Stocks Whipsaw Before Trump’s Iran Deadline. Teradyne, Coherent, Williams Cos. In Focus.

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0:38Ed Carson:Good afternoon, everyone, and welcome to Stock Market Today for Tuesday, April 7th. It's Alyssa Coram here. And a bit of a roller coaster to nowhere in the stock market today with stocks whipsawing before Trump's Iran deadline. Joining me now to discuss the market action and some stocks to watch is my colleague, Ed Carson. Ed, great to see you. Great to see you. I want to take a look at Teradyne, Coherent, and Williams Companies, three stocks that are holding up pretty well. All right. We will take a look at those stocks holding up well because, of course, we want to keep our watch lists fresh in this market rally attempt.

1:13Ed Carson:So we'll take a look at those stocks. But first, let's take a look at the major indexes. As I share my screen here, a bit of a dramatic day, Ed, that doesn't show up in the closing prices. The NASDAQ up one-tenth of a percent by session's close. You can see that upside reversal there on the chart. Meanwhile, the S &P 500 also up one-tenth of a percent or so by the end of the day. Same for the Russell 2000, up one-tenth of a percent. And the Dow down about two-tenths of a percent on the day, stuck underneath that 200-day line. Ed, what do you make of today's session? Yeah, I mean, I think Mike Webster might call this a helter-skelter market because, you know, it's sort of go around and you say roller coaster to nowhere.

2:02Yeah, and nothing really changed fundamentally on the war and ran war news front. I mean, there's maybe some talks. There's an eight o 'clock Pacific, eight o 'clock Eastern deadline that President Trump has issued. So could he extend that deadline? It seems unlikely that you get a deal by 8 p.m. Eastern, but you might have some kind of extension on that. So we just don't know. And so I think the market was just sort of, you know, running around, just trying to figure out what it was. It's nice to see the market come off off those levels. But obviously, news could change dramatically in the next few hours.

2:37I mean, you know, it could change in the next few minutes before that. So it's hard to know what your edge is. It's nice to see stocks continue to move up and build those watches because there are stocks showing strength that are looking a lot better than the indexes. But it's just still such a difficult market when the market moves this much on really nothing happening. I mean, you know, there's all this, you know, sort of fears and hopes, you know, and just these little things and there's nothing really there. And yet big, big moves in stocks occur. Just really tricky to have an edge in that environment.

3:09Ed Carson:It is. I would say if you are purely looking at the technicals, seeing the last couple of days of action, I would say is encouraging. It's not an all clear signal by any means to have five up days in a row here on the NASDAQ. But some of these upside reversals, we do know that you want to see weaker action in the day and stronger closes versus stronger earlier midday action that then fades. At least we are closing positive. But what we really want to see is some sort of power, right, Ed? Now that we have established a potential bottom and we have a couple of these updates, a couple of days of progress here, now we want to see a gain of 1 % or more with volume heavier than the prior session.

4:04Ed Carson:That might be that signal that would get us a little bit more invested. We haven't seen that yet. No, I mean, and that would be really nice to see. You'd probably get the Dow and maybe even the S &P 500 above their 200-day lines. The Nasdaq, probably not. I mean, it could happen if it's powerful enough, but that would be positive getting above that. I think you'd want to see more because, again, you could see a headline, deal is imminent, and the markets rallying close up, you know, 2 % on that. And then Trump says right after the close, no, it's not, you know, and then it falls back. So that's just, even if we do get that follow through, it's news driven.

4:37And so the news could whipsaw back and forth. But you're absolutely right. The technical action has been encouraging, but we need more. We need to see that more. And then we want more. We always want more. We're going to be very needy and greedy on this stuff. And I know when you're in a correction that I think you want that proven. It's like if we do get a follow through, investors should should be looking, you know, they have their watches ready, maybe take some action in a stock or an ETF. Get there, get there, you know, get a little bit in there. And then if the market continues to show strength, you know, step up exposure gradually.

