much well off the highs. We spent most of the day inside Friday's action. So it wasn't like we really kind of even came out of Friday's action.

5:50Alissa Coram:We did very briefly and then came right back in. We only like, at least on the queues, maybe we didn't actually do it on the NASDAQ. We came right up to that leveling got turned away. So that's not really kind of the power that I'm looking at. And because you have multiple of the other indexes fail, it's not like we have all the indexes kind of rolling together. The Dow Jones Industrial Average, that undercut on Friday. The S &P 500, that undercut its Monday low on Friday, last Friday as well. So you've got kind of this mixed message. Yes, maybe tech is holding up a little bit better. And that's what the NASDAQ composite it is showing, but I think the jury's still out.

6:32Alissa Coram:And one more thing, if you just kind of looked at the trend, some of the basic elements, where are we at in terms of our 50-day moving average line? Well, that's in a downtrend. Okay, well, I could see if we maybe, you know, crossed above that kind of the highs of the last few weeks, that line that you just drew perfectly from the previous highs at 23 ,988 on down. Well, we haven't broken that trend yet. So there's really kind of not much power. And we're still inside the Monday range. You know, last Monday's range was a big widespread. We got support at the 200-day moving average line, and we haven't even been able to cross above that high and stay above it.

7:20Alissa Coram:We did for a couple days, but couldn't really close above that level. So this to me is just not really sparking power. So I personally need more evidence. Now, that doesn't mean that you can't find some things out there. Maybe you do some probing buys. That's what I'm doing with a lot of my positions. And when I say a lot of my positions, I mean, two or three positions. That's how very little I have invested right now, mostly cash. So that's the way I'm looking at this. I should have also mentioned, in addition to the Dow and the S &P 500 undercutting the Russell 2000 that you brought up, the small cap index, you know, that is holding up a little bit better.

8:02Alissa Coram:and that did cross above Friday's high. Couldn't hold it though. So we're still looking at that 250 level on IWM. And certainly this had a little bit more progress after the Monday low came in. It did have a better day, but again, it just can't close well. So I need to see some more positive closes and it would also be nice to see some of the breadth go too because let's not forget RSP, That's the Invesco equal weight S &P 500. That undercut its Monday low on Thursday. It actually undercut it earlier than a lot of the other indexes. So I think we have a breadth problem. We have a strength problem.

8:45Alissa Coram:There's not very many stocks that are set up. So and hey, there's still a lot of news out there that is coming out on a daily basis. So it's a lot of reasons to be very cautious still here. Yeah.

8:58Justin Nielsen:So perhaps it's appropriate to dip the toe in the water with some smaller buys in leading stocks that are holding up much better than the overall market. But we don't want to be chasing extended stocks. and the environment, like you said, we don't see a real clear change in trend yet. We want to see more progress, starting with those shorter term moving averages, closing above it, then a 21 day, right? Our senior market strategist, Mike Webster, loves seeing a close above the 21 day, then a couple of days at the low above that level, then getting above the 50 days, so on and so forth to get you more and more invested.

9:41Justin Nielsen:So using that incremental approach versus a light switch approach.

9:47Alissa Coram:Absolutely. Yeah. It's a dimmer switch, right? So, yeah. And Ali, I think what you said is so spot on. If you are going to be buying something, what are you looking for? Are you looking for the things that are coming off their bottoms that are, you know, that got just clobbered? No, you're looking for the things that held up better. Our whole IBD methodology is really about kind of buying on strength. And so relative strength is such an important part of that. And so as we go through some of the stocks and ETFs, we'll be looking at what that relative strength line looks like, because that's a very good telltale sign of, OK, where should I be focusing my attention right now?

10:25Alissa Coram:And at this point, there's just not a lot out there that's looking great on the relative strength side.

10:32Justin Nielsen:Right. Before we move on, I do want to add a quick note of color to today's action, something that the team was focused on. If you look at the intraday chart here, you see a little bit of volatility that picked up in the last hour, roughly. And that was around the time that NVIDIA's CEO spoke. And you can see on the chart here that volatility a bit more emphasized on this individual name. I believe something along the lines of the percent of their business that they're expecting to come from the hyperscalers, some 60%. So investors speculating what that potentially could mean for the stock. So coming off of the intraday highs there, we're going to continue to keep tabs on the conference this week and see what sort of ripple effects there might be on this broader AI theme, Justin.

11:31Yeah.

11:31Alissa Coram:And you know what? It's I'm so glad you showed the intraday chart, because I think sometimes, again, there's a lot of news coming out. And certainly, you know, as the NVIDIA CEO was speaking, you saw that movement. But and when that happens, a lot of times we don't know why. Right. So there's a whole thread going on in Slack. Hey, did anyone see some news? The market's really moving. What's going on? And then we kind of find out, oh, OK, this is what's happening. But I think what's most important here is not the news itself, but the reaction. Right. And so we see that immediate reaction. Maybe algos are jumping in and saying, OK, there's positive comments, but it can't hold.

12:11Alissa Coram:And so that reaction, I think, is what's more important to me. That's that's my takeaway from this. regardless of what he said the market liked it at first but then it couldn't sustain that level so again that to me just kind of screams of algo trading on a headline and once once that's done people are saying yeah no i'm not i'm not that confident and so that reaction to me is very telling and that's what you typically see in a rougher market where um even good news is not something that gets a great reaction or a reaction that's sustained.

12:50Justin Nielsen:Okay, let's also take a look at USO, which is a proxy for the price of oil. Seeing that come off a little bit, Justin, but a huge move over the last couple of weeks.

