Major Indexes Test Resistance; Lindblad, Kiniksa Pharma, Guidewire In Focus — Stock Market Today

[00:00:00] Speaker ?: We'll be right back. [00:00:30] Speaker 1: Good afternoon, everyone, and welcome to Stock Market Today for Tuesday, October 20th. It's Alyssa Coram and Ed Carson here with a breakdown of the action in today's session. And the major indexes mixed and testing resistance for the NASDAQ, a little bit of a roller coaster to nowhere. As we start to see more earnings reports pour in, we'll get to Netflix and SpaceX in a little bit. And Ed, what else do you have for us today? [00:01:01] Speaker 2: Yeah, I have Lindblad, Conixa, a couple of names that we often don't talk about, and Guidewire Soft. [00:01:09] Speaker 1: Sounds like a plan. We'll get to those. Yeah, I think IBD is always great at uncovering some of those hidden gems, those lesser known names. So we will take a look at those. And first, I'll look at the major indexes. Here's the NASDAQ composite closing fractionally lower on the day and testing resistance once again at the 50-day moving average. Now, three days in a row with that. Meanwhile, we'll go to the S&P 500, up about three-tenths of a percent on the day, closing off highs. It looks like in the lower half or so of the trading range right at some converging moving averages. The Dow showed a little bit more strength today, closing up 1% right at its 50-day moving average. We'll see if it can more convincingly conquer that level if it's to continue higher. And here's a look at small caps, the Russell 2000, with the biggest percentage gain on the day, but the most damage in this chart, Ed, still below its 200-day line. Let's kick things off with your analysis of the tech-heavy NASDAQ. [00:02:19] Speaker 2: Yeah, it was nice to see it gets back off the lows, but it also hit resistance where you'd really like it to go to. Sort of the nature of this is not where the strength is in the market. There's some strength, especially in the space, really some weak. There's, yes, there's actually software. Yes, there's some mega caps that look interesting, but the NASDAQ is still really needs to get above there. Actually, it looks better, you know, for sure. But yeah, so it's above there. Then it gets above the 21-day line, and then you'd also be getting closer to some of these resistance areas. Maybe not the all-time highs, but a lot of key areas in there, you know, that whole area. So little levels that we could go through before you really start getting excited. But, you know, things might look, to be honest, a lot of stocks in there do not look a lot worse than this, that are in the AI. So I think a lot of people who are AI, AI, AI, or chips, chips, chips, that's the weaker part of the market right now. [00:03:23] Speaker 1: Exactly. And so since you mentioned chips, we'll just go there and check out SMH, down about 4, 10, 7% on the day and off lows. But it's near lows from the last couple of weeks. Only one up day here, Ed, in about a dozen or so days. So a lot of improvement to make, and it's, I would say, in terms of the lower end of the range over the last couple of months, it's right there. So could we see a breakdown back to the lows from July, roughly around now that 200-day moving average? I guess earnings season potentially, and just, you know, broader sentiment about the AI space, could have a lot to do in the short term with where things are headed with the chips. What do you think? [00:04:15] Speaker 2: I agree. And I think meta, I mean, to a lesser extent, SpaceX and Tesla earnings, you know, combined. With a CapEx, really the sense of, are they making money? You know, are they making money with AI? Are they, is, is, are they, you know, are they going to continue? And then all the concerns about AI financing could turn into virtuous things. Oh, they can expand, expand, but there's been a lot of negative signs about some of these things. Because again, if anything slips, then things can break down. I mean, it's like, or that's the fear. I'm not saying it would, but if it's like, this happens, this happens, you know, but, you know, these virtuous cycles have two circles turning to vicious cycles, at least, at least from sentiment perspective. And yes. So if meta comes out and says, you know, we're raising it by 50%, we are making so much money. And then the following week, you know, we have Google and Amazon and meta and they come out. I mean, Microsoft and they'll say the same, be paying off. We love it. Boom, boom, boom. Then you might see. If they give any hint of saying, you know what? It's not really paying off that great. I just get really ugly. So yeah, the next week or so, starting with tomorrow's report in particular. Yeah. Really important for that. But