Techs Outperform As Fed Holds Steady On Rates; Teradyne, Caterpillar, Alphabet In Focus

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0:38Good afternoon, everyone, and welcome to Stock Market Today for Wednesday, April 29th. It's Alyssa Coram here and a mildly mixed day for the Nasdaq and S &P 500 with more massive headlines on tap with big tech earnings out after the close. We're going to talk about that and other key news You Need to Know joining me now to discuss that and more is my colleague, David Saito-Chung. Dave, welcome to the show. Hey, Allie. Great to see you and great to be here. Thank you. Yeah, it's been a little while since this duo, the ACDC duo has rocked it for today. Especially on the SMT concert stage, if you will, where many people see us on Ivy Live, but it's great to be here after the close.

1:26Absolutely. So looking forward to getting your insights today. On deck, we are going to analyze Teradyne as well as Caterpillar and Google Parent Alphabet with earnings out after the close. So we'll be able to get you that early reaction to the report and the stock action. So first, let's take a look at the major indexes to give everyone some perspective on where we're at on the index level. So here's a look at the NASDAQ finishing slightly in positive territory on the day, up a fraction. Meanwhile, the S &P 500 was down fractionally on the day. The Dow, DIA, the ETF tracking blue chips down six tenths of a percent and the Russell 2000 IWM ETF also down around six tenths of a percent or so.

2:17So Dave, when you're Looking at the sector performance or the thematic performance, it does seem like tech is still in the driver's seat. Absolutely. And it's pretty impressive to have even just a tiny gain today, given that the breadth of the day's action was negative on both sides. Looking at thinkorswim right now, it shows that there were 3 ,300 stocks down and nearly 1 ,500 stocks up on the NASDAQ, so more than a two-to-one ratio in favor of declines. And yet we saw with the NASDAQ being a market cap-weighted index, a few of the MAGA 7 or Magnificent 7 were up, and that kind of, I think, helped the case for that.

3:08But you just showed also, I think you just showed the Qs, right? And wasn't it another? Yeah, that was showing out performance. And here's the NASDAQ 100 up some 6 tenths of a percent. QQQE up 8 tenths of a percent. So pretty nice strength out of technology leaders there. Without question, especially with the S &P being much broader index, just virtually flat. And then the Russell was down almost 0.7%. I was looking at IWM. And indeed, that's right. We have the lowest close in looks like about two and a half weeks or so. So a little bit of a pullback time during a period of, you know, mega, mega heavy news.

3:55Yes, absolutely. And we will get to the earnings related news here soon. You also wanted to, in our notes, take a look at the NYSE composite here. I did because you notice that, one, it seems to be lagging the NASDAQ side. You can tell that we are at least 2-3%, if not more, off that 23 ,500 level, which was a level of resistance back in February and March. And we haven't even gotten close to testing that level, right, Ali? Right. Exactly. And then you've got the 21-day exponential in that light, I guess, spring green color. I'm using a more forest green on my market surge. But I think we have the same 21-day exponential.

4:49And that's usually a really good indicator of short-term momentum for the indexes and stocks. And you see that is now below for the first time in almost a month. And then why don't we mosey on back to the NASDAQ or the Qs? And I think you would see a different picture. You see a really bullish space between these tech-fortified indexes and the 21-day exponential moving average. Yeah. And I think a lot of us are seeing that in our own portfolios as well, that tech strength. It's not just tech, but even AI-related names, you know, building construction comes to mind as sort of an AI-adjacent non-tech area.

5:35So it's not just technology, but those are definitely the standouts. And we, as stock pickers, want to try to get that outperformance versus the broad market. So knowing where the money is flowing and where that leadership lies is very important, especially in the context of a significant week on the quarterly earnings front.

6:15A year of Xbox Game Pass Ultimate with a custom color Xbox wireless controller. Learn more at windows.com slash student offer. While supplies last, ends June 30th. Terms at aka.ms slash college PC. Yeah, totally. And partly for that reason, I wanted to challenge ourselves by selecting a stock with Alphabet as one that just reported and give a little color on that one. and you can see that after hours it is up 2%. I saw some headlines showing some really nice earnings and revenue beats. If I may, I'll just share what I see on the Thinkorswim. It said that Q1 EPS at$5.11 per share. Not sure if that's a gap or a non-gap number, but either way, it was well ahead of the consensus view for$2.63, which you can see on your chart there with a quarter ended March 2026.

7:15So Wall Street was expecting a small drop. And once again, not sure if 5.11 versus 263 is a true apples to apples comparison. But the revenue came in really, really strong, 109.9 billion. So that was almost 3 billion above expectations. And I saw on CNBC, too, that cloud revenue and search revenue also beat. So I guess this is a positive start to four. Obviously, keep in mind that we'll have the conference call coming up, too. And they'll probably give more color about the outlook for Q2, Q3, and so forth. Yeah, that'll be really important to take a look at, as well as all of the other mega cap tech earnings out tonight.

