Watch Out For Bull Traps; HealthEquity, Brinker, Raymond James In Focus

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0:39Justin Nielsen:good afternoon everyone and welcome to stock market today it's Alyssa Coram here joined by my colleague Justin Nielsen we're going to break down the action in the market in today's session we're keeping an eye out for some bull traps out there Monday morning gap ups Justin we always like to see how the day plays out, but especially with the market in such a vulnerable place like we left it on Friday.

1:07Alissa Coram:Yeah, that's exactly right. I mean, when you're underneath support, when you're underneath your moving average lines, we often kind of refer to the market as being guilty till proven innocent. So you have to be very careful not to get too overly enthusiastic when you see some action that looks positive. And that's why we wait for a lot of different things. We wait for a lot of different signals, but we'll get more into that. And also a few stocks today, including health equity, Brinker International, that ticker symbol is EAT, E-A-T, and then also Raymond James, R-J-F, and HQY is the health equity one.

1:46Justin Nielsen:Perfect. Okay, we'll get to those tickers, but first look at the major indexes. Here's the NASDAQ composite reversing lower and closing down about two-tenths of a percent. Here's the intraday chart. So you saw that gap up. The gap quickly got filled. And you were pointing this out early on in the session during IBD Live, looking at the candlesticks. We can pull that up here as well. But we'll also look at the performances of the other major indexes today as well. The S &P 500 finished essentially flat. So now we have a number of sessions in a row here with the S &P closing off highs, looking better than the NASDAQ, but still in a weak position.

2:29Justin Nielsen:And you have the Dow blue chips finishing up about a half a percent on the day, but also fading. And then small caps finished up about seven tenths of a percent or so off highs, hanging on to that 50 day line. So back to the NASDAQ and the S &P, Justin, what's your take on what we saw unfold today?

2:53Alissa Coram:Yeah, it was not a good look, exactly as you said, with that gap up. And look, there was a reason to go up. We had oil coming down. We had a potential agreement ceasefire in place. That was good. So that is the kind of news that you would expect to really kind of fuel a market rally. And it did. It just didn't last, right? It didn't last for more than a few minutes before the indexes were coming down quite sharply. So when you have all these reasons why the market should go up and it doesn't, well, that kind of tells you what kind of environment you're in. Just take a quick look in terms of damage done.

3:37Alissa Coram:And SMH, you know, this was what was leading this market. The chips and the VanEck semiconductor ETF here just can't seem to get any movement upward whatsoever. So you have a lot of reasons to go up, but the market doesn't. And that's kind of where we are. The S &P 500, as you mentioned, it does look a little bit better. What I like here is that it's not making progress to the downside, but it's not making progress to the upside either. Each time it tries to go up, it just can't hold those gains. So it does look better. But again, the 50-day moving average line seems to be a ceiling right now for it where it's hitting its head.

4:25Alissa Coram:So I think there's a lot of work to be done on both of these. And you got to remember the magnificent seven MAGS is something that does really weigh on these. And, you know, we saw that gap down last week and it just seems to not be wanting to move. And when you don't have those mega cap companies, those trillion dollar companies moving upward, it's going to be very hard for the indexes to fight against that. Uh, so, you know, look, we're, we're just, this is where we sit on our hands. This is where we're patient. Um, it's, I think, okay for you to be expanding your watch list, really being aware of what names are holding up.

5:08Alissa Coram:It's okay to do some probing positions even, uh, to kind of see, Hey, can I get some traction on things? But right now I think this is a time to be very careful because there's a lot of damage that can be done to your portfolio and it can, it can just end up leaking. You know, it was a great rally in April and May and June was not so much fun. July, not so much fun. And if you don't, uh, if you keep on trying to relive the April and May time period, you can quickly find yourself leaking all those gains. And then if you round trip, then what good was it? Right. And what good is it to make all that money if you can't keep it?

5:46Alissa Coram:So, uh, that's why I think we get into a little bit more of the defensive action a little bit sooner. Sometimes that means we are not fully participating when the market does turn, but we can usually pivot pretty quickly. So we might not be getting in at the bottom, but we'll get in close enough. So, yeah.

