Is This The Market Turn We Were Hoping For? Viking, PriceSmart, GE In Focus — Stock Market Today

[00:00:00] Speaker ?: *music* *music* *music* [00:00:38] Speaker 1: Good afternoon, everyone. Welcome to Stock Market Today from Monday, August 3rd. It's your host, Rachel Fox here. And today we saw the major indexes burst higher with oil prices sliding after President Trump caught off new strikes, shifted back to more diplomatic efforts towards the ceasefire. Here to help me break down all you need to know about today's market action is IBP Head of Market Research, Justin Nielsen. Justin, what do you have on tap for us today? [00:01:05] Justin Nielsen: Well, yeah, we'll definitely talk about the market because a very interesting reaction as opposed to last week. So we'll go through that. And then we'll also talk about a few stocks setting up. And interestingly, this is outside of the tech sector. So we'll go over biking, one of the cruise line operators, PriceSmart in the retail and GE Aerospace. [00:01:24] Speaker 1: All right, very good. We will get to those stocks. But before we do, I'm going to go ahead and take a quick look at the major indexes. Just we saw the S&P 500 strengthen into the close up 1.6%. We saw the NASDAQ lead with a gain of roughly 2.1%. The Dow also rose up 1.4%. We also saw the equal weighted S&P 500 index RSP up only 1%. But that has been quite strong as of late. So I'm going to go ahead, share my screen, and we can get into some analysis here on these major indexes. So just a little overview. We're seeing the S&P 500 continue to really pull further above the 50-day line here. It also got above this recent level of resistance today as well. And meanwhile, we're seeing the NASDAQ over here sort of hitting its head at the 50-day line, also at a trend line, the 26,000 level. So Justin, this is obviously a pretty positive action today. So how are you interpreting this follow-up to Friday's positive action? [00:02:34] Justin Nielsen: Well, a few things. You know, to be clear, we don't have a follow-through day at this point. It's too early. This is only day three. And we usually look at day four or later. Now, this is the third day up in a row. Some nice strength to start. It's still vulnerable because for the NASDAQ, we came right up to that trend line that you have drawn there, Rachel. And that also corresponds right to the 50-day moving average line and right to a round number of 26,000. So there's all this kind of convergence of a potential resistance area. Again, I like the action that we've seen over the last few days. And the next thing that we'll need to see here is can we get above this downtrend line? Can we get above 26,000? Can we get above that 50-day moving average line? I think it was a good start that we got above our 21-day moving average line, a nice close above that. Now, the low, you know, it was still below the 21-day just barely. I do like to see that low clear. And the most important thing here is because let's not forget over the last few, you know, several weeks here, we have seen a number of times where the index did get back above its 21-day moving average line. The problem, it couldn't hold there. So that's another thing I'm going to be asking for this market to do to really kind of draw me in. So one of the things we were talking about on IBD Live today, because look, it has been choppy. It has been difficult. A lot of people saying, well, what do you do when it gets choppy like that? And some people would say, well, you just stop. You know, if you're out of sync, maybe just stop trading. Do some post analysis. Do some self-reflection. You know, see what's making it so that you're not firing on all cylinders. For me, it's hard for me to stop completely. You know, for very long, I'm always trying to do probing positions. So my mantra is do less. So, but it doesn't mean do nothing. So in a case like today, I was putting on some positions because I want to get some probes out there and see how they're doing. Can I get traction? Can I get traction? I'm going to use the market feedback to tell me whether or not these decisions that I've recently made in terms of buys are good decisions, and then I can go forward and put more to work. So, does that mean I'm going to, if this is a raging rally that just started, does it mean I'm going to underperform a little bit at the beginning? Yes. So, hopefully, again, because I will ramp up quickly if it warrants, I shouldn't be too far behind and, you know, should be able to beat the S&P 500 with the appropriate stock picking that we have so many tools and IBD to help folks do that with. [00:05:30] Speaker 1: Yeah, absolutely. I mean, you know, this is just taking a look at the NASDAQ here, but we saw the S&P 500, you know, take out the 50 day line on Friday, continue to follow up with the strength. It's tricky because from October to April, we saw a lot of, you know, getting above key levels and then pulling right back. So, it's hard to not get too optimistic right now, but there is strength in the S&P 500 and looking at RSP as well, VOO, you know, you can see there's clearly money sort