Techs Fall On OpenAI, Pare Losses; Celestica, Franklin Resources, Scorpio Tankers In Focus

0:00Ed Carson:Still running global payroll like a relay race? Deal replaces fragmented payroll vendors with one global system. No third parties. Hire, manage, and pay teams in 150-plus countries with in-house local experts and white-glove delivery. And Deal plugs into what you already use. Workday, SAP, NetSuite. Operate like a local everywhere. Visit deel.com slash wsj. That's deel.com slash wsj.

0:41Ed Carson:good afternoon everyone and welcome to stock market today for tuesday april 28th it's alissa corham here and tech stocks retreating today on open ai fears rippling through the ai ecosystem but stocks were able to finish off lows and a big earnings week continues. We'll have to see how that continues to shape the conversation around the AI theme. Joining me now to discuss today's market action and some stocks for our radar is my colleague Ed Carson. Ed, what do you have for us? Hey, Ali. I'd like to take a look at Celestica, Franklin Resources, and Scorpio Tankers. All right, we'll take a look at those stocks.

1:20But first, a closer look at the major indexes.

1:24Ed Carson:So red on the screen today, but could have been worse. The Nasdaq down nine-tenths of a percent. You can see closing off lows on the day. The most damage was in small caps with the Russell down about 1.2 % on the day. The S &P 500's decline was about a half a percent, and the Dow just edged lower today. Ed, so talk to us a little bit more about what drove the sell-off in today's session. Yeah, there's a few things. There was a report in the Wall Street Journal that OpenAI missed user and revenue targets in 2025, raising concerns about whether or not they would raise enough money to pay for all their spending commitments, which then raises concerns about how much demand will there be for all these data centers and stuff out there.

2:10It just renewed that. OpenAI refuted that, but that was still out there. There was also some weak earnings, including Celestica that was out there. And oil prices went up again. And there might be some jitters when you take a look, when people may have been looking for an excuse to sell ahead of Google and Meta and Microsoft and Amazon tomorrow night. So if you look at the index, there were some heavy losses in individual stocks. But if you look at that index, I mean, the major index is held above their 10-day lines. You know, a pause here would be fine. We've run up a lot. So I don't want to make too much of it.

2:49So yeah, it's not fun if a stock falls 5%, 7%. But a lot of those stocks have risen 30%, 40 % in the past two or three, four weeks. So you can't get too upset about that.

3:03Ed Carson:Exactly. Yeah, it's not like this is another deep seek day or, you know, the first realization about the AI impact on the software sector, that sort of action that we had seen in the past. It seems like perhaps, at least as of now, that selling a little bit contained, but we could perhaps see a little bit more color to the conversation this week with all of the big cap earnings. Right, Ed? Yeah, and that's going to be important. And the capital spending in particular is going to be important, what they have to say. And again, everybody expects it to be bullish, but that does raise the possibility of being somewhat disappointing.

3:42And it's like if it doesn't go to 11, are people going to be disappointed if the spending is still very strong? And, you know, but so that's all there is. And so maybe it's good that we took a break heading into it because there's less of a chance of a big disappointment over the next couple of days, you know, if you have that, you know, having had today. Not that today was that big of a deal.

4:04Ed Carson:Yeah, curbing the enthusiasm, dialing that back just a little bit. And as you said, just purely from a technical standpoint, a pause here would be constructive, right? Seeing a little bit of a pullback would be normal at this stage, given how much we've ran up. But then again, the earnings news could also be a catalyst for a continuation of this hot streak that we've been on. Yeah, absolutely. I mean, ideally, we'd pause for a while. But in the biggest earnings week of the year, and there's tons of earnings next week, seems unlikely. But yeah, this could very well be a positive catalyst, just like it was last time.

4:45Every quarter, we go, are they going to say something that makes you a little nervous? And they just haven't so far, you know, but at least not for AI spending in general. So it could very well be great news. So it's not like people should necessarily be selling. I think that maybe tomorrow people shouldn't necessarily be too excited about buying a bunch of techs right ahead of all that stuff coming in because you're almost doing, you know, betting on black or betting on red. You don't know what's going to happen. But I don't think there's any reason other than individual stocks that people needed to be selling things today.