8:00There are quite a few of them. And just because the sky is sunny right now in the tech sector doesn't mean necessarily that it'll continue. And we do know that not all tech names are winners. And I think Teradyne is a great example of that. So we'll go there. We'll circle back at the end, perhaps, for some quick commentary on some of the other mega caps with earnings out. But yeah, I think that alphabet guidance and the stock action critical for the broad market and also the stock potentially viable, you know, over the last couple of weeks and even after this report, depending on how the action shapes up in tomorrow's regular session.

8:45Yeah, I agree, Ali. And you can see on the pattern wreck with market surge, you have a cup base. Maybe there was a handle that formed below 349. But let's just use 349 as your entry. And so with the after hours move up 2%, if you were to buy it in after hours trading, and it's a liquid stock, as we know, it would not be extended. It would be about 2 % to 2.2 % above that proper buy point. And so I think, you know, there's always risk, obviously, and buying something outside the regular market hours. But so far, so good. And of course, there's always some wisdom in waiting for the next days open and engaging the true level of supply versus demand.

9:31Well said. Okay, well, as mentioned, let's contrast this with Teradyne was looking great headed into its earnings report and in the semi-equipment group. We've seen a lot of strength in the chip sector, but taking a tumble here today down over 19%, even though it looks like the numbers were pretty fantastic, but not quite good enough here, Dave. Exactly. You nailed it there in terms of what happened. I think I read somewhere it was the biggest decliner within S &P 500. Look at that volume, the highest in months. And it is unfortunate given that you see that the Q1 numbers were spectacular, right?

10:16They were accelerating in terms of the year-over-year growth rate. What convinced us to take profits ahead of this earnings news for leaderboard, because it was, I believe, a half-size position. It started as an initial 5 % weighting within the leaderboard model stock portfolio was, if you don't mind pointing out, Ali, those two down days before today's gap down. Those two days were in heavy volume, accelerating volume, and they weren't small smidgens of declines. Those were some real heavy institutional profit-taking sessions. And that to me was a negative sign going into the earnings report.

10:59And another, I think, really vital lesson for everyone listening in with Teradyne is that there's no shame at all in selling any stock that is on the way up, meeting your profit objective. and IBD's normal profit target is a 20 % to 25 % gain. If you bought as it cleared that 344.92 base buy point and you sold it last week, that was a fantastic sell. Even if the stock were to gap higher after that because no one really knows where the top is. But a very, very good strategy for us investors is to take a lot of profits in most of our stocks on the way up. So this is a good example of a round trip, a good example of how stock really shouldn't act right before earnings and how you just don't know what the reaction will be, even if the fundamentals were just so awesome as they were for the Q1 of Teradyne.

11:59Right. Great job spotting those sell signals over the last couple of days. I was in this one heading into the report. But I got out this morning. We can take a look at the intraday chart. And this is a smaller position for me. But I got out around 321. And that ended up being in the context of the day's spread. Not a terrible cell, right? Not at the day lows. But I think another lesson here too is you have to follow the sell signals. Obviously, the closer to the highs, the better. But especially when you do get a gap down like this, heavy volume, as you mentioned, closing below the 50-day line, a clear break in this chart.

12:49That's what you focus on. You don't focus on the fact that this saw triple-digit earnings growth and accelerating top and bottom line growth and the fact that it's part of the AI theme. That is all well and good. But as we often say, we buy on fundamentals and technicals and we sell on technicals. So that hold and hope strategy over the long run, it can do a lot more harm than good in your portfolio. I totally agree, Ali. Just a last comment, too, on Terradine, and you can just stay on that daily chart. You can see over the past four quarters of reports, it's just been a phenomenal mover. It's quadrupled in price since it cleared the 200-day back in the summer of last year, cleared 100-century mark, and then quadrupled.

13:38So it's in rarefied air. Even after today's disappointing drop, it's been an amazing stock. And perhaps it missed the so-called earnings whisper number for Outlook. There was perhaps a little bit of selling enthusiasm because of the Wall Street Journal's report on open AI's revenue challenges, if you will. So there's a lot of things that go into the behavior of this stock. Don't ignore it, Bo, because the fundamentals are good. And who knows, maybe a new good base could arise in the future. Yeah, it could set up again. Okay, great conversation there. Let's now pivot to looking at Caterpillar, a recent breakout from a cup base, perhaps an even earlier entry here with a little gap up within the base.

