Dow Leads The Way In Flat Session: Iren, Credo Technology, Vertiv In Focus | Stock Market Today

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[00:00:17]Heat. Heat.

[00:00:34]Good afternoon everyone and welcome to stock market today for Wednesday May 27th. It's Alyssa Cororm here and the Dow leading the way in a pretty flat session. We've got some high octane names that we want to check in on and joining me now to do just that is my colleague Ken Shrieve. Ken, what do you have for us today? Yeah, record uh record closing high for the Dow uh Ally, but you're right, very very quiet day for uh for stocks, but we'll take a 200 point gain for the Dow Jones. Uh three stocks to go over today. Let's talk about uh Credo Technology, CR DO. Uh also want to take a look at data center operator N. and uh also in the data center space uh Verta VRT which is coming down to its uh 10-w week moving average.

[00:01:24]>> All right, we'll do that. Sounds like a plan. First, let's take a closer look at those major indexes on this flat day.

[00:01:32]Here's the Nasdaq Composite up just fractionally on the session. So, holding near highs. Meanwhile, the S&P 500 up fractionally as well, holding near highs. The Dow in the driver's seat today with a biggest gain at 4/10en of a percent or so, backing off a little bit there. Let's take a look at the composite. So, we've got a couple of closes in a row here right at highs for the Dow. And then the Russell 2000 was just fractionally lower on the day right at highs. I guess not every day can be a super exciting point or percentage gain, Ken, but there's not a whole lot to complain about when you're at highs.

[00:02:16]>> No, it's uh it's just a it's just still a strong market that we've been uh we've been talking about. Uh we've got uh what is this? five five up days in a row for the NASDAQ and uh you know we tried to we tried to go down uh today and then we just ended up uh closing mostly unchanged and uh just holding holding gains uh really tight and holding holding up near highs. We had uh you know semiconductor stocks uh tried to sell off uh today. We had the uh uh the Philadelphia semiconductor index was down a little more than 1%. We had the uh the semiconductor ETF SMH that was uh that reversed lower but uh you know only down uh a little over 1% and uh had some big big declining uh semiconductor stocks. Qualcomm had a pretty bad day on the NASDAQ 100 that was down uh you know maybe six six% I think on the day but um uh you know really didn't spill over into the NASDAQ uh you know too much. it was basically just a flat performance.

[00:03:23]So even though uh semiconductor stocks lagged today, they had been on a you know a big tear. I mean Qualcomm was up for several days in a row and semiconductor stocks have been leading the market. But uh pretty pretty tame pullback for the chip stocks and really didn't uh really didn't spill over into the NASDAQ hardly at all today.

[00:03:41]>> Yeah. Okay. Any other thoughts, Ken, on the major indexes here? Your your thoughts on the outperformance from the Dow?

[00:03:51]Well, we, you know, had uh let's see, five stocks in the Dow up at least 2%.

[00:03:58]So, had some nice performance for some of the consumer discretionary uh names today. Amazon had a great uh great day in the Dow. I know the guys on swing traders. Saw some uh nice technical action in Amazon. We were looking at that uh at that name uh today. But nice move above the the 10day moving average for Amazon today. Uh Boeing, Home Depot, Nike, all uh all nice gainers in the Dow Jones uh today. So, they had five names in the blue chip index up uh up at least uh 2% uh today. But uh that was the the standout uh index uh today. The rest of the market basically uh unchanged. But uh you know when you've been in such a strong rally a flat and unchanged uh you know performance is actually you know pretty pretty strong considering where we've where we've come from.

[00:04:49]>> Yeah. All right. Well, what would your short-term outlook then be given where we're at here? What are some of the levels that you're keeping an eye on, Ken?

[00:04:59]Well, I think for the for the S&P 500, if we if we do pull back, uh, you know, we'll kind of see what a what a test of the the 10day moving average is. I think the, you know, the the the the story, you know, for this market again is just, uh, the fact that this in institutions are just not willing to to sell stock here. You've got so many leading stocks that are holding on to to gains. We're going to talk about uh credo in in in just a little bit, but uh you know, the market is just really unwilling to to give back uh gains. We had another, you know, big big drop in oil prices, and the market for for one reason or another is is very very optimistic about a a resolution to this uh US and Iran uh conflict. I mentioned on IBD Live, I'm not I'm not I'm not entirely optimistic uh myself. if I just see, you know, gas prices very elevated and I'm not sure the what what the case for for low lower gas prices uh is is going to be with, you know, the US negotiating with the uh with the uh IRGC, that hardline group in Iran. So, we'll we'll we'll see if we can get some relief uh at uh at at the pump. Uh USO, you know, big big drop through the through the 50-day moving average. So there's some uh some optimism that uh there there could be some uh relief at at the pump and there could be some movement maybe an agreement between uh Iran and and the US but uh we'll we'll have to see a lot of volatile headlines uh coming out of that uh coming coming out of that area.

