Tech Earnings Fuel Bullish Gain For Nasdaq: JFrog, Twilio, Microsoft In Focus

0:09Ken Shreve:Good afternoon, everyone, and welcome to Stock Market Today for Thursday, August 27th. It's Alissa Coram along with Ken Shreve here and software standouts in today's session. And of course, that big reaction from NVIDIA earnings. Ken, what do you have for us? Yeah, lots of great earnings reports and a really strong day for the NASDAQ, Ali. So we're going to take a look at a couple of software stocks. Start by taking a look at Twilio, T-W-L-O in the enterprise software group. Also want to take a look at MegaCap, Microsoft. And let's take a look at a breakout today from JFrog, ticker F-R-O-G. All right.

0:52Ken Shreve:I like it. We'll do that first. Let's check in on the major indexes. A pivotal day here, Ken, and a great close. You see the Nasdaq composite with a day of compelling strength up 1.6%. Meanwhile, the S &P 500 up 7 tenths of a percent on the day. Blue chips up just 2 tenths of a percent. The Russell 2000 up 4 tenths of a So it was absolutely a tech-led day of strength, not only with NVIDIA earnings, but as you mentioned, a lot of strength coming out of the software sector with some big earnings reactions there. And it looks like for the bulls, this is just what the doctor ordered. What do you say?

1:39Yeah, most definitely several days, five days or so of the NASDAQ just kind of, you know, biding time below that 21-day moving average and just kind of sitting above the 50-day moving average. And we were, you know, kind of saying during yesterday's video, Ali, that we were going to probably have a pretty good idea of which way the NASDAQ was going to go, depending on what some of these software companies were going to say after the close yesterday. day, and we ended up getting a lot of really nice earnings reports. Two Dow stocks, Salesforce and NVIDIA, you know, delivered really nice results and several other strong earnings reports.

2:21And we ended up getting a really nice close for the NASDAQ as well. You can see a nice close up near its session high. We didn't get volume come in exceptionally strong on the NASDAQ today, but it did come in a little bit higher than the prior session. So we're still kind of in the late, late summer doldrums here where volume has stayed below average for several weeks now. But we did come in a little bit higher than the prior session. So all in all, a really, really strong technical day for the NASDAQ. Just really, yeah, just stormed above that 10-day moving average. And, you know, the way it looks now, it seems like it could be a clear run towards that 27 ,000 level.

3:10We'll see if the NASDAQ is intent on getting there. We'll see. But really a nice day for tech stocks.

3:19Ken Shreve:Yeah, absolutely agree. And you mentioned the late summer doldrums. Now, of course, we are entering the seasonally weak period of September. But with that being said, even though we're not totally out of the woods, could see some chop from here. You're exactly right, Ken. The technical strength today in the setup. It's not like we were in a weak position heading into today's move like the chips, for example, right? We know that the chips had weakened below the 50-day. And so today's move up, we're still below a declining 50-day. But the positioning for the NASDAQ composite coming down to support at the 50-day and moving above the short-term, moving averages and a previous marked high, as you mentioned.

4:06Ken Shreve:And it's also not like we were in the position where we've already been running and now we're gapping up. So it seems like an ideal time for active investors to be adding exposure to their portfolios. When we see this type of action, this type of setup, whether on the index level or in an individual leading stock, this is right when it's time to strike. Yeah. I mean, we were on IBD Live this morning and we were discussing, you know, a lot of actionable stocks on the show this morning. even NVIDIA had a nice move today. And we had a nice clear buy point for NVIDIA at$227.92. Not marked on the chart there, but yeah, just that high that it broke out.

4:58And it closed at$227.98 today. So the high point of that recent high,$227.92. So this is a stock, even though it made a very big percentage gain today, it closed just a little bit above that pivot. So, you know, a great day for NVIDIA. Of course, the fiscal, the guidance, revenue guidance for fiscal 2027 was significantly higher than expected. and that allayed a lot of fears about the AI spend and just more good news from NVIDIA and just a really nice close for NVIDIA and just a really strong day. Now, we were fortunate to have our news editor, Ed Carson, in the office today sitting across from me and we had nice conversations.

5:55We were surprised, maybe, I don't know, not surprised. We've been complaining about market breadth seemingly for weeks and weeks and weeks today, but very surprised on the NASDAQ to see, you know, breadth barely positive today because it just seemed like, you know, looking inside the NASDAQ 100, there seemed to be a lot of stocks moving higher and, you know, broad-based strength across, you know, a variety of different subgroups in the NASDAQ. But I checked breadth sort of late in the session, and it was like 12 to 11 positive. And over on the New York Stock Exchange, the breadth was actually negative on the New York Stock Exchange.