of flowing into these other areas maybe other than just tech. Yes. [00:06:07] Justin Nielsen: So, that's definitely something that I think is still interesting to be looking at. I mean, look, RSP, the equal weighted S&P 500, you know, is right there at like highs. It's like barely, you know, barely down. It made new highs last week, unlike a lot of the other indexes. And to your point, the S&P 500 never really looked that bad. Yes, the 21 day moving average line did come below the 50 day moving average line. That did turn the power trend off on SPX. But we, as you noted, we kind of crossed that area. I love your line there, Rachel, because that was an important line of resistance and we did cross above that. And for this index, not only are we above the 50 day moving average line, but we also got that low above the 21 day moving average line. So, there are a number of things kind of going for this as well. But I also want to just real quickly, maybe if you go to like a 60 minute chart, we can do a little compare and contrast. Because as you mentioned, there was news, you know, folks getting a little hopeful about what that meant for, oh, actually, you know what? Maybe we can go to a 30, a 30 minute chart. Let's, yeah, yeah, I think that'll, that'll be a little bit better. So, yeah, with with the news here, and again, we've been tossed to and fro with news. So, I think the reaction this, this Monday was a big stark contrast to the reaction we had last Monday. So, if you go to July 27th, you see how, yeah, right, right there, kind of in the middle, you see how we had that really big gap up. And remember, it was hopeful that there were going to be some talks, some, you know, some postponement and strikes and everything like that. And it almost immediately started pulling back after that gap. And it was just, again, the news isn't as important as the reaction to the news. That was news that certainly should have kept the indexes up, but it didn't. And so, you have to kind of react accordingly. In fact, we went to new lows and, or recent lows, I should say. But look at what happened today. A nice move up and it just built on it throughout the other day. That's, that's the reaction you want to see. A strong close at the end of the day, as opposed to what we were seeing before. Some strong opens, but very weak closes. So, a nice contrast there. And I think that, that bodes well. A couple more things to just look at on the index level. Let's take a look at the small cap index. You can look at IWM for this one, which is the Russell 2000. And this one has also held up very nicely. I like the move that it had above both its 50-day moving average line and 21-day moving average line. And you don't even have to draw it, but you can almost see it's drawn itself. That nice little trend line that it broke across. So, unlike the NASDAQ, you know, where it's, it's kind of at that cusp of breaking above a downtrend. This one clearly did already. So, that's something that I think is a positive. And, look, normally I'm not a big fan of following the Dow Jones Industrial Average, to be honest with you. Because it's 30 stocks. It's price weighted. Just not as exciting. So, if you pull up Dow Jones Industrial Average right now, well, guess what? Those 30 stocks are not doing bad at all. You know, you've got the likes of Amazon and Microsoft in there. And those have been helping a lot. And there's just been a lot of those stocks that have done very well of those 30. And so, that index is very strong. And, look, a lot of people do still follow the Dow. Just because I'm not a particular fan of it doesn't mean it's not something that you're going to hear on the news all the time. So, I think it's important that, you know, folks see, hey, this is right there at highs. And so, again, a lot of, I think, strength, whereas tech has been under pressure, and maybe the NASDAQ composite is pulling out of things right now, you do have a lot of other areas that have been working. And it kind of goes to a point that David Ryan, you know, former hedge fund manager, protege of William O'Neill, the founder of Investors Business Daily, and three-time U.S. investing champion, I should add. One of the things he was saying is, like, your exposure over the last couple of weeks might very well depend on what you're in. Tech? Yeah. You maybe have lighter exposure lately. But if it was in other areas, there was certainly a reason to be a little bit more heavily exposed, but there were still some things that were working. [00:10:42] Speaker 1: Yeah, yeah. Like you mentioned, you know, memory stocks, SanDisk, your Microns, all of these names, you know, not necessarily working so well as of lately. [00:10:54] Justin Nielsen: Even with the bounce on DRAM, that's still down 37%. Yeah. So, I mean, it was clobbered, you know, to be honest. [00:11:04] Speaker 1: Well, let's take a look, because you mentioned Amazon and Microsoft. You mentioned Magnificent Seven. This ETF, I think this is definitely a noteworthy move here today. [00:11:15] Justin Nielsen: Absolutely. So, at a clear move above the 50-day moving average line, that