[00:06:35]So we'll we'll see. Uh but you know lower oil prices the market likes to see. But that 10-year Treasury yield, you know, didn't didn't really move a whole lot today. the oil prices and bond yields have been kind of moving in tandem, but um the 10-year yield traded all the way down to 4.45% today. Uh closed up at about four 4.48%.

[00:06:56]So, you know, bond yields have been falling. Oil prices have been falling.

[00:06:59]That's provided a good a good bid for for stocks. So, um we have an optimistic market. We got to hope we get more more progress on the Iran uh US front.

[00:07:12]Yes, that would be very helpful. And you mentioned the strength in Amazon. Here's a look at the consumer discretionary sector ETF XLY outperforming on the day.

[00:07:25]>> Yeah, I think Amazon gets a pretty heavy waiting in XLY. I think it's up close to a >> Tesla does as well.

[00:07:33]>> Tesla Tesla and Amazon are are pretty uh pretty heavily weighted. But I know one of them is about a 20 20% waiting in that uh in that ETF. So yeah, Tesla is is interesting. But XLY is uh gave a little buy signal uh today. That was uh you know definitely seeing some money flow into XLY. So uh that that looked viable uh today and uh so that's in a nice little nice little technical uh setup. So, and uh yeah, I wanted to look at Tesla as well because that one is kind of as as the SpaceX uh IPO gets ready to to come public uh next month in in June, I believe. Uh uh you know, Tesla is uh setting up and uh get a little cup with handlebase going here.

[00:08:20]So, we'll see if Tesla's maybe getting ready to to try to to break out here um getting close to that 450 level. So, still seeing some interesting setups uh in in this uh market here. Maybe uh Tesla could get ready to to get going here. But again, another top holding of uh XLY, which had a nice nice day today.

[00:08:40]>> Yeah. All right. Well, you mentioned Credo, so let's go there. A high octane name, the 21-day average true range here, 9.4%.

[00:08:52]We saw a recent move above 200. I believe that's new high territory and it's holding at new highs with earnings coming up in a matter of days, Ken.

[00:09:06]>> Yes. Yes. So, Credo uh you know interesting next week uh pretty pretty quiet in terms of earnings, but Credo does uh report earnings uh Monday uh after the close. So, this is going to be an important uh earnings report. uh Credo, they compete with uh pretty directly with Astera uh Astera Labs AAB.

[00:09:27]They also compete a little bit with Broadcom and also uh Marll. We'll look at Marll. They report earnings after the the close today. But uh they uh Credo is uh highspeed, low power connectivity solutions in AI infrastructure uh data centers. Uh what I like about Credo is uh and just a just a good example of how strong uh this market is and how strong the the the tech stocks in NASDAQ. You you look at the the the run this stock has made from 150 to over 200. Uh several up days in a row, five up days in a row. And here again, you know, the stock tried to to go down uh today and it just really didn't give up any ground. So for those out there wondering, you know, you know, what kind of market are we in? how strong, you know, is this market? Uh this is just an example of a really really strong stock.

[00:10:20]You know, the fundamentals are outstanding at at Credo. The growth story here is uh is is well documented.

[00:10:27]You've got the triple digit earnings and and uh and and revenue. So the the stock's price strength is uh you know, understandable because the fundamentals are are so uh compelling. So, I just like, you know, the stock has made such a a strong move and it's just still holding really really strong up near highs. So, I think it's going to be an important earnings report on on Monday.

[00:10:52]Uh we are going to see, you know, strong growth again. Uh so, we'll see what the company has to say uh Monday, but I'm just really impressed with the stock's uh relative strength and how it's been holding gains. And I thought the the stocks performance today even though it was down uh I think a couple of percentage points just a really strong uh day and we'll see what they have to say Monday uh a after the close but I think it's still an important stock uh in in this market in terms of AI uh and and data centers uh a real fast growing company and you know we we'll see what they have to say Monday but uh good good price action today on a on a on a for a down day for the talk.

[00:11:34]>> Okay. So, with just a handful of trading sessions before the earnings report, how do you handle something like this, Ken?

[00:11:42]Obviously, in hindsight, that bounce off of the 50-day or 10 week would have been a great time to get in this one or even more recently when it crossed the 200 level. What do you do with this now with earnings so close?

