Stocks Weather Nvidia News; Arista Networks, Five Below, Cloudflare In Focus — Stock Market Today

[00:00:00] Speaker ?: Субтитры сделал DimaTorzok [00:00:30] Alyssa Quorum: Good afternoon, everyone, and welcome to Stock Market Today for Thursday, November 12th. It's Alyssa Quorum here and the stock market weathering the NVIDIA storm with just modest declines for the major indexes. And joining me now to discuss all the market action and some standout stocks is my colleague, IBD News Editor, Ed Carson. Good to see you, Ed. [00:00:54] Ed Carson: Good to see you, Ali. I want to take a look at Arista Networks, Five Below and Cloudflare. [00:00:59] Alyssa Quorum: Okay, we'll check out those stocks. But first, a closer look at the major indexes. I'll get my market surge charts all queued up here for us. So here's a look at the NASDAQ composite down 0.4% on the day. The S&P 500 roughly with the same percentage decline and the Dow Jones Industrial Average reversing lower here. Meanwhile, the Russell 2000 was hit harder on the day, Ed, down about 1.6%. We can take a look at the 10-year. Looks like that's a pretty obvious culprit there. So we'll talk about that more. But first, the tech-heavy index because a pretty big tech company is in the headlines right now. [00:01:45] Ed Carson: Yeah, NVIDIA CEO resigned. What a few days since the first revelations came out. Resigned. We don't know the full fallout of how that's all going to play out. But the market sold off on that. It also sold off on NeoCloud Nebius. Remember, keep in mind, yesterday's follow-through day rally was in large part because of coral reefs. So the Nebius came out and said, eh, not so much. I mean, there was, you know, markets didn't like the Nebius thing. So to combine the NVIDIA and Nebius, it's like, I mean, if the market had sold off 3% today on the NASDAQ, I don't think anybody would have said, well, that's crazy. Why would it do that? So the fact that we rebounded, like NVIDIA came off lows, the market came off lows, a test of the Tunity line. Now, we don't know what tomorrow will be. Just like the election, we had this post-election rally. And then the next day, it's like, oh, wait, wait, oh, this might happen. So it doesn't mean we're out of the woods yet, but encouraging, very encouraging. You know, the Tunity line and today's low is obviously a critical level, I think, for the NASDAQ a day after a fallout today. So you would have liked to have seen further gains. But given the news with those things and the treasury yields, pretty good. [00:03:01] Alyssa Quorum: Yeah, exactly. And then NVIDIA, it seems like, Ed, there's just, of course, sort of this knee-jerk type reaction that can happen when you have a high-profile CEO exit. And investors wondering about the future, especially with the lack of succession planning. And IEBD's Claire O'Connor spoke with an analyst in detail about all of this news. And everyone can check that out on our YouTube channel. But in terms of the stock reaction here, Ed, it seems like in the very short-term, volatility, a lot of that to the downside. But perhaps as the dust settles, it seems like maybe the short-ish to medium-term picture for NVIDIA, not too much changes. With the financial picture, it seems, it's more of the longer-term strategy, deal-making, all of that, that's potentially in question. What are your thoughts? [00:04:05] Ed Carson: I agree. Obviously, we're going to get earnings next week. But those are earnings from the October quarter. It has nothing to do with what's happened this past week or so. Yeah, the next several quarters, probably not really an impact. But, yeah, we don't know the fallout, some of the chip sales that got to China and other things. So there could be, again, we don't know how it'll all play out. But, yeah, I think for IVD investors, you want to see a lot of strength here. And that goes for a lot of AI names, not just NVIDIA. But there's a handful of names, including NVIDIA's rival AMD, which I would have looked at, but you looked at yesterday. But there's a few names that are above their 50-day lines. But why would you be messing with a stock that's hitting 52-week lows? I mean, this one could rebound, but you could also imagine a scenario where people just really start to lose faith in it. And that if – and, you know, I have not lost faith in it, but I don't have faith in it either. I'm going to wait for it to get above some key levels and then shut up again. It's really damaged. So I just think it's really important that some people say, well, the fundamentals are going to be great. Look, NVIDIA's sell-off, even before this week, is an example of how stocks can sell off while the fundamentals are great. And the fundamentals look great. [00:05:19] Alyssa Quorum: Yeah, Sandisk's fundamentals are great. They're amazing. [00:05:22] Ed Carson: They're stratospheric, and yet the stock is plummeting to earth. So, yes, there's all sorts of those things. Yes, and wait for those names. There are a few names. We're going to look at one of them that are above their 50-day line showing strength, but really not many names in the AI space are, including NVIDIA. [00:05:42] Alyssa Quorum: Exactly. So just to tie a bow on this here, headlines aside, fundamentals aside, looking at the chart and studying history, what we know is if you're looking to outperform the market, especially