obviously there's been a lot of, a lot of negative headlines that have nothing to do. I mean, there was a negative cloud that had an IPO in South Korea that had a terrible debut. I mean, there's always these little headlines out there. So all those and, you know, out there. So that one is, and again, so we'll just have to see. And I think the market will tell you, look, there's lots of reasons. All the reasons you can say to be bullish or bearish about AI are still basically out there. I mean, okay, there might've been a headline or two, but you know, and it's fine to know that stuff. And here I am as a newsletter, but I have to keep that out. If the market starts taking off and the AI stocks start taking off again, it's like, maybe I don't just jump into the deep end, but I said, okay, I'll nibble. I'll nibble in there. And if it doesn't work, then I get down. If I have anything left in AI, I got to get out. It doesn't matter if somebody has this great bull thesis. There's already been bear markets in AI stocks during the chat GBT era. So it doesn't have to be up. We can have pretty negative periods. So just let that happen. Let the market tell you and let them tell you if the sector is good and which individual stock. [00:06:41] Speaker 1: Totally agree, Ed. Okay. Let's take a look at the S and P 500. Obviously at the highest of the day, a little bit more encouraging than where we ended up closing. And we will take a look at that official closing range here. All right. 63%. So in the upper half, but nonetheless, Ed, I think the bulls, of course, would have wanted a close closer to the highs today, but we do have a trend line here. So that might be a bit of a start to get something going. Technically speaking, if we can see that happen. Yeah. [00:07:20] Speaker 2: I mean, it's like you're on the right side of the 50-day line, you know? And so, yes, I mean, this is much better than the NASDAQ. It's also, you can imagine, one good day, we're clear about, we're above the 21-day line. We're above that trend line. We're very close to record highs. So, I mean, yes, one day or two days, and could look dramatically better or worse. So very key level here. Looked the best of all day in terms of the indexes. It wasn't the biggest gainer, but I think you combine that. But, yeah, this looks fine. This looks fine. It's just hard to know. You just can't get too excited either way. And, you know, we had just a debt in that Friday. We're not too different from where we were a couple of, you know, we go here, we go down, and then you have a downward reversal day. It's easy to not make money because, again, over the last couple of months, even though we got a bubble, it's been hard to make money. Because if you buy on strength, usually there's a down a few days or something. And it's just been tricky to actually get headway in this environment. [00:08:20] Speaker 1: It is. And it seems like, as of now, investors should continue to expect a lot of these pullbacks to be sort of the norm. It could be, especially if we do continue to see that late 1990s precedent play out, at least, you know, from an index technical perspective. Obviously, we know that there's a lot different about the dot-com boom than the AI boom, but something that we are continuing to keep track of. In addition to all of these sector rotations and leadership changes, Ed, that we are seeing underneath the surface. But you're absolutely right. This earnings season, as it continues to pick up, we'll see where the chips fall, as it were, with a lot of the sentiment and the reactions here for the AI movement. Let's go over another couple of charts here. We'll just quickly get your thoughts on what's going on with oil. I know you were mentioning on IABD Live this morning how fast we've seen oil prices come back up. [00:09:30] Speaker 2: Yeah, and a couple of things. One, this is how high we got, because before the market opened, the November contract, which is just expiring now, so it will get a little confusing, but the November contract got to $110. It ended up down just below one, it fell almost 2% to $102. There were reports of a U.S.