[00:11:59]>> Well, it's not too late since they report after after the close. uh you could take a look at uh at at an option trade uh sometime uh sometime on on Monday. I can tell you right now it's probably going to be a pricey the premium is probably going to be a little uh pricey on this one just because it tends to move a lot uh around uh earnings, but uh it could be it could be worth uh worth a shot. So you could take a look at at uh maybe the the strike price around 222 225 and and see where the premium is is is trading. if you can get a you know four to 5% risk uh trade it could be it could be worth uh it could be worth a shot. Um and then you know if if you don't want to try uh try an option trade uh just take take a look at the earnings report and just and just watch and see how the how the stock uh trades. It is it is trading very very well. So I think obviously the market is uh expecting a a good uh number. So uh just a good one to to watch and see what the earnings response is. So again, the options market uh could could present uh an opportunity here, but um uh again, you can just uh kind of watch the stock and see what the earnings report looks like and watch watch how the stock responds uh to earnings, but uh again, still could be in the early stages of a move here. And still a very compelling uh growth story, too.

[00:13:20]>> Yeah, no doubt. All right, one to watch with earnings due next week. Next on our list to check in on is Iron. I ren a nice week taking shape here, Ken. Up 20% already in this shortened trading week.

[00:13:39]>> Yes. Yes. And this is a uh data, excuse me, I have such an itch on my eye. Um this is a data center operated. They still have a little bit of a Bitcoin mining uh business, but this is a company that has really turned its focus to AI infrastructure, cloud services, and really they're a data center operator. And uh the news uh today that fueled this uh breakout, this is a 6561 buy point. So, the stock was buyable today. This was a a pivot uh still well within the the 5% uh buy zone here. And uh what fueled the move uh today is that they signed a $1.6 billion deal with Dell. Now Dell has a bunch of AI hardware that runs on Nvidia Nvidia chips. So Dell's uh AI servers uh they they run on a lot of Nvidia hardware. So Iron bought $1.6 billion worth of Dell gear that is going into Iron's uh data centers in Texas. So that is what fueled uh the gain for Iron stock uh today. But um and this is you know stock was just a classic breakout. Now this is a wide and loose uh base. Uh you can see that it was a pretty steep pull back when it corrected from 63 down to the 30 level.

[00:15:07]So, it's not a perfect base by any means, but volume was very heavy today when it uh when it broke out past that uh 65 uh pivot. Uh we thought it was worth a shot uh on on leaderboard today.

[00:15:20]So, we started a little small position uh just above uh 67 when it started to to break out. So, we took a little uh took a little shot here. Again, not a perfect uh technical setup, but uh like how the relative strength line was pushing into to new high ground and uh really like the uh the fundamentals here. This is a company that has uh signed some really big uh data center AI infrastructure deals with Microsoft. Uh they've also signed a big deal with Nvidia as well. So seeing a lot of these data center uh operators really uh starting to outperform is a nice nice group of them but iron is a is a nice performer in this group. So we took a shot uh today and uh again the number of base uh breakouts they've really been kind of in in short supply. We saw a lot of them when the S&P 500 followed through back in April on April 8th, but the the crop of base breakouts has really been kind of slowing down, but uh iron delivered one uh today. Got a good breakout over a buy point. So, we uh we took a shot.

[00:16:29]>> All right, let's move on over to VRT testing support at the 50-day 10-week line area. That's been a level of support for this stock in its move over the last couple of months. Ken, so kind of a make or break time for the stock.

[00:16:48]Will it continue to hold that support?

[00:16:52]And if it does, could that be a potential buying opportunity?

[00:16:57]>> Yeah, this is uh this is the the the second uh the second visit to the to the 50-day moving average. And you can see the the first time it it came down to the 50-day line, it uh it it found support and that turned out to be a a good uh a good entry point. So, uh this is a stock that is it it's testing the the 50-day line for the for the second time now. So, what's interesting here is this is a company that provides uh cooling services for data centers. So, uh this is a company where group pure modin mod reported uh very very strong earnings. This one had a downside reversal today. Uh but kind of the sim similar uh similar service. They're not tracked in the same industry group, but they both provide cooling cooling services for for data centers.

[00:17:44]Obviously, Vertive has been a big a big leader. So, uh, what I would like to see verdive do, if we go to the the the weekly chart here, and you look at the first test that this stock made at the 10 week, uh, the 10-week moving average, uh, that is a that is what a good test looks like. You can see those two those two blue up weeks when it came down and touched the the 10-week line. You can see that the current test that is going on. You see a couple of down weeks there. We'd really like to just see the stock bounce. So, we want to see just a nice blue uh up week uh during this current uh test here. What what I see now is two two down weeks, including the the current week where the stock is uh the the stock is uh is trading lower this week. So, hopefully by the end of this week, we're going to see a nice a nice support week, a nice blue up week where it is kind of bouncing and finding uh support. So, it looks like it's still a test going on uh to me. So hopefully we'll just see a nice blue up week and a and a nice test like we saw several weeks ago when it when it found support.

[00:18:49]So I would be, you know, reticent on buying too early here. Um to me it's just like it looks it's a it's a test of the 10 week line that's still going on.