14:33What do you make of this most recent pullback? It looks very orderly, Dave. It really does. And I'm glad we picked the same exact color for that 10-day simple moving average. Is that your pink fuchsia? There you go. Yeah, I went with the lime. You know, I like it zesty. So I went to the lime. Oh, there you go. I like the lime too. I'm with you. But in terms of the 10-day, yes, it's nice that it sort of ended right there, even though it's a fourth or fifth. It's, I guess, a fourth down day in a row. I wanted to mention this one too because, one, we are in the midst of the busiest time for earnings.

15:16Caterpillar reports tomorrow. The options market has priced in a 39-point move or roughly almost up to 5 % up or down based on what the news and the reaction will be tomorrow. Caterpillar was a full-size position in leaderboard. I'm a co-manager of that product. And a full-size position means 10 % weighting, which is a significant amount. And we just didn't have the proper profit cushion in the second half of that full-size position to warrant holding through earnings. So partly to be defensive while maintaining a small gain with the initial half position or 5 % weighting, we actually decided we notified our subscribers to just reduce the holding to a half-size position and we'll see how it acts tomorrow.

16:10Now, here again, like Teradyne, it hasn't quadrupled, but it's doubled in price. And this was the Dow's number one stock last year in the Dow Industrial, up 58%, excluding dividends. So it's going to be an interesting piece of news tomorrow. It is. We will be watching. Thanks for the color there, Dave. And as promised, let's just take a quick look at some of the other mega cap techs with earnings out. We already checked in on Google. Let's go to Amazon. This was also setting up near a breakout area with the report. I'm not seeing a whole lot of action here just yet, but it looks like the numbers are out.

16:54I'm seeing reports of better-than-expected results and cloud computing. That segment expanding 28 % year over year. Has not had the conference call yet. Right now, seeing shares down around 1 % or so, Dave. So not too bad. Not too bad at all. Indeed, yes. If we're in a hole 261, that's above the high of that interesting looking consolidation. I really wouldn't call that a cup. I wouldn't really call it a double bottom. Just kind of a consolidation pattern. But yes, indeed, the earnings came in very strong. I'm seeing$2.78 per share. And you can see down at the bottom of the chart,$1.63 was the estimate.

17:43So that's a very big beat for a mega cap. And the Q2 revenue range is looking at$194 billion to$199 billion. So if you slide a little bit at the bottom of that chart, I guess you can see the$189 billion estimate. So the top line estimate is well above that Q2. So that's positive. So why is it down? Not really sure. Maybe there's some nitpicky feelings about the cloud revenue. Although AWS, let's see, it was up, I think it says something like 28%. Yeah. Yeah, I mean, people really focus on AWS because that's a huge profit margin center for the company. So certainly, I think the tech team led by our tech editor, Ben Pimentel, will have a great story on that very soon, including hopefully some comments from the conference call.

18:42And let's just quickly check in on Meta and Microsoft. Here's a look at Meta in a weaker position heading into this earnings report with resistance at a flat to declining 200-day. And I'm seeing shares down over 5 % here. Let's also take a look at Microsoft, even weaker, heading into this report. A lot of space, Dave, between the current price action and the declining 200-day. It's been quite a laggard. I'm seeing shares down about 2%. As, of course, we know, the software AI-related stocks have definitely been taking it on the chin lately. They sure have. And it's really their relative strength has been sapped.

19:27You've got a 30 RS rating for Microsoft, so underperforming more than two-thirds of the rest of the market on a 12-month basis. And I think the meta rating was also weak. and we generally want to look for 80, 90 relative strength ratings as buy candidates. Clearly, you know, going back to Meta, they had recently announced a big staff cut, right? Something like 8 % or even 10 % of their staff, whereas Microsoft is trying to accelerate some voluntary retirements. So it goes to show that right now there's a lot of attention focused on their cost structure, given that they've announced some huge investments in AI.

20:15Well, there are a lot more earnings reports, and we wish we could cover them all on this show, but we'll do our best to cover as many as we can at investors.com and tomorrow morning on IABD Live. So we're looking forward to that. Dave, thank you so much. We really appreciate your input today. My pleasure. You're welcome. It was great to be with you, and keep an eye on the news. Yeah. Yes. Thanks so much, Dave. And thanks everyone for tuning in. That is it from us for today. Live at 5 p.m. Eastern, we still have our weekly investing with IBD podcast for you to enjoy. So that'll be live on our YouTube channel and available for watching on demand at investors.com slash videos, YouTube, and on all of the listening platforms, wherever you get your podcasts.

21:06So we of that. And then the Thursday crew will see you on IEPD Live tomorrow morning, investors.com slash IEPD Live for all the details. We'll see you then. And then we'll also see you right back here tomorrow after the close.

21:25We'll see you next time.

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