5:07But again, that's if things work out, if things continue to improve, we could easily have negative news and reverse lower. So again, patient, but getting ready.

5:17Ed Carson:Yeah, we're at a very critical juncture here. And that sort of knee-jerk, news-driven nature adds to the trickiness, as you said, Ed. And with your commentary on where we are versus the 200-day, we'll just put a little bit more detail behind that. The S &P, as of today's close, about a half a percent below that level set would be achievable. Let's take a look at the NASDAQ. Those are the two indexes that we're primarily concerned with on follow-through day watch. The NASDAQ is 1.5 % below the 200-day. It definitely could get there. It could there. It could, it could. But like you said, we're at this critical moment where we could see strength and then a bit of a reversal.

6:07Ed Carson:I think that dial up, dial down exposure versus going zero to 100 or fully leveraged on a deal related headline. We want to be going gradual, just as you said, because what happens underneath the 200-day, sometimes you can get your most powerful follow-through days, but other times you can get failed follow-through days and get those rejections at or around the 200-day lines. I left my crystal ball in my attic. It's getting a little dusty, but if only I had that, then we'd know what to do exactly here. But that gradual approach, I totally agree, is the way to go.

6:53Ed Carson:in a classroom of sodas most stay quiet then there's mr pib sweet cherry bold outburst the kind of flavor that gets attention bold kicker cherry let's also talk about a couple of other charts here what are you seeing with rsp this is the equal weight s &p 500 etf yeah so it declined a little bit today i mean uh but this isn't a better situation it's above the 200 day line but It is hitting resistance at the 21-day line, which isn't the worst thing after rising this many days. I just want to see this power. Again, there's just a lot of hurdles for even the stronger parts of these indexes or equal weights.

7:35Wanted to get above the 21-day line. Wanted to get above the 50-day line. And so, but, you know, this is definitely, was not in as bad of a spot as some of the other indexes, which were really breaking down two weeks ago.

7:48Ed Carson:Yeah. Yeah. Ed, I know you've been keeping a very close eye on the price of oil, oil futures. Give us an update. What's going on? I mean, oil's reacting to all the same stuff, all these headlines that were coming out. And it was up. It was up over. I mean, this is a sort of an ETF that sort of tracks U.S. prices. But crude oil got over$115 a barrel a couple of times. It fell back. You know, it's been all over the place today. And it actually closed. It closed fractionally higher the futures. But by four o 'clock Eastern, I think, was a little bit lower than we were yesterday. So, I mean, this is really important.

8:24I mean, we've had big move over the prior couple of days, especially last, you know, last Thursday. You know, that's just hard. I mean, we need that to come back down, you would think, for the markets to really to get going again. We're just waiting to see. It's all based on these headlines and what happens. So, I mean, would it be crazy to see oil at 125, 130 tonight on certain headlines? I mean, or even dropping$10. That's the kind of environment we're in right now.

8:57Ed Carson:And let's go to XBI because we're also keeping a close eye on the biotech sector. It's been holding up really well here. Yeah. And so, and, you know, this is often a really good spot to, you know, something to do to play the biotechs because it's very risky. in any kind of a market. And not necessarily that many are near buy points. You can find some, but this might be something that's paused. It's held pretty tightly. It's had some intraday swings, but the last several days have been pretty tight closes all in all. So you can imagine in a better market, this is something that could do well. Again, there's no guarantee.

9:31You can see plenty of times when it made moves and then had pretty significant losses. And yes, now in hindsight, It all has worked out. It's all sideways or up. But you don't know that. Again, but I definitely think XBI and some individual names in there are things to be looking for. Okay.

9:50Ed Carson:And let's check out the chip sector. Here's SMH, the upside reversal for this sector ETF, putting it right at that 50-day line. That's definitely a battleground here for the chip sector, Ed. Yeah. Yeah, it does seem like just about 400 in the short-term highs there would really be a nice place if we could get above there. A lot of chips acting well. A lot of AI hardware in general is acting well. So really want to be paying attention. You want to be looking at the areas that are holding up, showing that relative strength. So when this market does turn, these could be the leading stocks and sectors.