6:06Justin Nielsen:And I would like to add that we talked about how in early June we got a huge warning shot and we looked at a lot of historical examples. And when you see a big character change after a power trend, you do get some chop or a different look. It's very rare, if not impossible, to see an immediate turn back to that very steady period. So we knew that odds were we were in for some chop and we couldn't hold above on the NASDAQ at the 21-day line. we did get a glimmer of hope when the range right Justin started tightening but then it just seemed like when we couldn't hold that range you know so we were given multiple signals to dial it back along the way right it's not like today all of a sudden or Friday okay we we finally undercut the lows now we should think about scaling back exposure we've been accumulating uh so to speak these signals that have warranted a reduction in exposure.

7:19Alissa Coram:And that's really the way that sell signals go. It's not just one. It's usually an accumulation of sell signals. And this is where kind of incremental action can really help, right? You're not just, as you said on Friday, oh, we undercut the lows. Let's go from 100 % to 0 % invested. It's more like, oh, I'm seeing the distribution count rise. And I mean, it was up at like eight, nine distribution days. You know, that's telling you something when you can't hold above your moving average lines. It's one thing to be, oh, OK, I broke down below one. But when you try and retake the line and then you can't hold it like what we saw recently, that's another sign when you can't hold support.

8:02Alissa Coram:And let's not forget, while we do look at the indexes, you also have to look at the leading stocks. You have to look at your portfolio as well. And the reality is that a lot of these leaders got damaged much quicker. And, you know, we're showing these signs of cell signals much quicker before the indexes were, you know, whether it was some of the climactic action that we were noticing in WDC. that was something that we talked quite a bit about you know as this was going across channel lines you know there was just a lot of things out you still have your channel line up there for that we talked about so yeah there were just a lot of these signs out there that things were getting maybe a little bit overdone sold everything that day yes right if only but it's okay because there, you know, sometimes you do find that, oh, you know, you do get this sell signal, but then it can, you know, kind of shake it off and still move higher.

9:01Alissa Coram:And that's why selling some, and then you let the market kind of decide for you. I love how Scott St. Clair puts it. You just let the market decide, was that a good decision or a bad decision? If the stock or the market goes up after your sell, okay, well, I'm going to do less of that because that turned out to be a bad decision. But if it goes down, oh, I'm going to do more of that. So again, you just kind of let the market be your guide in that regard.

9:28Justin Nielsen:So let's take a look at some sectors now that also, you mentioned the chips already, but some other sectors that help provide more information about what we saw today. Here's software and IGV up 3.3 % on the day. some notable names in the group we focused on during IEBD Live. They did close off their high. So this is sort of, I guess, kind of in that bull trap sort of vibe of, are we going to get potential cell signals and then roll over again? Kind of like how we got a Monday morning gap up and then rolled over. So just things to be thinking about in a weak environment. And hey, hey, Justin, we have a ton of catalysts this week, right?

10:18Justin Nielsen:So we have Fed, we've got inflation data, we have earnings. So there are a lot of different directions this market can go.

10:27Alissa Coram:If your organization isn't managing its data with Everpure, then it's likely scattered all over the place.

10:34Justin Nielsen:My lord, for three days have I ridden to bring thee warning. The records thy great AI machine requires are strewn across five kingdoms. yeah the ever pure data management platform unifies data so you can always find it no messenger needed no more running around get out of the data dark ages with ever pure a new era

10:56Alissa Coram:in data management absolutely yeah uh and i mean the earnings that are coming out like 180 uh of the s &p 500 will be reporting earnings this week um and that includes you know some big ones you know, Microsoft, Meta, Apple, you name it, it's going to be a plethora of things that could, you know, either put this market back on track or derail it even more. So I think that there's a lot of these that we just have to kind of get through and see if the market can trend again. And we also have to just be aware, is there a new crop of leadership that's coming up, that's holding up, you know, better and seeing money flow to it?

11:39Alissa Coram:Or is it a little bit of a bounce from some of the old leadership. That can happen a lot of times, especially when we've seen some of these leaders down 40%, 50%, you know, bounces happen. And that doesn't necessarily mean it's completely out of the woods. So I think this week will be very interesting. And it'll kind of tell us, hey, is this a market where it has like what we saw with the S &P 500, where maybe it's going down and it's kind of stabilizing? Or is this just kind of a pause before the other shoe drops?