using our style, our strategies and risk management tools, like you said, we want to see a lot more strength here. And there were warning signs before this week, and even traders here short-term trying to catch a bottom or look at an undercut or something, which is different, I think, than holding this over the last couple of months and writing it down. In either scenario, whatever your approach is, having the risk management tools in place, and whether it's a short-term bet right now or something from a couple months ago, you don't want to take a big loss on any trade, even if it's something, a company leading the AI revolution, Ed. [00:06:43] Ed Carson: Yeah, absolutely. [00:06:44] Alyssa Quorum: Okay, and we'll see what the earnings are like, as you said. So just a little aside there, next on our list, we do have the NASDAQ hovering above that 40-week moving average, and I want to take a closer look at the S&P 500, Ed. What are you seeing here? It seems like there's a pretty key level to the upside we'd like to get above. [00:07:06] Ed Carson: Boy, I mean, this is still an inside week. I mean, it's still inside weeks of that huge loss, the 50-day line right there. I mean, it's just like, it is a big resistance area, so you want to see that get above that. So if we get above that, I think that would also just be showing some more strength to this rally attempt. Yeah, I mean, that's what we need to see. Well, not terrible. Again, it's understandable, given all the news that we had today that could have seen a major sell-off. It didn't. But, you know, that's sort of like, you know, an honorary victory, the symbolic victory kind of thing for Iowa. You know, it's like, oh, that's great. But you want to be rising, not falling, and we just need to get above that. [00:07:49] Alyssa Quorum: Yeah, and I know when it comes to individual stocks, Ed, you like that trifecta of signals, right? So we kind of have this, we have a downward sloping trend line, we have the 50-day moving average, and then that key high from that bad day last Thursday. So it seems like that could be a critical level, not a guarantee of further gains if we can surpass that. But I do think it would be an interesting signal to see. [00:08:18] Ed Carson: And this is definitely a rally. We always say, like, oh, try to go incrementally. And if things are working, you can incrementally and very quickly be fully invested. Today wasn't really a day. I mean, there were a couple stocks you could have bought. So, I mean, some investors did that. But, you know, it was a down day, this and that. But this is a big hurdle. This is definitely a reason not to be all in, because what if we come up to that and then reverse lower? And then the NASDAQ undercuts the 200-day line. You know, like, you can imagine without too much pain, things getting very painful for individuals who get too aggressive. So very key level, get above that would be a really good sign. And probably a lot more stocks would be flashing buy signals. You get above those November 5th highs. [00:08:59] Alyssa Quorum: Exactly. Okay, and then a quick look at blue chips here. Just a downside reversal still holding above the 8th, the 21th, the 50th, and well inside the bar from last Thursday. And we are hanging above 52,000. And I want to take a closer look at small caps here, Ed, and the 10-year yield. So talk to me about what you're seeing there. [00:09:26] Ed Carson: Yeah, I mean, we saw a pretty weak breadth. And I think this is, you know, there's different measures of looking at it, and this is definitely showing that. And right back below the 50-day and 200-day lines, yeah, those treasuries, look, a lot of sectors were picking up. And you can see the last few, you know, the 10-year yield surging above there, you know, there are some big breaks. And now it's recovered one of the, a couple of those big breaks, it seems like. And so the Russell 2000 was really rallying on a relative strength basis for several weeks, and really a lot of that, and some of it's oil prices too, but a lot of it was the treasury yields. So that's, again, part of the reason why it makes this rally tough is that what's going to lead? I mean, we've got like three or four AI stocks that are above their 50-day lines. And then, yeah, we have these other groups that were doing well, but they generally fell today. Nothing, no boo-hoo, I don't want to go, I mean, you know, but it's just like RRSP, you know, not a great day. That fell more than the indexes. Again, very close to high. So there's plenty of stocks that look like this, that with one day, they're in buy zones again. So it's not like, oh, no, nothing, but it is a little more uncertain what will really lead, especially this was a follow-through day that was driven by stocks that are nowhere near buy points for the most part. Yeah, exactly. But again, this is why we see, everybody can have doubts. There's a lot of reasons to be doubts of follow-through. This is why we still say you should probably participate despite that, and then add if things are working. So those are just reasons to, it's a little weird. But yeah, the treasury yield really definitely is having an impact on the small caps. [00:10:58] Alyssa Quorum: And then we'll breeze through a couple of ETFs. I'll pull them up, Ed. You can just give me your rapid-fire thoughts. Here's a look at the