low cleared it. The low cleared the 21-day moving average line. Again, this really speaks highly for what, you know, what gives the market some really strong tailwinds. Because, remember, a lot of these indexes that we look at, except for RSP, a lot of these are on the market cap weighted designation. And so, when you look at the Magnificent Seven, that's your trillion dollar club. These are the ones that really drive these indexes higher. And so, it's a nice kind of vote of confidence when you see mags performing like this. And again, we have seen some of these stocks that have set up recently. I know Webby went over Alphabet on Friday. That was a nice continuation move today. So, getting above the 50-day moving average line. Look, to be honest, the whole thing on the 50-day moving average line on Friday was, if it failed there, you would say, well, obviously, that was a short setup. But a nice move above here, getting above that resistance or getting right to that resistance line, but certainly above the 50-day moving average line in 21-day is a strong sign there. And again, a lot of these have certainly improved. Apple got killed a little bit on earnings last week, but there's a lot of power in that group. [00:12:40] Speaker 1: Yeah. Well, let's take a look at a few other groups using ETFs that are looking interesting setting up. There's Cyber, which, you know, we also talk about Hack, which is another one. But CIBR, kind of getting up to a key level here. [00:13:00] Justin Nielsen: Yeah, so strong move, again, bounce off the 50-day moving average line. And look, this was already kind of showing some strength, some relative strength, back in April and May. This was really kind of coming on strong. It did base along with a lot of things in June and July. But again, it held better than a lot of things. Now, why do I like Cyber maybe a little bit better? Hack might be a little bit better in terms of the chart. But I always do want to know, hey, what are in these ETFs if I'm interested in them? And the makeup of Cyber over Hack is something that I like a little bit better. Because the two biggest positions in Hack, as far as I know, are Broadcom, ABGO, and Cisco. You know, whereas those are, yes, they are very heavily involved in cybersecurity. These don't look nearly as strong to me as your CrowdStrikes, your Palo Altos, your Fortnets. All of these were getting support at the 50-day moving average line as opposed to being below them like the two top positions in Hack. And wouldn't you know it, Cyber is focused on those stocks, the CrowdStrike, Fortnet, Palo Alto. And so that's why I just prefer this one a little bit. Or BUG is another way to go on the cybersecurity side. This also includes Okta as a major position. So I do have a position in BUG myself. So, yeah, that's very interesting to look at. It should also be noted. I'm just going to throw you for a loop here, Rachel. I didn't put it in the notes, but XLE, you know, is certainly been a tricky one. Because the news headlines have, you know, tossed us to and fro a little bit. You know, the whole straight of Hormuz, the supply issues. Is it going to be resolved? Is it not going to be resolved? I do think you and I have talked about this on previous SMTs. I think the oil refiners look a little bit stronger. The CRAK is the ETF there. You know, I mean, that was down 2% today. But it still does look in a little bit of a better position. And then let's also look at JETS. Because look, if you got lower oil, that's going to help these go further. So JETS having a nice move. It had a breakout that looked like it failed. Went back below the 50-day moving average line. Would have triggered a 7% to 8% stop loss for you. But I do note that it did kind of break below that 50-day moving average line. But had a nice close off the lows and really just came right back above it. So it only spent one day below the 50-day moving average line. So not a bad look there. So this looked interesting to me as well. Yeah. [00:15:54] Speaker 1: Trading in a buy zone here. Maybe would have been really tricky to hold. Yeah. Bouncing out of it. But you can always buy back. And yeah, this is great. [00:16:04] Justin Nielsen: That's my philosophy. There's no way I could hold that. I just don't have the stomach for it. Especially, because remember, you might say, "Oh, well, yeah, that wouldn't be too hard." But you've got to remember, you probably had all these other things that were putting pressure on you as well. And so my appetite just during that time was not for, "Oh, let me see if I can wait a little bit longer and see if this will work." It was more like, "How do I protect myself? How do I stop myself from losing more money?" [00:16:33] Speaker 1: Yeah. Absolutely. Always a good mindset to have. Let's go ahead and take a look at our stocks for today, which all have very similar setups. Yes. They've had a pullback and now they're kind of moving back higher again in cup-like fashion. Let's start with Viking here. Cruise line looks like it's getting above this 105.76 level. Yeah. [00:16:57] Justin Nielsen: And, you know, it was really