6:33So that was a bit curious today to see so much strength on the NASDAQ and the New York Stock Exchange. I didn't get a final tally on breadth today, but maybe a little bit later we can check RSP and QQQB. Yeah, okay. We're there on the RRSP. There we go. So you see RRSP. I got you. Okay, you got me. And so, you know, on a day where the S &P 500 didn't rise nearly as much as the NASDAQ, but still, you know, a decent day for the S &P 500 up 0.7 % and a close near highs. The equal weighted RRSP was actually negative today. So that was a bit curious. You know, obviously not going to change our view on a really, really solid day for the market.

7:23But yeah, Brett, a little bit disappointing today.

7:27Ken Shreve:You know what? I feel like this is one of those elements, Ken, where we're going to be throwing some curveballs, right? Because it seems like recently we saw the index level weakness, but Brett was doing good. So, okay, underneath the surface, maybe we're seeing a little bit of a different story. Now we're seeing the pendulum swing the other way. So, you know, what pitch do we focus on, right? How concerned should we be about weakening breadth? It does feel like investors are having to be a bit more discerning about what stocks to buy versus just this, you know, sector-wide or thematic stampede that we saw in March and April.

8:13Ken Shreve:So we'll focus on the setups. We'll focus on the leaders and keep track of that breadth component, as you mentioned. Yeah, and I think you just obviously just need to be concerned about price. And when you look at the NASDAQ's price action today and you look at the S &P's price action today, you got a close near highs and a move above some key moving averages today. So that's a positive. And for the S &P 500 as well, you know, several days in a row below that 10-day moving average. And that can also be a resistance level as well, but not today. Just powered right through it. And we'll see if the S &P 500 is going to make a run at 7 ,800 now.

9:01Ken Shreve:Exactly. Yeah. Because we would definitely want to see, after strength like today, you really want to see that momentum continue. The expectation would be a continuation of this move to the upside, at least in the short term. I quickly want to check out the software sector. I did pick up a position in IGV this morning. And hey, we gave the Stock Market Today audience a heads up on this trade on the show yesterday afternoon and look at the breakout here for software. We're going to take a look at three software names in this show. So look at this ETF, 7.6%, an unleveraged sector ETF. That's pretty good.

9:45It's pretty amazing. And honestly, we were pretty much all over this software trade, even when IGV first started coming off its lows several weeks ago. We started to see this when the chip startoff initially started. The rotation there. Yeah, the rotation started in these software stocks. So this move started several weeks ago. But yeah, I mean, just an incredible move today. Even if you look at the enterprise software group, so if you pull up ServiceNow, which had a breakout today, and this has been kind of a laggard in the enterprise software group, but look at the enterprise software group itself.

10:34This is an industry group chart, but the enterprise software industry group had a great technical breakout itself today. Kind of a similar look to IGV, the ETF, but enterprise software, yeah, had a nice breakout itself today. So software stocks working quite well. Yeah. Hack ETF, yeah.

10:54Ken Shreve:Exactly. Yeah, we talked about earnings out last night from both CrowdStrike and Okta. So fueling a group move there for this subgroup in software cybersecurity hack up 8.2%. So we wanted to give that a shout out. Let's move on, Ken, and take a look at Frog leaping out of a base here up 12 % RS line blue dot. This was not an earnings move, just a very powerful technical breakout. Yes, nice breakout for Frog, and this is kind of a classic-looking cup-with-handle base and a breakout handle that formed just underneath the 100-level. Kind of an interesting company here. This is a company that basically operates a software supply chain platform.

11:44They compete with probably two companies that aren't in the exact same business but do similar things. Atlassian is a company that competes partially with JFrog and also GitLab, GTLB. LLB, so sort of like a software repository. They call them like an artifactory, but basically software supply chain platform. But JFrog is very interesting because, again, just sort of like Atlassian, very, very consistent track record of earnings. So go back to Frog and just look at recent earnings growth, FROG. And you can see just very, very steady earnings and sales here. But just a classic breakout. You've got the relative strength line with a blue dot right at the end here.

12:41So the relative strength line is shooting into new high ground with the stock. And you can see the stock broke out. Two earnings reports it broke out on earnings. reported earnings not that long ago. Also had a positive response several weeks ago when it reported. So nice breakout today. It closed right at the, just past the 5 % buy zone here. So this is a stock, you never know, it could start pulling back in light volume, you know, in coming days. So just because it's a little extended now doesn't mean it couldn't pull back in light volume and maybe retest that prior buy area here. But kind of a longtime leader in the enterprise software group.