-Iran deal. Then other reports said, "Eh, not so fast," and that didn't seem to be confirmed. So we'll see if this sticks, because if there really was nothing there. If there's something there, then maybe it sticks, but really tough. And while USO fell yesterday, the U.S. oil price had risen for eight straight sessions, like 70%, a huge gain. So in that context, we're right at the highest levels in three or four years. Yeah, so we'll just have to see. But that downside reversal really saved it, because that's when the market turned higher or more convincingly turned higher in that regard. But yeah, so a lot going on, and I think just a lot of people are just wondering what happens after the midterms, or does the fighting ramp up again? All sorts of things. So oil is low, blah, blah, blah. I mean, oil is high. Oil is very high. And the Treasury, I think what's interesting is that there's still these AI concerns. Yeah, there are some weak economic data, but I don't, you know. I think it's these AI financing concerns. If the AI financing concerns go away, one of the interesting things is, do the Treasury yields spike? Because we've had hot inflation data. Oil prices have skyrocketed. These are things that would normally make the yields go up. So if you think that the borrowing is going to go up like it has, you could see this surge, which would then have implications for all those consumer names that have been taking off. That makes me nervous about going into some of the areas that are working, even, because there could be a riptide effect. Again, it doesn't mean you can't stop or get too concentrated in any particular thing because there is these risk of violations, not just within the market, because all the oil prices, yields, and the stock market could have some enormous rip-saw days in there that could really, can just upset everything that you were working on. [00:11:39] Speaker 1: Exactly. And you mentioned the strength in the mega caps. I just quickly want to go back to the magnificent seven ETF here. Mags, so a recent pullback, but definitely in a stronger position than the NASDAQ composite. We'll also take a look at the NASDAQ 100. That's QQQ, similar to the NASDAQ composite, but definitely something to be aware of in terms of how we're tracking there, more work to be done, more repair work. But it definitely seems like some of these non-tech areas are looking better. And again, we do have big earnings coming up that could have an impact on what we're seeing with the action in a lot of the magnificent seven names. We've talked recently about how some of the tech names can almost be seen as a flight to safety, you know, like the apples of the world. And here's QQQ below the 50 day moving average, like the composite, so stuck under that level. And we want to see improvement there. But Apple sitting pretty with earnings less than two weeks away. Here's the equal weighted NASDAQ 100, not faring better at all by any means. But one could imagine, you know, if you put your optimistic hat on, hey, maybe we are just still setting up and, you know, wouldn't take but more than a couple of days potentially to clear a trend line, get back above the moving averages. But, you know, an undercut of the lows of this consolidation, we definitely would not want to see. And here's the RSP. This is the equal weighted S&P 500 ETF. Now, this had a really good day ahead of 1.2% right at the 50 days. So what do you make of this action in terms of the kind of breadth that we're seeing out there? I guess outside of tech. [00:13:37] Speaker 2: Outside of tech. I mean, we're seeing the retail consumer. We're seeing medicals do well. There's some of the financials. I mean, a lot of the banks are struggling, but some of them have come back strong. Some of the payment stocks are strong. So, you know, OMG's done pretty well. So, yeah, you get outside of tech and really the AI space and there's a lot to like. So you can't just get too bearish. It's just this is key levels. And again, just like all the others, like the major index is right at the 50 day line. It looks like it just got above, not divisively, but yeah. So it's encouraging there to see that. You know, again, the images are so dominant by these heavy type market names that it's actually sort of, you know, it's good to see that there's some underlying strength elsewhere. [00:14:30] Speaker 1: Okay. Well, we'll quickly take a look at IGV representing software. This was up on the day, almost 1% hanging right at that 50 day moving average, but still an inside day add to that horrible downside reversal that we saw a couple sessions ago. So that's definitely a dark mark on the chart here. And it seems like within software, investors just really need to be discerning about that shifting leadership, right? There are still some names in software that we're seeing that haven't really pulled back at all, or they're trading sideways or setting up. So looking within the sector for that leadership is key. [00:15:11] Speaker 2: Yeah, it is weird because some of the leaders that we saw, they really did. And then it's sort of like the mediocre, some of the ones that we are, they're mediocre, like a service now there. And then there's some new specialty, sometimes niche players that have come on. Yeah. So all the situation, but overall, the sector is still hanging on pretty