Strength In Indexes Not Good News For All Stocks. GE Aerospace, Broadcom, Palantir In Focus.

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0:40Good afternoon, everyone, and welcome to Stock Market Today for Monday, October 27th. It's Alexis Garcia here. And stocks sprang higher today on rising hopes of a comprehensive U.S.-China trade deal Qualcomm was also a big mover today after announcing an AI chip set to compete with NVIDIA and AMD. But the strength in the market was not good news for all stocks. So here with me to break things down and tell you everything you need to know about today's trading action is IBD Market Research Director Justin Nielsen. So Justin, what's on tap for us today?

1:21Alexis Garcia:Well, we are going to focus on the good news. So we had a few stocks setting up. I will tell you the most difficult thing right now about finding great setups is you look at some stocks and earnings are right around the corner. Earnings are here. I'm really glad that you and Ed are doing your Friday earnings cheat sheet because otherwise, what would people do, right? But we'll talk about GE. We're doing our best. Yes, we'll talk about GE Aerospace, Broadcom with that silly symbol AVGO that they decided to keep. And then also we'll end with Palantir because a lot of people are taking a look at that.

1:53Alexis Garcia:I do have a position in Broadcom. All right, Justin. Well, we'll get to those stocks, but let's just check on the major indexes first. The S &P 500 finishing the day up 1.2 percent. The Dow up 7 tenths of a percent. The Nasdaq up 1.9 percent. And small caps up about 4 tenths of a percent. So let me get my screen share going here. But talk to me. We have a very busy week here. We've got a slew of mega cap earnings on deck. We've got some potential Fed news happening. We also have this China trade agreement in the balance as well, just to make things interesting. So how are you kind of approaching all these big news items this week?

2:40And how do you think investors should really be looking at the market right now?

2:44Alexis Garcia:Yeah. And let's not forget that we have the daylight savings time whole switcheroo of the... It just feels really rude after this meeting. So I'm glad you said something because I forgot completely. But you know what? It's so funny because as much as we were kind of wringing our hands about that October 10th big drop that we had. And again, what started it? Well, the rare earths that China was curbing. So the big thing is that, you know, as much as we were going sideways, the fact that we popped up on Friday really kind of changed the way we were looking at things. And the follow up today, it's a nice, nice move.

3:21Alexis Garcia:The problem is, again, as we talked about at the beginning, is there are a lot of stocks that are, you know, faced with earnings coming up. And actually, a lot of stocks are feeling extended now in just two days, with a lot of them really kind of moving so strongly. But look, as much as we were kind of thinking sideways for a while, we had to shift that on Friday. We had moved our exposure up that day. And it's just it's back to an uptrend very clearly. We're trending above that 21 day moving average line. We're not going to fight the market and say, oh, but we thought it was going to be sideways.

3:54Alexis Garcia:It's, hey, the market turns, we turn. All right. Well, let's just check in on small caps with IWM here, Justin, because, again, this one, a little bit of a, laggard today, but also seems like it's wanting to get back above these recent highs. So any thoughts here with IWM? Yeah. And initially I thought, you know, IWM was the stuff because it was the first one to get above its October 10th high. But it came in fairly sharply, back below its 21-day moving average line. And it's lagging a little bit right now in its relative strength versus the S &P 500 and NASDAQ. So I'm still keeping an eye on it.

4:33Alexis Garcia:But right now, my focus is a little bit more shifted back towards the NASDAQ composite and the Qs. And let's take a look at RRSP. Just give me your thoughts on market breadth here. This up about four-tenths of a percent today. And again, seems like a number of stocks are participating here. Yeah, it's nice to see that, you know, this is the equal-weighted S &P 500. So we're going to talk about some of the areas that weren't doing so great. But overall, you do have a little bit more participation. And I'm watching very closely to see how this closes. You know, Friday was not a great close necessarily.

5:09Alexis Garcia:It was well off its highs, as were a lot of stocks. But today was a little bit better. There were still stocks that were off their highs, some things that were looking great this morning that didn't finish so great. But RSP finishing high in the range, that was encouraging to me. And what about QQEW? That's the NASDAQ 100 equal weighted ETF. This one jumping 1.2 % today definitely looks like it closed in the upper part of that range. Yeah. And when you have a gap up and you're still able to hold those gains and build upon them, that's a good look. And so the fact that you have the equal weight of now, look, technology does seem to be where the money is flowing right back into.