chips, SMH. [00:11:08] Ed Carson: You know, that's 200-day line. That's, when that starts to go over that, then you start thinking a little bit more about the AI kind of sector a little bit broadly. Not there yet. [00:11:19] Alyssa Quorum: Yep. Okay, here's IGB software. [00:11:22] Ed Carson: Yeah, that has work to do. Again, there's a few names, but a lot of them are not. [00:11:28] Alyssa Quorum: And kind of in no man's land, right? So yeah, let's see if we can get back above the 50-day here, get a little trend going. And just looking at the relative strength line, right? At least see that crossing above its moving average. That would be good to see. XRT, here's retail. [00:11:46] Ed Carson: Yeah. I mean, obviously, we had that big sell-off. You know, that's fine. You know, but again, the higher yields seem to hit that. There were a number of names that came down toward buy points or other things. Again, not the worst or anything like that. You know, this is obviously doing well. You have VSEXY is definitely a name. VSM, you know, is another one. It's coming down to sort of things. So, you know, you might feel, I'm feeling pretty good. I'm up 10% on some of these names. And now, all of a sudden, it's like, well, now up a couple of percentage points, you know, if you got right at the right time. So, yeah, it's just, if yields rebound, and that's part of the concern. If yields rebound, especially if AI trade rebounds, we get those yields to highs. Some of these retailers, there's a very good chance that they'll slide off. And we have a lot of retailers coming up. XLF is another thing. There's different things going on. There's a lot of things. There's a lot of things that people should be looking at in financials. So, that's still hanging around there. And XLV, some of those are doing, that's doing very well. Had a down day, but can't be too upset with that progress over the last months or so. [00:12:51] Alyssa Quorum: Yeah. And then biotechs, looks like XBI kind of had a tough day, down 3.3%. And the IABB, a little bit of a different weighting here, off, but not down as much, down 2.2%. Anything that sticks out to you about the weakness in biotech today? [00:13:09] Ed Carson: No, not really. I don't know why it was that. I would also bring up ARCG. There were some names in that. Again, that plays the hot stuff. And what was clearly the leading biotech ETF for a while, not so much anymore. And that's just something to watch out for when you have more speculative. You know, some of these ETFs are a good way to play it, but they still can make big moves. And you have to have, you know, you have to protect yourself in those situations, too. [00:13:37] Alyssa Quorum: Well said. Okay, let's check out some individual names. Here's a look at ANET, outside day, upside reversal, 5% gain after reclaiming the 50-day line in yesterday's session. So, here's one of the ones, one of the few, right, Ed, that has gotten above that hurdle. [00:13:56] Ed Carson: Yeah, and there's a lot to like about this one, accelerating earnings and revenue growth for a few quarters. You say it's above the 50-day line. The relative strength line is almost at highs, you know, which, boy, there's not many AI stocks that can say that. If you're going to buy something like ANET, and you can see this, is that breakouts often fail. I mean, let's be honest, and, you know, or there are these things that fail and then come back up. If you go on to a monthly, it has a great track record over time if you can get on board. But it's like trying to get on to, you know, getting on to one of those rides where you have to, it's moving slowly and you have to get on quickly. And so, if you were to buy it, this would seem like the time to do it. I mean, just because, you know, buying up near the top, not that it has a real base anyway, but that just seems like it, there's that. But again, you know, there's a few names, you know, if AI comes on, this is very likely to do well. But you could imagine if AI rolls over that, yeah, there's still the names like ANET and AMD are not going to be able to hang on. But a lot to like about it. But so that's why I wanted to bring it up because it's one of the few. [00:15:09] Alyssa Quorum: Yeah, and I agree buying closer to the 50-day or the 10-week makes a lot of sense for a stock with this type of personality. I think in general, it's a good practice. Yes, I do too. You know, and then add on the breakouts. We like, you and I like doing that, IBD team. And then also in terms of managing risk, because like you said, what if, you know, that rotation out of AI reignites? Currently, this is about 7% above the 10-week. And so, if you're using that as sort of your line in the sand, just good to keep in mind with that. [00:15:46] Ed Carson: This is the kind of thing, it's one thing to have a little piece, but I wouldn't be like buying all the stocks that are doing well above the 50-day line. Because it's like, how much AI exposure do you really want, especially at this point? [00:15:56] Alyssa Quorum: Yeah, going small. And then next on our list, we'll take a look at five below. So, this is in the retail space. Reversed lower by about 1.4% today, Ed. But we are tracking a handle that's developing on the right side. And I think, aside from today's decline, you take that step back, this has seen some really nice outperformance