13:02Alissa Coram:Yeah, and it seems like this is where, you know, the more oil comes down or comes off its highs, This is where the stock market will kind of, you know, get get into a little bit of a higher gear and indexes will do a little bit better. And certainly if you were looking at the relative strength line, I mean, you can't get much better than this. This is just going almost vertical. So, yeah, I don't know if this is the kind of action that would make Maverick, you know, pass out, you know, because of the level that it's going. But look, you have to kind of keep in mind that there's a lot of news that's affecting this.

13:38Alissa Coram:You know, what's going on with the Strait of Hormuz, with Iran, you know, how, you know, the reserves play into this. There's a lot of variables. And let's not forget that a lot of these commodities are in dollars. So the, you know, the price, you know, how the dollar fluctuates can also impact this. So it's a lot of kind of headwinds going back and forth and very difficult to tell what to do with it. And in fact, I'm just going to go ahead and show JETS for a second here because one of the ETFs that, of course, is affected by the price of oil is your airlines. Right. And we were seeing despite these gains in oil for a while there, it looked like JETS was just shaking that off.

14:17Alissa Coram:And then it really just couldn't. And you saw that kind of dive below its 200 day moving average line. Well, this is one of the better performing ETFs today, up 2.2 percent. But again, this is this is kind of what you had out there. A lot of times the strength were areas that looked like this. And to me, OK, yes, maybe you held on to that Monday low at Monday low, but you're still below the 200 day moving average line. You can't say that this is breaking a downtrend. It's barely gotten above, you know, Friday's high. So this is just indicative to me a lot of what we're seeing out there in individual stocks and some of these sector ETFs where there just isn't enough strength right now.

15:01Alissa Coram:And I think this is a good reminder that for as much as we talk about this follow through day as a way for us to get in early, earlier, I should say, because we're not trying to call the bottom, but it does help us get in earlier. We don't have to wait for it to get into all time highs or wait for a golden cross. That's when the 50-day moving average line crosses above the 200-day moving average line. A lot of technical analysts love that, but I feel it's a late signal. So this follow-through day does get us in early, but we don't have to rush in because a lot of times you can find yourself waiting just a few days and getting a little bit more clarity.

15:39Alissa Coram:So maybe you start very small, but you certainly don't want to overdo it. So, yeah, again, the uptrend or the downtrend, I should say, has not significantly changed here. And Jets is a good example of that. I'm going to bring up one more example just because I think this might be instructive as well. You know, because thinking of a time of news, go ahead and pull the NASDAQ back up if you don't mind. And let's go ahead and scroll out a little bit. We'll take a little bit of a longer look and go all the way back to April. Remember, April of last year was not so long ago. And if you could point out for me, April 22nd, because that's when the follow through day was after this whole tariff tantrum happened.

16:25Yeah.

16:26Alissa Coram:So on April 22nd right there, you know, that was a follow through day. And so that's, again, our rule for when you can start buying. But I will say that this was not my favorite looking follow through day ever either. A lot of things are similar here. You hadn't crossed the downtrend. You were still within that big widespread. Hadn't really, you know, you basically were staying within that. And it still took a couple of days for you to get out of that. There were just a lot of elements here. And so, yeah, I did buy something, but I didn't get really heavily invested until a few days later. And there were still plenty of things to buy, plenty of things that were looking very interesting.

17:06Alissa Coram:So, again, don't feel like you have to be in a rush to get that as close to the bottom as possible. There will be time. Yeah, such a great example there, Justin.

17:18Justin Nielsen:Always learning lessons from past market cycles. All right. And I would say in terms of the downside, too, we're continuing to keep an eye on the recent lows, that 200-day. And now today's low also becomes a key level on the NASDAQ.

17:37Alissa Coram:Yes, absolutely. Because a lot of times, again, if we're going to call this a follow-through day, the low of the day does become kind of a critical area as an early warning sign. You cross below that, close below it, I should say. And that usually doesn't speak highly for the potential of the rally to actually work. And remember, a lot of follow-through days do fail. So we don't have a lot of room here. I mean, to close below today's low, I mean, that's basically like if the wind blows the wrong way, it's going to do that. So, yeah, you have to be very careful. And one more example of something that, again, was up a lot today, but the trend is just still kind of down in the dirt is our old friend Bitcoin.

18:21Alissa Coram:So this is iBit, which is the, you know, the Bitcoin ETF, one of many. We're still below that 200-day moving average line, below that 50-day moving average line. I will say to its credit, this is looking a little bit better in terms of how it's come off the bottom. It's made a little bit more progress. But even this still has a lot of work to do. And again, if you kind of do a line, it's right up to where you could potentially see this hitting resistance. It's right there at its 10-week moving average line, right, you know, a little bit under its downtrend line. So you could certainly see that this is not out of the woods yet.

18:59Alissa Coram:And that's, again, where a lot of stocks and ETFs are sitting right now.

19:04Justin Nielsen:Yeah, crypto is a different animal. So I'm not going to be one to short this. But the setup does look more like a short here, Justin.

19:12Alissa Coram:Yeah, I'm with you on that. And I'm also with you on, I don't want to short it either. You know, I don't think that I necessarily have an edge there. I do think this could be going down more. Mike and I certainly talked about, you know, I bet going down to 14 would be completely legitimate within the history of Bitcoin and cryptocurrency. That would that would look normal. And GBTC might be a better way to look at that. So, yeah. And 14, I think, is the level that we were talking about actually on GBTC. So, yeah, that's that's that's quite possible. But again, while I think it could easily get down there, I'm not brave enough to do that, especially on a short side.

19:54Justin Nielsen:Yeah, because we do know it's not always a one-to-one type thing. But when the market gets rocking and you have more speculative investors getting aggressive, one of the places that they go is crypto. So if the market tide shifts, could see some more money flowing that direction. So we'll have to see.