12:12Justin Nielsen:Yeah. Okay. We'll be nimble. Any other ETFs to look at, Justin, before we move on? I guess jets, right? With oil on the move. We can take a look at that ETF. We saw a lot of the airline travel-related stocks moving today. Why don't you tell us more about what stood out to you about that sector?

12:37Alissa Coram:Well, you know, certainly one of the things that is interesting is that, you know, you've got oil having such a big, you know, component for this sector. But there are some areas where, you know, you would expect oil to have a large sway, but it just wasn't. You know, Viking, you know, comes to mind. And again, Viking is not a jet by any stretch. But, you know, it's in that travel space, you know, a little bit more susceptible to price moves in oil. You know, that's just, again, the cruise lines do use that as well as the jets. But this was holding up pretty well considering how high oil was getting.

13:20Alissa Coram:And a lot of the airline companies were actually doing fairly well. So Delta Airlines, you know, and by the way, a lot of these do have earnings behind them now. Delta Airlines, American Airlines, you know, those were kind of bouncing. Well, Delta Airlines bouncing off its 50-day moving average line. American kind of coming back up to its 50-day moving average line. We'll just have to see, can these now stay above it? United was the other one that was bouncing off of its 50-day moving average line. So very interesting looks there. We should also take a look at IWM, the Russell 2000, because this kind of like the S &P 500, you know, last few days, it has seemed to resist going down.

14:07Alissa Coram:The difference here is the S &P 500 couldn't stay above its 50 day moving average line while the Russell 2000 has. And this is despite the fact that the TNX, which is the 10 year treasury yield, kind of had a breakout. Now, it has pulled back the last few days, and so that's helped the small cap index, I think, because it's a lot more susceptible to rate rises in interest rates. But yeah, the fact that the IWM, the Russell 2000, has been holding the 50-day moving average line, I think is notable. And one of the other things that we're also tracking a lot is RSP. um rsp is like it's almost at highs you know it's it's it's hardly off it's it's gotten supported this 21 day moving average line hasn't even come down to the 50 day moving average line this of course is the equal weighted s &p 500 so uh as much ugliness as there is out there in the leaders the ai leaders um former leaders if you will tech space um you know your average s &p 500 stock is still, you know, not not doing too badly.

15:16Justin Nielsen:Yeah.

15:16Alissa Coram:And that that's what actually makes this market, I think, a little bit tougher is because you look at this and you're like, oh, you know, there's why why should I why should I be cautious? We're barely off of our highs here.

15:30Justin Nielsen:Mm hmm. Yeah. So a lot of cross currents to think about right now. Next on our list, let's take a look at hqi one of the bright spots today up 4.7 percent and breaking out we can see on the weekly chart here an improvement to the relative strength line and this is a stock that has a pretty mild average true range so in terms of risk management something to think about here? Yeah.

16:04Alissa Coram:So, you know, if you look at this, the relative strength is poor. You know, 62 is nothing to write home about. But you also have to remember that a lot of these stocks that are kind of benefiting from some of this rotation, you know, they didn't participate. And now they're kind of looking better. So I think I can forgive some low relative strength stocks in this environment. And a lot of times what I'm going to do is I'm going to look at, hey, is the relative strength of three month improving? Is the six month improving? And that's something that, you know, we are seeing. Actually, even the 12 month, you can see that that is improving.

16:43Alissa Coram:Four weeks ago, the RS rating was at 36. The 12 month RS rating was at 36. So the fact that this is up at 62, I mean, that's a big improvement. The RS three month is at 79. So that's a lot more, you know, intriguing in terms of that relative strength. But look at some of the other ratings here. The composite rating, 94. EPS rating, 96. Accumulation distribution rating, A. You know, there's a lot to be said for this stock. And I know that it might have been a little bit upsetting that it kind of hit its head right there at 100. It looks like it was ready to break out and just didn't quite do it.

17:25Alissa Coram:Now this is another chance at it. So I'd really like to see this kind of cross above 100 and stay above there. So I think today was a great start for that.