13:28And maybe keep an eye and see if we can get a low-volume pullback here. But kind of a unique company in the enterprise software group. And, you know, kind of keep an eye on it and see how it trades from here. But good long-term track record of growth and nice breakout today. I think it was the only stock in the market surge, Growth 250, that made the actual breakout screen today. today. So, yeah.

13:54Ken Shreve:Good shout out. There you go. Yeah. Love that strength of the relative strength line on the weekly chart and the accelerating growth, the outstanding fundamentals that you mentioned, Ken. Moving on, let's check out Twilio. I know our friend Arnie was giving this some love on IBD Live this morning and up 5.6 % on the day, retaking a buy zone, that prior buy point. Around that 238 level can gap up on earnings a couple of weeks ago. So this also riding the software sector momentum wave today. Yes, sort of cloud communications platform for Twilio. And again, a lot of these enterprise software stocks have had And the fundamentals are just really pronounced in this group.

14:51And Twilio, you can look in the annual earnings, just very, very steady growth here as well. So just consistent quarter after quarter after quarter. Like the fact that this is back in a buy zone here, nice gap up, back into a buy zone. And, you know, just another stock that gapped up on earnings, recently pulled back right down to the 21-day moving average and, you know, certainly participated in that software rally today. So just broad-based strength in that enterprise software group and a stock that is, you know, back in a buy zone here. excellent sponsorship great numbers from uh ibd you know top top rated and in a lot of a lot of different areas here so um you know i just think this is uh one of many really really solid names uh in in the group here and uh you know nice uh nice nice setup here you know not looking at a stock that is uh super far gone and super far extended here just kind of uh kind of could still be in the early stages of a move here and just kind of consolidating and in the early stages of coming out of a base here, kind of, you know, just sitting right in a buy area here and looking nice and tidy, actually.

16:21Ken Shreve:Yeah, stage two uptrend. We like to see it. Okay, let's take a look at one of the big daddies of the group, Mr. Softy Microsoft, up 1.7 % on the day. Honestly, Ken, it feels like Microsoft's earnings, quite a catalyst for the sector and AI-related names, of course not widespread, but a number of the AI-related software names a number of weeks back, kind of kicking off a reinvigoration, so to speak, of the interest in the software sector. Well, the thing about Microsoft's earnings, you know, the reason why it was up so much the last time they reported earnings was because this was really the first company, you know, this whole monetization of AI, and there was a lot of apprehension, you know, when are companies really going to start monetizing AI?

17:17And with Microsoft, with Azure, their cloud services and Copilot, they're showing accelerating growth in their Azure cloud services when Copilot is part of that. And growth is accelerating there. And in the latest quarter, Azure was up more than 40 % year over year. So that business has been accelerating. and they're actually showing the street that they're starting to monetize it. I think that's why I don't remember how much the stock was up more than 15 % on that earnings day. And you're talking a stock, trillions of dollars in market cap. And yeah, let's see, Microsoft was up. Yeah, it was up 15%, and you're talking a market cap, what, north of$3 trillion here.

18:10So, you know, big, big buyers in the stock after earnings. But, you know, when you're having your cloud services growth accelerating like it is a company this big, it's just, you know, Wall Street is taking notice. So it gapped up and it's performed well since then. And here it is on the verge of another breakout today. And it participated in that software rally again today, crossing the 500 level and approaching a new pivot here. So just below that 513 pivot. So I think this is a stock with the NASDAQ acting well, you know, could try to break out again here. Now, maybe it's going to pause here.

18:52It's, you know, been on quite a run up several days in a row. So it could just kind of, you know, buy time here and maybe pause and take a little breather. But we'll keep an eye on this one and see if it's going to try to break out over that 5.13 pivot. But showing incredible relative strength here in a very hot industry group. So it may not try to run immediately, but we'll keep an eye and see if Microsoft can eventually move over that recent high of 5.13. But like the look of the relative strength line here in light of a very strong recent earnings report and just the shape of the software sector in general here, not a bad idea keeping an eye on a mega cap like this one.