10:29I mean, this is what you should be doing right now.

10:32Ed Carson:Well, I think that is a good segue to Teradyne because it's in the Semi Equipment Group and it's definitely on our watch list and something that Mike Webster, our senior market strategist, was pointing out. And I know the team is all over looking at relative strength in stocks, Ed, whereas SMH made a lower low. This actually had a higher low. So it makes it to where it's not a proper double bottom, but it shows that relative strength where it is holding up quite well here and actually getting above a trend line today. Yeah. And even when it dropped down a week and a half ago, it quickly got back above the 50-day line, whereas SMH is just now fighting for it.

11:20Yeah, it looks like an early entry today. You could also just use the high from a couple weeks ago. Again, it just makes it so tough because if the market sells off, in all likelihood, Teradyne will fall back. It may be a relative strength winner out of that, but you could easily see this coming back to last week's lows or worse, depending on the market. In a better market, I might have jumped on something like this. There's a few names out there that, and maybe this will work. Again, if we rally tomorrow, you know, you could see this one taken off and people who bought this will say, of course you should have bought this, but you don't know that.

11:55Uh, so, but yes, it's been really, it's been really coming on. It's been, you know, here's the base after, after making a big move and having a lot of short consolidations and yes, you could have played them, but here's the first real base, you know, along the way. And that's, that's an opportunity. That's one positive from this correction that we're undergoing is that we're getting some of these leading stocks are setting up in bases. Uh, so a lot to like about this name and it's just, it, the market just makes it tricky on pulling the trigger, but really everybody should be following this one.

12:28Ed Carson:We know that the odds of success go up when you have the market tied in your favor. And I think every trader's perception of risk is a little different. Every trader's risk tolerance is a little different. For those of us who follow the IBD methodology, waiting in large part, if not completely for that follow through day is something that a lot of us follow and helps us with that risk management or risk reward or the odds, right, that we're playing. But even in uncertain market environments, whether a follow through day has happened or not, let's say it does happen and we are still in a risky environment.

13:12Ed Carson:I think at the very least, that's where our other risk management rules come into play, right? Because you have your line in the sand, you have your exit, and you sort of know roughly, you know, barring some sort of 20 % gap down or something, you know generally what you're risking with your stop and with your position size. So at least we do have that in our favor, no matter what conditions are like. Yeah, you want to put the odds as much in your favor as possible and make sure that your losses are as small. So you, you know, like you could have used the 50-day line today, you know, like if it broke below, if you did buy today, use the 50-day line as an exit, you know, if it clearly, if it closed below there or not.

13:54Yeah. And risk tolerance, and if you might have a risk tolerance, but it's important if you have that risk tolerance that you react to the risk as well. I mean, I'm not as nimble as some folks. I don't really like swing trading that much, to be honest with you. And so I'm not as good as -

14:08Ed Carson:You're kind of a busy guy. I'm a busy guy. And so I don't, but anyway, that's just my, I don't, I have trouble pulling that trigger. So when, you know, if you, I sometimes wait a little bit longer because I'm not going to be as good at cutting the losses as fast as, you know, if you are going to be more aggressive and you have to be aggressive going out, especially in this kind of environment, you know? So, you know, that's just, so you have to know your style, know, know what you can handle. Absolutely. What you, what you were bringing up. I agree with what you're bringing up there, Ed. Well said.

14:41Ed Carson:Let's go to Coherent. We also have a trend line setting up for this top stock to watch. Yeah, and this one doesn't have a base yet, but you can imagine that. I think that one, I don't think it has a base yet. I may want to check on a weekly. Now that I think about it, I get confused. All the stocks we look at, yeah, it looks like it needs the end of this week. You know, on a daily, it sort of looks like a double bottom. But if nothing else, there's that trend line. There would be the short-term high. So there's places you could get into this name. optical is one of the this is not in the fiber tylerum optical group but it's an optical stock optical stocks have been extremely strong i'd say along with memory stocks probably the strongest tech areas over the last several months and they're in basing and some of them are a little bit off there but this one's not far from the 50-day line you know it's a little bit some of these other names they have huge names and this one the atr is strong on this one but it's not as high as some, some are like 10%, 15%.