[00:18:59]Uh if it bounces and we get a nice blue up week and uh and it and it makes a compelling case for support, I think it would be much more interesting. So, still a test uh going on here, but this has been a big leader uh in the power equipment uh group. No doubt about it.

[00:19:16]It's a stock market leader with great fundamentals. So, we'll see how the test ends up uh going here. Uh wouldn't be surprised to see it uh find support. So, we'll see what the stock looks like at the uh at the end of the week here and uh we'll see if it ends up bouncing.

[00:19:31]Okay, Ken, we have a couple of after hours movers to look at.

[00:19:38]>> We do a few a few >> big ones. Yeah.

[00:19:41]>> All right. So, Salesforce, big company, big downtrend, >> not a a big move, down about 2.6%. So, a lagarded stock, not a an impressive response. But Snowflake on the other hand, look at this. It's been beaten down too, but it's at least it's tried to >> establish a a little bit of a a rally off the lows. Up 30% on a beat on earnings. I'm also seeing a headline.

[00:20:14]It's planning to spend $6 billion on Amazon Cloud. Let's check out Amazon again, which we looked at the beginning.

[00:20:22]I don't know if it's moving on this news. Just seeing a fractional move there at the moment. But Snowflake, I mean your earnings reaction there.

[00:20:32]>> So Snowflake, yeah, Snowflake trading at 228 and after hours. So this is going to be a gap above the Yeah, above the 200 day the 200 day moving average.

[00:20:43]>> That's a pretty incredible move by by Snowflake. This one has come nicely off lows much much better than >> CRM has. Yeah, CRM has really been both both have been really hit hard by caught in that nasty software selloff, but uh >> Snowflake has done a uh made much more progress coming off lows uh than than CRM. So, credit to Snowflake that that is a big big after hours move up 29 uh up 29%. What's the go to the weekly chart and see what the the short uh the short position here? But uh if that was a heavily shorted stock, not really.

[00:21:22]Doesn't look like the short position was uh all that all that high in Snowflake.

[00:21:26]So pretty impressive move.

[00:21:28]>> It is. Absolutely. And there was one more to take a look at. I'm not sure if it's quite as exciting, but I guess we'll find out. And that's uh HPQ. No >> up one and a half percent. I guess they all it can't all be 30% movers, but >> up a little bit. It's in it's in the the top ranked uh industry group uh in in the market, which is uh which is interesting. This is in the same industry group as uh as Dell um and uh NetApp. Yeah. So, this is interesting. HP, you know, made a very bullish move above its uh 200 day moving average. Uh this was I think uh was that on Monday or Friday? I don't. Yeah, but this uh this moved when uh when Dell Yeah, on Friday when Dell when Dell moved and uh we have uh NTAP uh NTA NTAP reporting earnings tomorrow uh and that moved the same day that HPQ and Dell moved. So, this industry group has been >> red uh redot. One more uh earnings report, MRVL in the in the chip. Oh, yeah, that's right. In the chip group.

[00:22:42]MRVL and that one is up uh yeah up a little bit% >> yeah this was another chip stock that got hit pretty uh pretty good today but again a huge huge winner in the >> the fabulous uh the fabulous group chip chip design group so that one's uh yeah making a nice trying to recover from a four and a half% decline uh today this has been a big big uh big winner fundamental fundamental giant so looks like that's a nice nice response after hours.

[00:23:13]>> All right. Well, there's a a little look at some earnings movers. We are past the bulk of earnings, but still some notable reports to discuss. So, >> yes. Yes. And uh pretty pretty quiet uh pretty quiet tomorrow. We do have uh Dell, I mentioned Dell is reporting uh tomorrow, so that'll be a that'll be a big one. Um yeah, so we can go over that one uh because you and I will be on tomorrow, too.

[00:23:39]>> We will. We'll have to go over that one.

[00:23:41]Good stuff. Thank you, Ken. We appreciate it. See you tomorrow.

[00:23:44]>> Thank you. Take care.

[00:23:45]>> Thanks everyone for tuning in. That's it from us for today, but it is Wednesday.

[00:23:50]So, catch Justin Neielsen on the Investing with IBD podcast today live at 5:00 PM Eastern on our YouTube channel.

[00:23:58]This week's guest is Jim Roel, founder of the Ropel Report and hedge fund manager who for many years has followed the IBD methodology. We'll get a good dose of optimism from Jim as well as an update on where he sees the market headed in the short term and the stocks that he is paying attention to and why.

[00:24:22]So for that, make sure you check out the podcast, the Thursday crew on IBD Live.

[00:24:27]We'll see you in the morning starting 10 minutes before the opening bell.

[00:24:30]Investors.com/ibubdive for that. We'll see you there. And then Ken and I will see you back here tomorrow after the close.