19:36Ken Shreve:Okay, let's try to do a rapid fire earnings review, Ken, just one day after we got earnings from CrowdStrike and Okta rubric out tonight. And this one's down hard. In the regular session, in sympathy with its peers, up 11.3%. But after hours down, I'm seeing 9 % to 10 % decline there. Let's see how that's hitting the group. I'm looking at the HAC ETF, not seeing a whole lot of movement there, the Cyber ETF. But let's look at some of the individual names, like the CrowdStrike. Not moving a whole lot on this report from Rubrik, so perhaps isolated to just the company versus these big group moves that we saw today.

20:24Ken Shreve:Let's see what else. On the upside, ESTC, Elastic, in the database software group. This is a rubber band type move. up 18%, Ken. Yeah. So that's great to see. Database software had some ants recently due to, yeah, really, really strong heavy volume move and a pullback here. So yeah, really nice move for Elastic. And yeah, another strong industry group here. Yeah, very nice move from Elastic, yeah. Yeah, so it'll be interesting to see how it acts around that 100 level if it can get there in the regular session tomorrow. You know, looking at this 18-month line, it is, you know, below its 52-week highs.

21:22Ken Shreve:And we'll have to see if there's any sort of overhead type situation. Yeah, sitting right at 100 in after hours here. So, that'll be a round number. It'll try to conquer. Yep. Okay. So let's get Ken's hot take on Marvell's earnings reaction down 3%. Yeah, not too bad. I mean, this was a big, big winner in the chip space and right along with Estera Labs and just one that's been struggling. I thought this one was going to have a chance to move after NVIDIA's earnings report, but it tried to cross that 250 level, reversed lower today. Earnings after the close is sort of a muted reaction so far, just down a little bit, but it was expected to deliver strong numbers and still a very, very strong growth trajectory.

22:16This company competes with Broadcom, heavily competes with Broadcom in the chip design area. I think they do a lot of business with Alphabet, do some chip design with Alphabet. So we'll see. You know, just a muted reaction so far. Still growth prospects very bright for Marvell, but we'll see. These chip stocks, as we discussed yesterday, still have a lot of overhead supply after pretty sharp sell-offs here. So Marvell's back above the 50-day moving average. That's a positive. of a lot of chip stocks can't say that, but tough day today in light of strong results from NVIDIA.

22:57Ken Shreve:Okay, a couple more quick ones. Here's S-Sentinel1 in the security software group, along with Rubrik, down 6%. Then a couple of other software names, Workday Enterprise Software, down 5%. And ADSK, this is Autodesk in the design software group, down 7 % after a healthy 6 % gain in the regular session today. So it seems like a number of these software names that reported tonight, not as big headlining type names that we saw in the prior after hours session. But what's your read on some of these early reactions? Yeah, well, Rubrik was a bit all over the place, headed into earnings, big, big earnings rally.

23:52I mean, this was a stock that fell sharply just a couple of days ago down to the 21-day line and then rallied yesterday and then a big rally ahead of earnings. So we had Rubrik on leaderboard a few weeks ago, got shaken out of it. So we were kind of following it. But yeah, very, I mean, this is not a great earnings reaction at all. Well, Sentinel-1 also, you know, again, these are not leaders in the group. We know that the CrowdStrikes and the Palo Altos and the Fortinets are kind of the big, big leaders here. So, you know, Rubrik and Sentinel-1, nice pre-earnings rallies. But again, these are kind of the second, maybe third-tier stocks in the group here.

24:33So maybe not a big surprise to see the earnings reactions that we're seeing here.

24:39Ken Shreve:you know okay well uh and looking at the igb etf seeing that down about a half a percent right now but we'll be tracking uh friday's session it's going to be an important close for the weekend with the broad market trying to get back on its feet here back in rally mode yeah we'll see if we can get some uh we can get some follow-through uh tomorrow and uh if we don't I don't know if it's a complete deal breaker, but if we, you know, just get, you know, just kind of tight, tight action and maybe just a modest low volume decline, that's not a bad thing either. But maybe, you know, a little follow through wouldn't be bad, but just a quiet orderly, you know, session tomorrow wouldn't be so bad as well.

25:24So we'll see.

25:25Ken Shreve:We'll put in our orders for either one of those scenarios. Mark it. I like it. I like it. Ken's writing the prescription for us. That's right. That's right. All right. Good stuff. Thank you, as always, Ken. All right. My pleasure. Thanks, everyone, for tuning in. That's it from us for today. But the team will be back tomorrow morning on IABD Live. Investors.com slash IABD Live for all the details. I'm out tomorrow, so you will not see me on IABD Live or Stock Market today, unfortunately. But you, of course, are in very good hands with the team. I'll see you back here next week. And the team will see you tomorrow, everyone.