well. [00:15:32] Speaker 1: And we'll just check out medical with a look at XLV. What a day for this sector ETF, Ed, up 2.4%. [00:15:43] Speaker 2: Yeah, big factor. And I would probably brought it up if you and Justin didn't talk about it yesterday. A lot of the stocks that you talked about were really strong. Lily there, a lot of health insurers, there's just a lot of strength. And you look at the biotex, XBI, IBB, those indexes, also strong. So you're seeing it across a wide range, defensive growth and more growthy area. Definitely a core area for investors to be looking at. [00:16:14] Speaker 1: Yes, let's take a look at just quickly, just to show visually, XBI also with an even stronger day, up 3.7%, but more damage in this area of the market with biotech, IBB. This one has different weightings than the XBI in a better position. I think arguably actionable today as it retook the 50-day line and cleared a trend line. Also, just for kicks, here's a look at ARKG percentage-wise with a strong gain today of 2.7%, but had that dramatic move lower a couple of weeks ago and still some repair work there. So it does seem like at the sector level, the IBB, the one that's in the best position here, but then you have the XLV looking the strongest within healthcare. But this is something that, you know, the relative strength line and just a lot of screening ed was showing up on our radar as it was turning. I think we were very impressed with the resilience and the performance in the last couple of weeks in this broader healthcare sector. And now that brings us to our individual stocks that we want to cover today. Here's ticker LIND, Lindblad Expeditions and Leisure Services Group, up 3.3%. A nice upside reversal today, Ed, at the 21-day line. [00:17:36] Speaker 2: Yeah, we didn't go over in a group, but trouble did very well today, probably because oil coming down. But yeah, this is interesting. This is our stock, and I love reading the stock today because there's these little information you learn beyond things. I didn't realize this team's up with NatGeo. And so I think my mom went on some of these probably Lindblad things. I didn't realize it because she did some NatGeo cruises. So these eco-tourism things, and so those are fun. So this is shifting into annual profitability this year, some solid growth side reversal, the relative strength line, basically at highs, might be at highs on a week. So yeah, I mean, just found support exactly where you'd like it to. And, you know, just there's not really any resistance. I mean, it may not be an all-time high. I'm not sure. But it's like, look, you know, that's pretty performance here. So yeah, just a lot to like. Maybe travel can come back. This is, you know, eco-tourism tends to be an affluent. And so it's not a real surprise because this is going to be one of the leaders in there, one of the areas that's going to be safe in case you worry about inflation or other things. They're probably somewhat resilient with that. So yeah, I like this as travel really took off today. [00:18:55] Speaker 1: Yeah, and I would say the relative strength in 2026 has been quite notable. You have had, of course, some bases along the way and some pullbacks. But I think that a couple of weeks ago when you saw the stock up 22% and then go tight the last couple of weeks, that's what we like to see in leading stocks. What are your thoughts about the earnings growth, Ed, and what we're seeing there? [00:19:30] Speaker 2: The revenue growth or the earnings growth? [00:19:33] Speaker 1: The earnings. What are your thoughts on what we've been seeing lately with the earnings? [00:19:39] Speaker 2: Yeah, I mean, so there's some spotty stuff, but it's like a really taken off. And so after some losses, it's going to looks like it's turning profit for an annual base, then some saw as well. And the growth isn't tremendous. That is one thing you'd like to see faster. Well, I'm not sure how, but they obviously are leveraging now. But yeah, the growth, that's picking up. It just sort of seems to be at a turning point often really is when stocks can take off in that regard. [00:20:15] Speaker 1: Well, we do have the next earnings report, it looks like, coming up in two weeks' time. So we'll see if traders can build enough profit cushion heading into that report or what the options market is showing in terms of the expected move either up or down. I have not looked at the options for this one, but the technical action, very compelling in recent weeks. Next on our list, let's go to KNSA, one that the IABD Live team and the IABD team at large has been following very closely as it's built this base over the last quarter, an explosive move after the earnings report in July, which showed a move of 25% in