Tech Continues Its Bright Burn; Digital Ocean, Crocs, Warrior Met Coal In Focus

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0:17Justin Nielsen:Good afternoon, everyone, and welcome to Stock Market Today for Monday, June 1st. It's Alissa Coram here. And more new highs for the major indexes despite a spike in oil prices. Joining me now to break down the action from today's session is my colleague, Justin Nielsen. Hey, Justin, how's it going?

0:34Alissa Coram:Just fine. Yeah, it seems like with oil prices, it doesn't matter if they're up or down, the market can still power higher. But we'll talk about a few stocks, a little bit of rotation that we're going to kind of cover today, including DigitalOcean. Ticker symbol there is D-O-C-N. Crocs, one that we haven't talked about in quite a while, that's C-R-O-X. And Warrior Met Coal in the coal space, that's H-C-C, ticker symbol there.

0:57Justin Nielsen:Yeah, mixing it up today. No chips, you know? A little bit. A little bit. All right, good stuff. We'll look at the ETF.

1:04Alissa Coram:There you go.

1:05Justin Nielsen:Let's take a look at the major indexes. Here's the NASDAQ composite up four-tenths of a percent on the day to lead the session. Meanwhile, the S &P 500 up a quarter of a percent on the day. The Dow was in the green by about 0.1 percent, reversing higher. Small caps did lag on the day with the Russell 2000, down about four-tenths of a percent or so. But it was able to close off of lows, which was good to see, and close above that 2 ,900 level. Justin, we're continuing to poke into new highs. And the notable milestone today, it seems like we're hitting notable milestones all the time, right? But the one today is the NASDAQ above 27 ,000, closing above that level for the first time.

1:57Alissa Coram:Yeah. And again, it's kind of like that three-day pullback that we saw, which, again, some of the leading stocks were off quite a bit. That just seems like a thing of the past. Again, very quickly recovering. Actually ended up being an opportunity to maybe reload on some stocks if you had gotten out of some things. But, yeah, power trend intact. And remember, look, these pullbacks, that's that's a part of the game here. You know, you don't go straight up every day. The pullbacks, they can be harsh. They can be really rough. You can get drawdowns that maybe get a little bit larger than you like, especially if you're in some of the heat.

2:34Alissa Coram:But at the end of the day, it's a matter of making sure that you're finding, OK, what is what is still working? Is there rotation? Some of the rotation seemed a little bit quick at times. But some of this rotation, especially in software, which we'll talk about in a little bit, is seeming to really catch on. Yeah.

2:51Justin Nielsen:All right. Well, eight days up in a row for the NASDAQ. In terms of levels to watch, Justin, you talked about the power trend. So the 21-day, the green line on the chart remains a critical level in that context. And then the 10-day moving average above that, which we did pierce in that three-day pullback. So right now the Nasdaq composite, it's about 2.1 % above the 10-day and 3.8 % above the 21-day. In terms of extensions, you know, what are you seeing out there with the room that we could have to continue higher from here, perhaps?

3:32Alissa Coram:Well, and that's the thing is a lot of times we talk about the extensions that are normal. And when you start having to be a little bit more cautious, a lot of times that's extensions from the 50 day moving average line. And you can do that in terms of percentage or you can do it in terms of ATR. But you also have to keep in mind early in the rally, which I would say that we still are fairly early in this rally, even though we've come up quite a bit. You know, we are still fairly early in the rally and it's very normal. You can go back to 2025, that kind of V-shaped recovery that we had after the tariff tantrum, or even back to 2020 after COVID, you know, the COVID bear market.

4:10Alissa Coram:A lot of times you can get that extension pretty quickly. That's not necessarily something where you want to do a lot of selling just because you're extended. Because again, a lot of these stocks can go up much further than you think. But at the same time, you have to be ready for some of these pullbacks. It's, again, just a part of the game. And how you get prepared, maybe that is selling some into strength, but keeping a core position, trading around that. Or, you know, maybe you're selling into strength, lightening up, and then you're having to do some buying back. Now, the risk there is that you don't get a pullback and it just keeps on going without you and then you're kind of scrambling.