5:46Alexis Garcia:And this is the top 100 stocks on the NASDAQ that are non-financial. So that means it's got a very high technology bent and that's where the money's at. So it's no big surprise that QQEW is doing as well, as it is. Let's check in on the 10-year treasury yield, Justin. This one, pretty flat today, holding at this four level here. So any thoughts or anything we need to be aware of with the treasury yield? Well, you know, usually I'm thinking of this as being a little bit more positive for the small caps. And I mean, for the market in general, but especially for the small cap indexes, it's certainly something to watch.

6:24Alexis Garcia:One of the things that we were taking a look at today that looked a little interesting was TLT, which is the 20 plus year treasury bond. So this is, you know, this was looking interesting as well. So, you know, it's something that we watch, but we don't have to spend too much time because sometimes those correlations match and do what you would expect. Sometimes they don't. At the end of the day, unless there's a chart that I can trade off of, I'm not really doing much with the treasuries myself. And I just want to look, at Qualcomm really quickly, because you mentioned some stocks that were big movers, but came off their highs.

7:01Qualcomm today certainly fit that bill up over 11 percent, but, you know, finishing in the middle of this trading range. But obviously, this was one that was grabbing a lot of headlines today.

7:13Alexis Garcia:Yeah, absolutely. And I mean, it's one of those things where, OK, you traded, you know, well off your highs. You know, it was up over, you know, 20 percent intraday, close to the beginning of the day. It still has earnings coming up. But look, 11 % is nothing to cry about. So a very big move. And, you know, that had some effects on some other stocks. I believe Arm was helped a little bit by that, you know, what was going on with Qualcomm. And look, the chips overall, if we just look at SMH, you know, that has been looking really strong. Very similar to what the NASDAQ 100, the Qs look like, but very strong action here by the chips.

7:53And let's take a look at some sector ETFs starting with FFTY. That's the IBD50 ETF. This, another gain of 1.6 % today. And again, building on these gains over the last few trading days, Justin, and getting over this 40 level.

8:09Alexis Garcia:Yeah. And one of the things that's interesting here is this was really kind of filled for a while there with a lot of gold stocks because those were doing so well. And the fact that this was doing so well today, despite gold not looking so great, I think is because a lot of those gold stocks are starting to phase out of this ETF right now. And, you know, it's going more towards the growth and outside of gold. Well, let's just take a look at GLD really quickly. That is the gold shares ETF. And we've seen this skid over the last week down at 2.8 percent today, closing below this 21 day line, Justin.

8:46So maybe the gold run here over. Yeah.

8:51Alexis Garcia:And if you look at GDX, which is the gold miners, taking an even harder hit today, down more than 4 percent and below the 50 day moving average line. Closed a little bit off the highs, but still, this is its first crack of the 50 day moving average line since back in July, where, you know, we really saw some some huge rally in the gold miners. So definitely you've had your shots across the bow as your warnings. So be very careful with these. All right. Well, let's take a look at IGV. That's the software ETF. This went up nine tenths of a percent today. And it looks like it's close to getting near these highs here, Justin, of 117.99.

9:33Alexis Garcia:So off its highs. But again, this is, you know, two back to back gap ups really kind of changing the look of the sideways action that we were seeing. So I'm encouraged this, you know, was able to challenge that 117.99 area. I'd like to see it get above there. But, you know, you're definitely seeing some some strength there. And you're seeing members of computer software enterprise group, the database and data storage and cybersecurity. there's a lot of areas in the software that are starting to participate more and more. So again, it's just kind of this technology shift back, you know, back on investors' top earners.

10:11All right, let's take a look at FXI. That is the China LC ETF, this up 1.3 % today. So possibly getting a boost from trade talks here, Justin, but what's going on here?

10:24Alexis Garcia:Yeah, no big surprise. China is going to be a beneficiary here if a deal can be made. Both U.S. and China. Because, yeah, when the parents fight, nobody wins, right? So we don't really want this to turn into a tit for tat. But it's, yeah, really strong action. Of course, you know, some of the members of the China that we have been really looking, you know, looking at closely include Alibaba. That's been kind of a stalwart leader in that space. Futu, F-U-T-U, has been Another one that, you know, has gotten a lot of attention. PDD as well, that broke out to new highs today. So a lot of things looking kind of interesting in that space.

11:06And then let's just wrap up the sector look with REMX. That's the Rare Earth ETF. This down at 5.2 % today, breaking this 21-day line.

11:18Alexis Garcia:Yeah, so no big surprise if this is kind of figured out. a lot of those pricing pressures that we're sending this upwards, you know, might not be so great. So some of the stocks that we were looking at there include like MP Materials, ticker symbol MP. That's one that we've been watching very closely. And I mean, it had that strong breakout, but now, you know, again, the pricing, this news just really kind of changes things. And so I think this would be very difficult to play some of these rare earth metals right now, at least on the short term until you have a little bit more sense of exactly what's happening with this deal.