interesting to me that the, you know, among the cruise lines, I mean, because, you know, we also take a look at RCL, which is in here, NCLH, you know, so that's Royal Caribbean and Norwegian. And Viking just looked a lot stronger. And so despite the rise in oil that was going on with everything going on with Iran, this one just held up really well. It, you know, basically got support at the 21-day moving average line. So that is something that was interesting to me. You study the market long enough and you study those leaders long enough and you just notice how well they tend to hold up, how much they resist going down, even when the market indexes are putting pressure on them. And there were a lot of reasons, I think, for Viking to go down because of what was going on with oil and that uncertainty. But it just didn't really want to go down. And so something that holds up that nicely, you see the relative strength really, you know, held a lot of the gains that it made from May and June. So the fact that it was able to do that, I think, bodes well for this. I should also mention, look, we have a number of these smarts, these ratings that really kind of help you out with determining, hey, am I looking at the right kind of stocks? And the composite rating here is 90. It's got an RS rating of 95. And so, and you see the three months, 92, six months, 95. So there's just a lot of things going for this in terms of those ratings. Rating of 59 for the EPS is a little bit low, but you can see that the most recent quarters all have double digit, really strong growth. So, and if we go to the weekly chart, you can also see while the weekly chart does show that earnings line has kind of flattened out. It's been some pretty strong quarters here on the earnings side. So that's something I think is interesting. And more than anything, the way this held up, the way this is getting that support at the 10-week moving average line, I think is very, very constructive. [00:18:58] Speaker 1: Yeah, impressive indeed. And maybe a good place to roll over into if there's another leg higher here. All right, let's go ahead and take a look at GE, which I think also made a very impressive move here today. Not quite back to new highs, but getting above maybe a prior resistance level. Some nice support here at these shorter term moving averages. Yeah, what do you make of this move? [00:19:26] Justin Nielsen: Yeah, well, unlike what we were, you know, what we were looking at earlier with the Jets kind of failed breakout. This had a breakout, but look how it didn't give up all the gains, right? This had a 20% gain. It came right down to the 50-day moving average line, held, got support, and, you know, bounced from there. And now we're kind of clearing this other area of resistance. So this is a good look to me. And again, you know, if you're a little nervous about tech still, it's nice to kind of have some diversification in other areas, especially since we've been seeing the RSP Dow Jones, you know, do so well. And even IWM as well. GE is by no means a small cap company, but the fact that you have that breadth kind of behind you. So, yeah, a really good look here, I think, for a GE. I think they really unlocked a lot of value when they did the breakup for GE into the Aerospace Company, the GE Vernova for the Energy, and the GE Healthcare. That really unlocked, I think, a lot of value here. And you're still seeing kind of the dividends for that. Really strong, you know, gains in terms of earnings. That earnings line is, you know, really, really nicely and very stable going in an upward direction. You've got a strong composite rating of 92, an EPS rating of 93 in this case. RS is a little bit weaker at 84, but it's really held up very nicely. And again, you can see that on the relative strength line, how you can very easily see this getting the relative strength line getting to new highs. The fact that it got that support at the 10-week moving average line, I think, bodes well for this. So, again, another one that's held up well, really didn't do anything wrong here in terms of its move. It's trended nicely and wasn't willing to give up those gains. Some, certainly, but not all. [00:21:28] Speaker 1: Yeah, I think the quarterly earnings growth is a standout. Also, that up/down volume ratio of 2.7 really shows that there's a lot of institutional support here. So that's two signs of... [00:21:43] Justin Nielsen: And one thing I will say is that the Aerospace Defense Group at 87 really kind of hides the fact that there are, I feel like, a number of stocks that have held up well in this group. I think for a while there, you had Lockheed Martin, LMT, and North Roman NOC. Some of these legacy, you know, Aerospace Defense plays that, you know, were just on the weaker side, but the largest in market cap. Now, GE is also a very large market cap in Aerospace Defense, but looks very different than these other ones. So, of the legacy, GE is by far the standout. But you have HWM, HEI, there's a number of stocks that also look very interesting in this group. TDY, I think, was another one that I was looking at in Aerospace