15:36And you get that on a bad or whipsaw day, and you could easily see 20 % moves on some of those names. So again, you'd want to be with your risk tolerance, great if this market could take off. There do seem to be that trend line. There's some other areas where you could either that's where you start or where you add. Strong growth for this name. It's just, you know, a lot of things to like about this. Yeah, because you drew that long-term trend. It was sort of getting up to those levels, but it's based for a while. So you can imagine this one running for a while. Like you could imagine this one running to 340, 350 before getting into trouble, before maybe hitting that channel.

16:13So, I mean, that's one nice thing about getting that base, have a little bit more time to digest. The earnings line is strong. So another one that should be high up on people's watch lists. Agreed, Ed.

16:26Ed Carson:Let's round things out with a look at Williams WNB. And this has some headline risk here because it is an oil and gas name. Shares up 2 % today. We saw so many oil and gas names with a very strong start to the year in January and February. And a number of them have had some orderly digestions as of late. Williams, one of them. Yeah, we'll have to see you right there. Absolutely a headline risk. This is a transportation and storage, I think, of a lot of natural gas. So maybe not directly tied to natural gas prices. And natural gas prices haven't skyrocketed. U.S. natural gas prices are actually pretty low.

17:11That's much more of a domestic thing than oil. Oil tends to be much more global in price. So there is headline risk. And I definitely can imagine if global energy prices tumble that this could be affected negatively. but it might not have that, you know, immediate kind of huge decline that you might see in some other energy names. But, you know, like, so this one's setting up, you know, there's that tight trend line. You can write not as tight, or you could just use the short-term highs. All of this would be pretty close to the 50-day line. So there's some opportunities you could get in there.

17:46You know, so this is just a name. It's been basing. It probably will have a base soon. I think it does already have a base. So you provide an early entry into that new base. But yeah, you'd want to watch for it. I mean, it's just that's, you know, it's something that you have to be careful on. Because if natural gas prices or some kind of measure that maybe I'm not familiar with that would be important to natural gas transportation, you could see a pretty sharp drop.

18:17Ed Carson:I have to see as of right now, this stock is trading about 2 % above the 10-week line and a very orderly base there. So another good one for the watch list. It's been an area of strength. Yeah, absolutely. All right. Well, that's it from us for today, Ed. Thank you as always. And we look forward to seeing you on earnings cheat sheet with Alexis Garcia. A little sneak peek of what you guys will be talking about this week. You know, there's some chip names and there's a lot of banks that are out there. It's like, it's hard to believe it's already earnings season. We just need a little bit more uncertainty to keep us on our toes, I guess.

19:02Exactly.

19:02Ed Carson:We haven't had enough of that. But yeah, that'll be out Friday morning. So yeah, definitely look for that. Yes, we love that weekly series during earnings season with Ed and Lexi. I mean, it's in the name, earnings cheat sheet, everything you need to know to prepare you for the week ahead during earnings season. Don't miss it. Check out that series. All right. Thanks, Ed. And thanks everyone for tuning in. That is it from us for today. and we will be back tomorrow morning on IABD Live, investors.com slash IABD Live for all the details. We will see you then. And then we'll also see you right back here tomorrow after the close.

20:02Hey, this is Telus Demos.

20:03Ed Carson:And I'm Miriam Gottfried. We're reporters at The Wall Street Journal and the hosts of WSJ's Take on the Week. It's a weekly show that gives listeners a leg up in the world of markets and investing. From the Fed's moves to market bubbles, we dive into the biggest deals, key players and business news ahead. If you're looking for more news and tools that you can use to help navigate the markets, consider becoming a subscriber to The Wall Street Journal. Visit subscribe.wsj.com slash take on the week to subscribe now.