over the last couple of months, as we've seen broadly more interest in the retail space. But as you said, interest rates could have a lot to do with the future performance. We'll see. [00:16:30] Ed Carson: Yeah, and this one doesn't have earnings for a while. It has strong earnings recently. It's supposed to slow down. Weekly is nice, because you can see the big run it's had. It's paused, but that's okay. Now it's taken a break. But it did have a big run. So, it probably needed to take a break there. So, you know, is that a long enough break? You know, certainly perhaps. It does have a handle on the, I think it has a handle on both, on the weekly and the daily. But I will say that a lot of other retailers, a lot of discounters will be reporting next week. So, there will be some things out there. But, yeah, this is a strong performer. Again, you don't want to get too exposed to any one sector, because of things like the yields. You know, that could, you know, all these retailers that were doing well came back. Again, looking fine. It just was down today. Not the worst thing heading into earnings, you know, heading into these other earnings. But, yeah, nice action here. Relative strength line pretty close to at least consolidation highs. And nice to sort of defensive growth name in a sort of uncertain kind of environment. Even though we have a follow-through day, it still feels uncertain. [00:17:38] Alyssa Quorum: Yeah. It does have that feel to it. Anecdotally, right? Just what we're seeing out there in terms of our style of stocks. There are some follow-through days where it just feels more decisive, more powerful, a little bit more broad-based. It doesn't quite have that feel to it yet in my book. And, like you said, so many cross-currents with the leadership, right? Yeah. Yeah, it's a really interesting environment right now. Let's go to NET. This is Cloudflare and the Enterprise Software Group having a great week. It's up about 18.5%. It's right at that 10-week, right at that 50-day. So, potentially in play here. Ed kind of reminds me of the AMD chart a little bit from a technical perspective. I do own some AMD where it's kind of that shakeout plus three pattern, kind of a double bottom. Right at the 50-day, you got the trendline situation here. So, again, after a touch of the 200-day. So, another one potentially in play here in the software. [00:18:54] Ed Carson: Yeah, I agree. I was talking about this with Arne Gutierrez. Like, you know, from my fellow IBD Life panelists, we were just talking offside. Yeah, this looks like AMD just a couple days later. [00:19:05] Alyssa Quorum: Oh, wow. Great minds think alike. Look at all of us. Yeah. [00:19:09] Ed Carson: And so, but you can definitely see that both. Even the test of the 200-day line. There's even something interesting is that both of them have that left, that prior base. That there's this kind of entry just above. So, I think if you look at net, you know, there's sort of that right there, right at that, that's really on that situation. So, I mean, look, ideally, given the run-up it's had, ideally, it would run up to or just above this double bottom or the 332 area, pause and then go. Who knows what this market, you know, I mean, what it will do. But, yeah, I was just trying to find something that was not already out there. This is, I would like to see more strength. I wouldn't buy it right here myself. Even, obviously, it's shown a lot of strength. But it's one to set up. It's really important. I think people should be working on their watch list because there's going to be things that were off your radar. A week ago, cloud flow was sort of off my radar. I mean, it was tumbling. Why am I looking at this thing? Yeah, exactly. But, you know, so a lot of things looked bad a week ago. And then there's the watch lists are pretty full. That is, while it's what we're talking about in certain markets, there are things coming up. There's things shaking around buy points. There's a lot of interesting stuff. So, you got to look into it and figure out which ones that are going to, you know, make sure that you've got this wide net, but also what are your priorities and stuff. You want to be doing that so you're not, when things do turn and you go, oh, wow, this is working. It's like, well, do I really want this? You actually want to do some of that thinking ahead of time. Helps keep the emotions out. But, yeah, this one has done well. It can have some shakeouts like a lot of software names have had this summer and fall. But one to be looking at here. [00:20:54] Alyssa Quorum: Yeah. Well said, Ed. Good stuff. We always appreciate it. [00:20:59] Ed Carson: Thank you. [00:20:59] Alyssa Quorum: Thanks. And thanks, everyone, for tuning in. That's it from us for today. We will be back with more tomorrow morning on IABD Live. We're going to be joined by Don Vandenborg of Revere Asset Management. Always great to chat with Don. Like-minded and love how he really gets into the spreadsheets and talks about portfolio risk. So, we're going to have him on the show tomorrow. Looking forward to seeing you there, starting 10 minutes before the opening bell. Investors.com slash IABD Live for all the details. We'll see you there. And then we'll also see you right back here tomorrow to wrap up the week. [00:21:54] Speaker ?: Редактор субтитров А.Семкин Корректор А.Егорова