one day and a very strong close. The stock has just kind of been biting time ever since then, and this 80 price level, Ed, has been quite key. Today, we got a strong close with shares up 4.7%. It tried to go a couple of days ago, ended up with a weak close, but today, not the case. [00:21:22] Speaker 2: Yeah. I think when you got over 80, 81, you know, got over the bulk of the trading, you could have bought here. It's not, you know, it's not like it's super extended. You know, medical, we've traditionally seen as defensive growth, but this is clearly in the growth space. This is like strong growth, top and bottom line, again, a biotech with strong profitability, not just the relative strength line at a new high. Yeah, it made a nice run, went in, you know, sort of a tricky market, really held up well, taken off here, just looks really good. I believe this was added to leaderboard today and just nice, nice action, you know, all told. Again, one of many medicals that was showing strength today. [00:22:07] Speaker 1: Yeah. And so, I guess, Ed, when you see the indexes on shaky footing and some of the more traditional growth areas, I guess you could say, struggling, if you're looking at the sector rotation and the strength, that sort of might give investors a little bit more confidence to go after something like this that is actionable today with, you know, hey, maybe the indexes aren't all systems go, but the medical sector and biotech area is continuing to look quite compelling. So, at least you have that group strength in your favor. [00:22:49] Speaker 2: Absolutely. [00:22:50] Speaker 1: All right. Let's go to Guidewire. This is GWRE. So, to our point earlier where, hey, not all software stocks are falling apart, Guidewire setting up here, shares up already for the week, Ed, up 8.7%, working on its sixth week up in a row off the bottom. I will say the left side of the base is not perfect by any means. We've got two pretty poor down weeks there. But it is forming the right side of the base earnings for this particular stock. Not a concern for a while here. And that left side of the base, the reaction to the last earnings report is what really contributed to the decline there with a gap down in reaction to the report. But today, a powerful move, over 7%, and I could see some traders taking action today. [00:23:46] Speaker 2: Yeah, this one has solid growth. There was a weird, not sure what happened with the June quarter, but generally it has pretty decent growth as well. Again, there's some niche players. There's a number of insurance or property-related software names that are doing well. I think you and I may have looked at apps, so maybe I was thinking about the earnings because that's coming out in a couple of days. That's a real estate or a property management. Yeah. And there's some other things. I think Porch, PRCH, which technically is not, but it seems to be really software. So I'm not exactly sure how that one works. But that's all kind of in a software solution in property. So yeah, some of these niche things. Guidewire. Yeah, I don't like the left-hand side so much, but sort of showed in early entry, as you point out. Earnings report, yeah. There's been some ugly reactions on earnings. And so I would definitely, so if you do get into this, watch out for that. And I certainly wouldn't be too excited to jump right ahead of earnings when that time comes. So yeah, just another one of these things. So definitely look around. Don't just look at the cybersecurity. Don't just look at a handful of big names. You want to dig through these niche players that are shaping up. [00:25:12] Speaker 1: Mm-hmm. Okay. Let's take a look at some earnings out after the closing bell, including from some high-profile names. Here's SpaceX. Shares up at this moment about 2.3%, hovering around the 150 level the last couple of days, we're talking about 2.3% in the last couple of days. So if you rewind just a little bit, we had the IPO debut at 135, spiked high in the next couple of days to well over 200. It's 225. Then we had that massive sell-off down to around 100. And then from, you know, the August to October timeframe, we had a move up to 176. So then we pulled back to 150. So I could see some traders, if we do have a powerful move in tomorrow's trading session, could see it as a tradeable level for the stock. What are your thoughts on the reaction here and the SpaceX report? Anything notable that you're seeing so far? [00:26:20] Speaker 2: It was really strong. I think it was the gap where, I mean, it's confusing because they don't necessarily report all these things, but it seems to be the first profit quarter on like a basis ever, perhaps. And that's important because eventually that will help it get into