4:49Alissa Coram:But a lot of times those pullbacks will come, give you opportunities to reload and yeah, just depends on your style. You know, for some folks, that's a lot more work and not always worth it. You know, you can do a lot more work and sometimes you're like, oh, if I would have just held everything, I would have been fine.

5:05Justin Nielsen:Well, you know, it all depends, like you said, on your style and the levels that you're watching and where your entries were, right? Absolutely. But yeah.

5:14Alissa Coram:One thing I will say about the NASDAQ composite in terms of levels, you know, we have that high from just, let's see, that was on the 14th of May. And I like how we kind of came up to that level, had like a two day pause right around there and then kind of really snapped out of that. So that's kind of a first a first area that I'm looking at. Hey, can we get support there? And then, as you mentioned, the 10 day moving average line is certainly another area to look at. And the 21 day moving average line. Look, we haven't had a test of that area in quite a while. This has been quite a run. So that is certainly to be expected as well.

5:54Justin Nielsen:At some point, it'll happen. At some point. We just don't know when. Let's go to the S &P and talk about levels to watch there.

6:02Alissa Coram:So in a similar way, you know, you got that two day pause, you popped out and I'm kind of looking at the same thing, kind of just drawing a line right there. And yeah, seeing if we can hold, same thing. 10 day, 21 day moving average line are also areas to be observing. But certainly it's worth noting that, look, the NASDAQ and tech is certainly the stronger area. So while the S &P 500 is doing fine. And I should also mention RSP, which has, you know, it was a little bit slower to move. But this breakout is holding very nicely. So we do have a lot more breadth behind this. While the small caps underperformed today, they have been participating lately.

6:42Alissa Coram:So that's something to really kind of lean on, I think, that there is more breadth. Some of this rotation isn't necessarily completely abandoning the leaders that were doing so well. It's just adding more fuel to the fire in a lot of ways.

6:58Justin Nielsen:Yeah, that's what we like to see. Okay, let's go to speaking of the rotation. Look at this software assault here. A big move to kick off the week up almost 6 % Justin after blasting above the 200 day line on Friday. This also comes a really strong rally off of the lows, a beaten down group. But it does seem like investors collectively, at least as of now, are breathing a sigh of relief when it comes to what AI means to this sector. So it seems like at least as of now, those worries are behind us. Yeah.

7:41Alissa Coram:And this this area was certainly punished pretty, pretty dramatically. And even when it was starting to come up, it was it was a little tough, right? Because, you know, you tested the 50 day moving average line again. You came down to it. You seem like you were, you know, getting above resistance. There was another test. But the the move here has been quite spectacular off the bottom. And you've got cyber, you know, whether you do CIBR, which I do have a position there that is on Swing Trader or hack. I kind of switched from hack to cyber. both of those are showing one of the areas that are just really taking off.

8:20Alissa Coram:And like, look, today you had so many software stocks to choose from. We've talked earlier on IBD Live about the industry group spreadsheet, how many groups, Twilio, yep, you knew where I was going there, 20 % move here almost. It was up 20 % earlier, only 19 and a half or whatever. So, but gosh, there have been just so many moves here. And of course, we'll cover a software stock. So between the cybersecurity, you know, the enterprise software, specialty software, database software, you name it, there's just a lot of participation in the software. So back from the dead. And this is one of the areas of rotation.

8:58Alissa Coram:A lot of things were getting extended. And then all of a sudden, some of these software stocks coming out and giving you an opportunity. Even Twilio here, nice move out of earnings, had a pullback, really didn't even challenge the lows of that earnings gap up day. And here we are, you know, taking off again. So some very big moves here in software, certainly worth watching for opportunity.

9:21Justin Nielsen:And I just quickly want to point out that this is our stock of the day today.

9:26Alissa Coram:Oh, I missed that myself.

9:28Justin Nielsen:Check that out, everyone. are I helped picked it out. It was, you know, if you have if you have a day where Chris,

9:36Alissa Coram:Ed and Webby are out, you know, so many people.

9:41Justin Nielsen:I was happy, happy to help contribute to that. Of course, I didn't buy it, but shame on me.