5:21Ed Carson:Exactly. Look at those sell signals. And then we do have levels on the downside for all of the indexes that we look at, whether it's recent price areas, 10-day moving average as well that you mentioned that the indexes are holding above. Also on the NASDAQ here, that breakout area around 24 ,000. And so if we did see a pullback over a couple of days, what does it look like and where does it stop? Those are some of the clues that we are going to be looking for to sort of gauge the health of this power trend that we are now in. Yeah, absolutely. OK, let's take a look at the S &P 500. Similar action here as well.

6:04Ed Carson:What levels are you looking at, Ed? Yeah, I mean, I like it to hold a 10-day line. It's held this pretty much the whole way. Since the first day of the rally, and that'd be such a minor thing, but then holding, I think, that 7 ,000 level, which is also sort of the top of that whole range, that would be where it is. And unless this came right down, the 21-day line would be catching up to that pretty quickly. It seems like that'll be getting to that in a few days. So that would be the area where it started getting a little more nervous about how things are. Not saying that everything, again, would be falling apart, but that would just be an area where you'd like it to hold support.

6:39Ed Carson:Absolutely. Okay, quick thoughts on blue chips and small caps before we move on here. Yeah, I mean, this hasn't been moving up, and it didn't really fall that much. So it's nice that the laggard area hasn't really fallen off. It's formed a handle. I mean, we'd like to see some bases like this, but the thing is, with bases like this, the relative strength lines aren't that great. And that's just sort of one of those back and forths. A lot of the good stuff is already gone, and so it makes it a little trickier right now. It does. OK, and then here's a look at the Russell. A little bit more of a pause that we can see on the chart here.

7:18Yeah, and that's not the worst thing if, again, takes off. You'd like it to hold above the top of this base. You know, that's sort of, not the base, but this area, the trading range. But, you know, it's still acting pretty well. So, again, if I saw stocks with high handles and then we move back up, that could be pretty intriguing because those are going to be stocks that maybe have better relative strength. And they've shaken some people out. So this still looks good. Just want to watch it and see it hold here.

7:47Ed Carson:Yeah, we'll see if those additional buy points in the leaders can develop. And here's a look at RSP. So your average stock also seeing a handle form here. But to your point, that relative strength looking a bit on the weaker side. And here's a look at QQQE, equal weighted NASDAQ 100. So notable tech selling here. Yeah, notable tech selling. It was pretty broad. And I think on the RSP shows it wasn't just techs. You know, there were other things going on. It would be nice to see this come back a little bit. But it also shows that, yeah, AI had a bad day. But clearly AI and chips and those kind of things are clearly what's leading.

8:28They're not the only things moving, but that's clearly been the driver in the last few weeks.

8:34Ed Carson:Well, one sector right in the middle of the AI theme would be the chips. So here's a look at SMH down 2.9 % on the day. But Ed, this has had an impeccable move here. What a run that this has had since the follow through day. So yeah, news related behind the selling today here, news related to dip, but seems like it's totally reasonable to see the chips take a little bit of a breather here. And it still looks strong. Yeah. I mean, I own some of this. And look, it hasn't come close to the 10-day line this whole way up. I mean, it's hard to get excited about, you know, disappointed with that. So it's at a down day.

9:20We'll see how things are. There's some stuff out for the close that looks pretty good so far. So you can see there's a bit of a bounce after the close. So, yeah, chips seem to be acting are definitely a leadership spot, and even not just the AI, stuff that's not even very AI. It seems like chips in general, analog chips, and a lot of chips that aren't as like the cutting edge are coming on in a way. So, very strong area.

9:46Ed Carson:And another technical element here is if you look going back to last summer, the rate of ascent here, it got a little overheated. So above an upper channel line, so that's something else that, you know, in a raging bull market, you can have these periods last, right? But just a factor to be aware of, at least for some short-term heat. Yeah, maybe there's nothing wrong with cooling it down just a little bit, you know? It seems like some of these things have gotten pretty hot. Yeah. All right. You mentioned oil. So let's do a quick check in on USO. Yeah. Crude oil. And this is the June crude. I don't think June crude had gotten, which is now the near term contract last week or so.

10:31It almost was at 100. It got above 100 intraday. Brent crude and international is 110. It's pricey. I mean, that's an impact. And probably one reason why RRSP is down. Yes, energy went up, but a lot of non-tech sectors that have tighter margins and that are more in the real world, those energy costs are going to come in. And that's an impact, either affecting them or their customers. So that's something, you know, that's out there as well.