the P500. It needs annual earnings or so to do that on a gap basis. Revenue surging, again, because of all these AI compute deals as they've pivoted to that, all untapped stuff. I assume that growth will slow down just because they're selling all this extra stuff. But right now, just tremendous going on here. Yeah, I think if it goes over, again, there's lots of details you have to look into. I have no idea because there's so many things you could look into and say, I want to look at this or that. And so I would just be very cautious about after hours training because people, Yeah. Because I just don't have even figured out what they want to look at yet. I mean, honestly, you know, with someone. But yeah, I think if it goes over the 21 day line, somebody really aggressive could do it. Or maybe the highs from a few weeks ago, I don't know, like maybe 156 of that. And then there's like, yeah, those kind of levels. Those might be places. Again, those are aggressive. Those would be a few things. So I could see starting a position because I don't know if I'd want to wait all the way to 176, say, which, you know, is the more clear short-term high. But yeah, so that one is doing well. Yeah. The call will be important. That's probably just starting. What will they say? Yeah. That will must say anything about a Tesla merger. You know, there's always, so this could go through the place by tomorrow's way. So again, yeah, I'd say as tomorrow trades, you know, that would be something more rather than I want to jump in now. But looks interesting and has held up better than a lot of the Neo clouds that it sort of competes with on the AI side. [00:28:06] Speaker 1: Mm-hmm. We'll be watching the action in tomorrow's regular session for sure. And any comments to come from the call. We also want to take a look at Netflix. This has been quite beaten down, Ed, and down another 5%. I know they've had some management shakeup stuff going on recently with getting rid of the content team and wanting to produce more hit shows. So we'll see what management is saying about that on the call. But the stock is not what it once was. It's been struggling for a little while here and a disappointing 5% decline in reaction to the report. [00:28:52] Speaker 2: Yeah, it seemed like the revenue is in line. The guidance might have been a little in line. But yeah, this just needs a lot of repair work. I mean, the 40-week, 200-day line has been major resistance, and that's falling quite a bit. So it just needs to change that whole thing. I mean, it's like there's just – it's going to slow dramatically. You can see the growth rates for next year. We'll see how the thing is going to really slow down. There was this leveraging, hey, we're going into advertising that tap subscriptions. And hey, we're doing this. But now it just – they're really struggling to, I think, with a lot of metrics. [00:29:29] Speaker 1: And from a technical perspective, this stock a couple of months ago showed a pretty classic shorting signal after the spring earnings report with that downside reversal right at that declining 200-day line following a weak rally. You can see the weak upside volume. So weak rally right up into a declining 200-day line. Got rejected. Classic shorting signal there from a technical perspective signaling more weakness to come. And that's what we've seen since. So not the time to buy this one on the cheap. Better to wait for an actual turnaround in the fundamentals and in the chart. Do we have ISRG out, Ed? Oh. [00:30:15] Speaker 2: Yeah, just beat fuse. I don't know why it's down, but boy, is it down. And again, you can see that resistance level. Oh, it's coming back. It's coming back. It's hitting resistance right where you might expect it to. And maybe something with the guidance, how much growth they see on surgical systems. But obviously, a negative reaction. So yeah, there's a lot of earnings. Earnings, really, this is the first big, big day. And I think, again, the next couple of weeks, just a ton of earnings that are coming out. [00:30:45] Speaker 1: Yes. And we know you're going to stay on top of it, along with the rest of the IBD team. So we appreciate it, as always, Ed. Thanks, everyone, for tuning in. That's it from us for today. But we will be back with more tomorrow morning on IBD Live. You'll get our reaction to these earnings reports and the market action in real time. So we'll see you there. Investors.com/IBD Live for all the details, starting 10 minutes before the opening bell. And then we'll also see you right back here tomorrow after the close. [00:31:29] Speaker ?: We'll see you next time. We'll see you next time. We'll see you next time. We'll see you next time. We'll see you next time. Bye-bye. Bye-bye. Bye-bye.