Defense. You know, things that have based, you know, they've consolidated, they're coming out of patterns, or at least setting up patterns. So, yeah, I think there's a lot to be looking at here, despite that lackluster group rating of 87 out of 145. [00:22:51] Speaker 1: Yeah, absolutely. All right, let's look at our final stock here, which is going to be Price Smart. Another sort of cup-like, you know, little pullback to moving averages, and now it's moving higher, trying to retake the 200 round number level and this potential entry of 199.84 here. [00:23:13] Justin Nielsen: Yeah, I'm not usually a fan of buying something where it's in that green area, you know, that's usually where you want to take profits. But we hit that green area, pulled back a little bit, came down to the 50-day moving average line, bounce support, bounce. So, yeah, I would like to see this take out that prior resistance, and that just so happens to be one of those round numbers, 200. So, I think we've got a level to look at there that's going to be interesting. Now, I do think this was viable as it got that support of the 50-day moving average line. I like early entries like that when you can manage your risk and know very easily on, you know, one of those, you know, bounces. Hey, if it goes back below the 50-day moving average line, I'm out, then it just means that this trade didn't work. If you were willing to stick your neck out there, you got rewarded. And this is looking strong, but you do have another chance at this if it breaks above 200. Now, this one is a little bit more, again, lackluster maybe on the earnings and revenue side. Double digits, so nothing to, you know, nothing to poo-poo too much, but a little bit lackluster because it's just barely double digits. But another one, as you noted, Rachel, hey, there's kind of a theme here. These look very similar in terms of how well they held up. And that's, again, whenever I see a market in a pullback and a lot of leaders in trouble, if I'm going to look for another crop of leaders, I look for the ones that held up best. And all three of these, I think, fit that bill. [00:24:43] Speaker 1: Yeah, I would definitely agree with you. Three good stocks to be watching closely right now. All right, Justin. Well, I think that I'll wrap it up for our . [00:25:00] Justin Nielsen: You kind of broke up for me a little bit, Rachel. So I'm going to just, yeah. Do you want to try again? [00:25:08] Speaker 1: Let's take two, guys. Let's go again. Yeah. So final question for you, Justin. Recommended market exposure has been low. We've been at around, you know, zero to 20% given everything that's happened over the past few weeks. But in light of today's action, how should investors be thinking about that? [00:25:27] Justin Nielsen: Yeah, so I'll just share what I did. I did do some buying today. You know, I always keep some levels still invested that I just kind of don't touch unless things get really, really bad. And it just, you know, and I'm talking about like below the 200-day moving average line. So there was a significant, you know, portion of my portfolio that I just, you know, left. I let it be. It's more long-term. But my more active portfolio, those accounts, you know, I had gotten to pretty much all cash. They were just like a few small positions. And so today, I was on vacation on Thursday and Friday. I might have done something otherwise. But I was at the aquarium of the Pacific, which I love and my son loves. And it was his birthday. So he's a big strapping young 12-year-old now. So, yeah, I was off. Otherwise, I probably would have done something on those days. But I was doing a little bit of catch up, doing some buying. Again, trying to take it slow. I want to see some traction happen on the stocks that I bought today. So I'm probably closer to in my active accounts, you know, from, you know, 10-15% going into Friday and today to more like 30-35% in those active accounts. And tomorrow, if we're still continuing or my positions are still doing well, I'm going to add to that. I'd also highly encourage folks to, hey, if you want more market analysis, we've got Jim Ropal coming on the monthly market report. That's going to be live at 5:00 p.m. Eastern. So, Allie, I love having Rachel, but that's what Allie's doing. She's getting ready for that show with Jim. So if you wanted to catch that, it'll be real interesting. I know I'm going to be very interested to see what Jim has to say about the market right here and what stocks he's looking at in particular. So check that out. [00:27:24] Speaker 1: Same here. Thank you for the shout out for that. All right. Well, that's going to wrap it up for our SMT today. Thank you guys for joining us. We will be back here tomorrow with more market analysis on IBD Live in the morning. So you can head on over to investors.com/IBD Live for all the details there. As Justin mentioned, we've got Jim Ropal and Alyssa Quorum on our monthly market report today at five. So be sure to check that out. Thanks so much for watching and we'll see you back here tomorrow right after the close. [00:28:14] Speaker ?: Thank you.