11:03Ed Carson:Yes. Okay. One more ETF to take a look at. And let's take a look at the regional banks here. Ed, an update. Yeah, there's some nice things in the regional banks or just banks, you know. I mean, there's the financial sector not so much, but the banking sector is doing well. So, you know, it came off its highs. But, yeah, you know, all these things are looking pretty good, looking pretty similar, sort of a handle-handle. So in a buy zone or breaking the downturn of a handle, came off the highs. But, yeah, people should be looking at this area. The relative strength lines aren't tremendous, but it's something I think people should be keeping an eye on because you don't want to have everything be AI chips.

11:42Because today would have been an unpleasant day, I think, for somebody loaded up just on those areas.

11:48Ed Carson:But again, like you said, we'll have to check in on some of these names that reported after hours and how that might shape tomorrow's action. But first, let's get to three stocks from today's session. Today, we helped a coffee shop get an insurance quote simply and easily. and made sure a floral delivery van was able to make someone's day. We're the Hartford, with decades of experience insuring millions of unique small businesses. When it comes to your small business insurance, Thank you. one size absolutely does not fit all. Get a quote or find an agent today at thehartford.com slash smallbusiness.

12:34Ed Carson:CLS Celestica, one of the earnings losers on the day, Shares finishing down 14 % to pick up in volume here, Ed, with earnings up 80%. There was acceleration there. Revenue of 53%. That was also acceleration. We've seen a couple of quarters of acceleration here, but not enough, Ed, for Celestica. I guess especially in combination with this AI-related news that came out, or why was Celestica in particular so hard hit today? Yeah, this may be, again, where the expectations are so high. And their sales were, they just beat, though some estimates they were just in line. But it was just so fractional.

13:16So people may have wanted more. And you can see the last couple earnings reports, or at least, okay, the last earnings report did not go well, or at least soon afterward. And the prior one, it rose for maybe a little bit, but then quickly rolled over. Now, that may have been some other things going on. So the market, so again, this is sort of like NVIDIA. They have these good numbers, good numbers, but it's like, what have you done for, you know, but they want even more. So it could be this just needs to consolidate for a while. I don't know, maybe it'll bounce back tomorrow. It did, but it's round tripped.

13:41If you bought the breakout, this round tripped that, and that's not good. You probably wanted to, you know, don't want to lose that kind of thing. And this is why we talk about having a decent cushion. This one had, you know, this one fell 15%. So, you know, if you had a 10 % cushion, you would be down, but you wouldn't have been crushing. If you bought more around 300, around that short-term high, or maybe bought a trend line, I don't know, like a 325, I'm trying to eyeball it. You know, those would have been areas where you could have held it. I, you know, probably might have wanted to lighten up a little bit.

14:12But, you know, it is holding the 21-day line. It is near the top of the base. So I can understand if somebody with a little bit more of a cushion held on. But again, this just shows you everything's going well. It is pretty strong numbers. The guidance was pretty good. this is a hot area of the market. And yet, you know, the market, this one just did not, you know, it had run up so much. And that can be an issue sometimes heading into earnings.

14:40Ed Carson:Okay. Well, you know, and I think in terms of the strategy, right, that we've talked about before is if you have a gap down on earnings or a heavy loss, take a look at that intraday chart. Maybe you do want to head for the exits pretty early on in the session. And other times you will see some sort of recovery, which then you are presented with a situation where do you want to lighten up on a bounce or do you want to hold because of the bounce? And so it depends on your strategy ultimately and your existing cushion at that point, if any, or how your other holdings are performing, your conviction.

15:21Ed Carson:and the particular situation that the stock is presenting. This definitely stands out on the chart here today, Ed. So looks like we could, at minimum, see a new base form here for CLX. Very well. I mean, obviously, tomorrow night's earnings from all these others could change it around again. So that's the thing. But you can't be hoping for things. And also, one thing I try to do, I try to start selling some, you know, because it makes it easier for me psychologically. to get rid of the rest as opposed to saying, oh, I just need to hold on. I could have sold it here. You know, I just need to wait for it to come back up.

15:58But if you start selling, it's just easier to get rid of the rest. And if it comes back, then, oh, okay, lucky. Or you can either get out at a better price or you just hold. But it's nice to at least start selling when you have a big gap, you know, sell off like this and it round trips things.