12:18Various 18+. Well, let's move on to some individual stock names then, starting with GE Aerospace. This went up 2.9 % today. And again, a nice finish here at the upper end of that trading range, Justin, and looks like it's just shy of this 316.53 high.

12:37Alexis Garcia:Yeah, it was a real disappointing kind of reaction. I mean, it was up on its earnings report, but closed well in the the lower part of the range. And look, you still had a market that was, you know, struggling a little bit to get some grounding. But the fact that we're retaking those levels of resistance, I think was a big positive here today. And look, aerospace has been doing very well. And GE is certainly one of the stronger names out there. Now, this is not one that is a big screamer. The ATR is milder on this. So sometimes it's a little nice to get those ones that are not moving as as much.

13:12Alexis Garcia:This is just a little bit more of a steady mover. And that can be nice for the portfolio to give you a little bit of balance and not as much whippiness. And this has been trending very nicely above the 10-week moving average line. You've got some tight action. Let that 10-week moving average line catch up to it a little bit. And now it looks like it's on the verge of breaking out to new highs. I should also mention this was our stock of the day today, IBD stock of the day. Kit Norton wrote a really nice piece on this. So definitely check that out. All right. Well, let's move on and take a look at AVGO.

13:46That's Broadcom. This went up 2.2 % today. It looks like it's sitting right at that 363.24 cup with handle buy point.

13:56Alexis Garcia:Yeah, and maybe a little bit late for a swing trade, but this is really set up nicely for a position trade. So your classic cup with handle and like GE, we've got earnings behind us on GE. This has earnings far enough away that you really don't have to worry about it. Now, just because you don't have to worry about earnings on this one doesn't mean you don't have to worry about earnings at all. There's a lot of stocks that are coming out soon that will be affecting their vendors, their suppliers and everything else. So that's something to be keeping an eye on. But a really nice cup with handle.

14:27Alexis Garcia:Its depth is only 13 percent. So you could actually call this flat base-ish, too. It kind of fits the bill there in terms of its depth. But a really nice look here. And it's right on the verge of crossing the high of the handle. So while, again, it might be a little extended for a swing trade, it's really poised for a nice position trade as soon as it gets up above that traditional high of the handle. And also good reminder there, Justin, to keep an eye on those related industries and companies. If you're following these stocks, their earnings could move this. We've got a lot of big tech earnings this week.

15:01So definitely something to keep an eye on there. Let's take a look at Palantir. That's PLTR. This up 2.5 % today, falling off highs, but still in a buy zone here, Justin, after crossing this 188.20 point here.

15:18Alexis Garcia:Yeah, so this is in that computer software enterprise area, but it also has some of that exposure to defense as well. So it's kind of a mixture of a lot of these areas of strength. I mean, it's got some AI, it's got a little bit of everything, but it also has earnings coming up. So be very careful here. But it's nice to see, again, more and more participation from some of these. I mean, you can call them the old leaders, the old guard. The money seems to be flowing right back to them. And so that's, you know, these are the ones that need to be on your radar. You know, you can look at this and say, gosh, it's already moved so much.

15:53Alexis Garcia:And, you know, what more can you expect of it? But sometimes these can surprise you. And so I think it's definitely one of those to be keeping an eye on. And it certainly has the fundamentals chops with an EPS rating of 98. and double digit gains as far as the eye can see in both earnings and revenue growth. All right, Justin. Well, thank you so much for your insights today. And why don't you fill us in on what you have on tap this week? Well, looking forward to Mark Minterbini coming on the podcast on Wednesday. So that's a big thing. We've got Jim Ropel, who will be on next week on Monday. So that's just a little heads up.

16:28Alexis Garcia:We've got, you know, two greats within a week's time. And then Don Vandenbord is going to be on IBD Live on Friday. I'll be hosting that show on our Halloween special, I guess. And Don Vandenbord, of course, from Revere Asset Management is, I just really like his approach to risk management, you know, the way he looks at things. So for those that haven't gotten on IBD Live yet, that's definitely worth taking a look at this week on Friday. All right. Well, a lot of good stuff coming. Thank you so much, Justin. and that wraps it up for us today. We'll be back tomorrow morning with more market analysis starting with IBD Live.

17:08You can head on over to investors.com slash IBD Live for all the details there. Thank you so much for watching and we'll see you right back here tomorrow after the close.

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