9:45Alissa Coram:That's the problem, right? We talked about it so many times on the show on IBD Live. And yeah, sometimes it's hard to actually buy the things we talk about when so many things are working.

9:55Justin Nielsen:Exactly. OK. And you did say we would talk about chips. So let's quickly go there. Perhaps some stalling type action here or losing steam a little bit around the highs, Justin. But what an impressive move we've seen from the chip sector. It's still, I think, is looking really great here.

10:17Alissa Coram:Yeah. And I do have a position in SMH. And look, we can't really talk about chips without talking about NVIDIA. NVIDIA, which I do have a position there. That was looking, you know, very strong, kind of, you know, crossing a downtrend here. So there is, even within sectors, sometimes there can be rotation. So NVIDIA, certainly not the strongest of the chips. You have things like ARM that have just been going crazy. You know, I mean, look at the move on that. And up again, another 15 % today. So it's very hit or miss, you know, what you're in. You know, there are just some spectacular moves in that chip sector and some that are a little bit, they're doing great, but it's hard to compete against things like ARM that are going up so much.

11:05Alissa Coram:But certainly an area of strength, whether you're using SMH or SOXX, or for those that really like the leverage, SOXL. I do have a position there as well, smaller, but a lot of different ways to play that and a lot of stocks to choose from.

11:20Justin Nielsen:Exactly. And what I would say with something like this and a number of the other high flyers is now we're on the lookout for alternative entries, right? Whether it's a high type flag, maybe some sort of short stroke or the Twilio, right? Just a little bit of a pause, pull back to the 21 day, and then it moves out. So there are those potential follow-on opportunities as well versus getting the FOMO with some of the high flyers, right, Justin?

11:48Alissa Coram:Yeah, no, absolutely. And Twilio is a great example. That 21-day moving average line, after having such a strong move on earnings, what did that do? It gave you another chance. It gave you a way to get into the stock while managing risk. And that's really, you know, it's very difficult to get into something unless you can manage your risk. But once you can get something that manages your risk, even if it doesn't work, you can at least get into it because you've got a way to manage that risk. So it just opens up a lot of doors for you.

12:16Justin Nielsen:Yeah, okay. One more theme we wanna look at before we get to the individual stocks, and that is the metals and mining ETF, XME, outpacing the broad market today up 1.8%.

12:31Alissa Coram:Yeah, we're going to talk with Mish Schneider on the podcast this week, so she's going to be on live at 5 Wednesday. Mish, of course, does a lot of what she calls her economic modern family, but she really likes the hard metals, the commodities. She knows her stuff there, and it's interesting because, again, a lot of these metals, whether it's aluminum, things like AA, Alcoa that have been, you know, really moving up well, nicely, or like what we're going to talk about in the coal space, HCC. There's a lot to offer here. And then, you know, of course, you've got your gold, you've got your copper, you've got all these things that, again, a lot of the metals have been doing well.

13:08Alissa Coram:And so XME was something that did join Swing Trader today, a little bit of an undercut of the Friday low and move to higher ground. So again, just one more area that's participating and actionable at this point.

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14:07Justin Nielsen:Up 11 % today.

14:09Alissa Coram:Yeah. So, again, I do have a position in this. Let's go to the weekly chart. the concept behind a high tight flag is that you get this very strong move and where you would normally say okay yeah you've got to consolidate you've got to come in you've got to pull back the the stock just doesn't want to give up much and so you get this very tight action where it's just holding those spectacular gains doesn't want to give them away you can see that it kind of had this a little bit earlier where it did pull back to the 10-week moving average line it was just a a little bit more sloppy in that way. A lot of back and forth action.

14:43Alissa Coram:This one's so much tighter. So this one did join Swing Trader as well. I bought it after the restricted period. A nice look. And it's in that space, the software space, computer software enterprise. We're seeing a lot more of these stocks, you know, come on board. Now, DigitalOcean was already in a different echelon for software, right? It did not have that big drawdown that we saw in IGV and in a lot of software stocks. This one was holding up, really getting support along the 10-week moving average line this whole time. So it was already in an upper echelon. It was already showing relative strength.

15:20Alissa Coram:And now it just gave us a chance to get into it if we hadn't already or to add to it if you did have a position.