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18:12Justin Nielsen:This is Brinker International with a solid day of its own, up four and a half percent we've seen a pretty steady uptrend here justin since mid-may or so for the stock and i believe on the weekly chart we're getting pretty close uh to prior highs we're right around there let's let's take a look exactly uh yeah so we are in new high territory here for

18:37Alissa Coram:eat yeah so uh and and it's not alone there have been a number of these restaurant stocks that have looked kind of interesting lately. Cheesecake Factory comes to mind. But yeah, eat. It's not getting overly done. You know, I look at that weekly chart and sometimes when I see multiple weeks up in a row, I'm like, oh, you know, it would be nice to see a pause. And we did get a little week pause last week. But if you look at the daily, it's having a few days up and then it kind of pauses a little bit. A few days up and then it pauses a little bit. Meanwhile, it has been trending very nicely above its 21-day moving average line.

19:17Alissa Coram:You see that relative strength line improving. It's got a very decent relative strength rating of 85. It really, you know, and that's up from 58 from a month ago. So it really is heading in the right direction. And again, you have a lot of confirmation from the other ratings. The EPS rating here is 91, composite rating 94 accumulation distribution a so it's got a lot of um those ratings also going for it uh it did kind of break out above a little resistance line and then immediately pulled back but it just you know doesn't seem to want to stay down for very long so this one seems like the trend is is certainly turned um higher and uh yeah this is this is one i'm watching very closely as well as some others in the space, as I mentioned.

20:07Justin Nielsen:Yeah. What are your thoughts on the fundamentals here, Justin?

20:11Alissa Coram:You know, the one thing, I mean, look, the EPS rating of 91 is not bad at all. It's hard to get super excited about single digit, you know, growth here. And that's what we have. I often like to look at the weekly chart to kind of get a sense of, okay, what does that earnings line look like? And, you know, it has kind of rounded, you know, rounded out, right? It's not going at the same angle that it was. So, you know, that's not a great look. You know, on the other hand, look, retail is a tough business, right? The margins are razor thin a lot of times. So it's not unusual. And it's interesting to note that the estimates, you know, are pretty decent.

20:56Alissa Coram:And on the annual side, you look at those annual numbers and it's a pretty nice move there that it's had, you know, from 283 earnings per share in 2023 to 410 to 890. That's, you know, that's not bad. So the fact that it's kind of slowing down to 1076 estimated for 2026 and then 1253, that's still some pretty decent growth, about 20%. So, you know, I'm not thrilled with a single digit. But again, I'm a little bit more forgiving, I think, of the retail stocks and certainly the estimates and that trajectory that it's had is pretty impressive. Double-digit gains for the annual is still not bad at all.

21:39Justin Nielsen:Well said. Okay, moving over to the financial sector, here's RJF. RJF. We've been looking at a number of stocks in this industry group with compelling action lately. And RJF up 2.5 % today, breaking out of a cup with handle. Earnings are out of the way now. Yeah.

22:03Alissa Coram:So we're starting to get a little, at least the earnings out of the way for a lot of stocks. Um, so, you know, all the, all the ones that we just talked about do have, um, if, if earnings aren't out of the way, they're far enough away that you don't have to, um, be concerned about that at any time soon. Now you still have to be worried about all the other earnings and all the other things that we talked about, uh, the fed, the inflation data, um, economic data that's coming out, but, uh, for RJF, um, you know, and, and the others that we talked about, you don't have to worry about earnings. But this is just kind of your, you know, straight up breakout right here, you know, coming out of a cup with handle.

22:41Alissa Coram:Again, the relative strength here is a little lackluster at 57. But this is just one that hasn't participated in a lot of this action lately. So I can be a little forgiving of that. That's up from 33 from four weeks ago. And the RS three month is 80. So that again, tells me that the relative strength is going in the right direction. We see that relative strength line, uh, turning higher. And this is another one where the other ratings are very strong. The composite rating 94 EPS rating 89 accumulation distribution, a plus. So, uh, it has a lot of things going forward in that regard. And not to mention that the group, as you said, uh, there's a lot of other names, uh, you know, kind of going along with it.