16:14Ed Carson:Totally agree. Great thoughts on the process there, Ed. Let's now go to Ticker Ben Franklin Resources. Our stock of the day today, look at the close here right at the top of the range. It looks like up almost 7 % on the day, heavy volume. So an earnings winner, a breakout here with a blue dot on that relative strength line underscoring. Of course, you know, if you're going to have a 7 % gain, a breakout to new highs outperforming the broad market here. Yeah, really strong move here. Some acceleration that we've seen the last couple of quarters. So that's nice to see. The weekly is a little different.

16:55Yeah, see, on a daily, and it is a 52-week high for relative strength. So it's not just there. It's not at the bottom, but it just hasn't performed particularly well on a relative strength basis. Or look at that green earnings line. I mean, it's turning around, but that's after, honestly, several years of disappointment. That's not great. So it's a tricky thing. This is where you want to look at both. I mean, this one worked out very – it worked out well. Maybe this is going to have a time. It's supposed to have decent earnings these next couple of years, but it doesn't have the track record that some of these others.

17:29So, you know, this is why you look at daily and weeklies. This was our stock of the day. This one, you know, it's at the highest levels in years, but it obviously just hasn't had the fundamental or technical performance over time. I mean, this was a great stock in the 1980s at times. There have been moments when this has done it. But so can this make another run? It's showing strong earnings right now. But, yeah, there's a daily and weekly disconnect of it.

17:59Ed Carson:Yeah, we like looking at all the timeframes to measure the quality of the stock, right? And I guess if you have a shorter term timeframe, maybe you don't need the longer term charts to show that A plus leadership. But it can be helpful in terms of assessing whether you want to take profits at 20 % or if you want to try to hold for a bigger move in something like this. Let's go to STNG. This is Scorpio Tankers. The transportation shipping group is currently ranked pretty darn high here, Ed. And this stock cleared a trend line not all too long ago, now trying to top a traditional buy point. Yeah, I mean, this is a group that David Ryan was bringing up on IBD Live.

18:50He's so good at spotting these things outside of tech. It's so easy to say, oh, let me look at the flashiest, you know, highest beta names out there. And I'll do that, you know, sure. But it's like it's nice to have some other things. This isn't as connected to prices. Obviously, oil prices rising has probably helped us over the last week and just tensions over there. So it's not, you know, this comes back to 60 and everything's, you know, then this will probably have an impact. But still, it's not going to have that same kind of drop. This one cleared some short-term levels. I think it was actionable the last couple of days.

19:23It's starting to get a little stretched. Earnings are coming up in a week, but this is a group that people should be looking at. There's a number of names in this group that are acting well. And whether it's the tankers and there's also oil services machinery, but there's some groups that are probably benefiting from some of the things that are going on out there, but aren't going to immediately plunge if prices reverse off. And, you know, this one, really strong fundamentals here, like the earnings growth, really, really strong in the last quarter, supposed to be very strong. Again, this one, it goes through ups and downs.

19:57Shipping companies will do that. So I'm a little more forgiving for this. This is the nature of it. This will have a run. And then things will lighten up, presumably. Now, I mean, I don't know if that'll end in a few weeks, a few months. Obviously, there's things going on. But so you just have to be aware of that. But it can go on really strong moves and it's been really acting well.

20:21Ed Carson:Last quarter was great. Triple-digit earnings growth and a turnaround, it looks like, is expected to continue with estimates for the next two quarters, including the report coming up in a week from now. As you mentioned, Ed, the expectation is for more triple-digit bottom-line growth. So we'll have to see if it can do that. Yep. All right. Well, speaking of growth and earnings, let's check out some of the reports out after the closing bell. Seagate Technology, a winner here, up 13 percent just about, STX. Ed, this is one of the hot groups here, the latest one to report. Yeah, obviously hot within, you know, within AI in general, but memory.

21:06This is the first of the memory plays. And boy, is this one moving. And they really crushed views. And that's, you know, so I don't know about the guidance, but I'm going to assume they were pretty strong. So really strong start for the memory plays and AI in general.

21:24Ed Carson:So we did have Micron a number of weeks ago, right? But now we're going to have Western Digital, SanDisk as well. Those are the other ones in the group, right? Coming out full disclosure, I do own. Yeah, and Silicon Motion, which I don't think is reported yet, that also is reporting tonight. And that one does controllers for flash memory. So that one is acting well. Bloom Energy, a lot of attention on this fuel cell maker, which is, you know, that one, strong results as well. So this one, which had gapped out, you know, it really held up. Yeah, it fell today, but not that badly. Held the 10-day line, and now it's gapping up.