Indexes Edge Higher As Fed Stands Pat: Brinker, Medpace, Iovance In Focus — Stock Market Today

[00:00:00] Speaker ?: *music* [00:00:30] Alyssa Quorum: Good afternoon everyone and welcome to Stock Market Today for Wednesday, October 28th. It's Alyssa Quorum along with Ken Shreve here. And the major indexes at some key levels ahead of more big earnings reports. We do have the Fed now behind us, perhaps at least the day one reaction. We'll see what the day two reaction is. Ken, what do you have for us today? [00:00:55] Ken Shreve: A little bit of buying into the close alley. So we managed to get a little bit of green in the market. So we'll take it. But I wanted to take a look at a pretty good earnings report for Brinker International. That's the parent company of Chili's Restaurant. So ticker there is EAT, E-A-T. Also want to take a look at MedPace in the medical sector, M-E-D-P. And also a biotech stock that's trading pretty well here. IOVance Biotherapeutics, ticker IOVA. All right. [00:01:30] Alyssa Quorum: We'll get to those stocks. But first, a closer look at the major indexes. Here's a look at the NASDAQ composite up 0.3% on the day. Ken, we are right at that 21-day and the 50-day which have converged. So a key inflection point for the tech-heavy index. Meanwhile, the S&P 500 up about 0.3% today as well. Continuing above its recently retaken 21-day and 50-day and clearing a trend line. And the Dow on the day up about 0.2% holding above the 50-day and small caps with a gain of about 0.25% adding to its gain above the 200-day line in the prior session. So good to see green on the screen like you said. What do you make of the action, Ken? [00:02:26] Ken Shreve: Well, you know, there was some buying. Like I said, there was some real late session buying the final few minutes of trading. But I was looking at the NASDAQ and I noticed that during the final half hour of trading, the NASDAQ had come within one point of its 50-day moving average and its 21-day moving average. And it had gotten turned away. So I don't know. Yeah, I think I don't know that it had conquered it at the close. I didn't check. But it's still getting some resistance there as far as I could tell. But yeah, it's trying to get above some resistance there. And I'm noticing some big, big former technology leaders that are still, you know, trying to get above some resistance here. NASDAQ is, you know, fighting a good fight and making a bid here. But it's still a little bit challenged like a lot of our former big tech leaders out there. Many, many made big, big moves in the NASDAQ 100 today. But, you know, tech stocks in general still challenged out there. And I think the NASDAQ is still challenged as well. But, you know, decent close for the NASDAQ composite today. We had a Fed meeting that came and went. And they didn't do anything with the Fed funds rate. It stayed right where it is at three and three quarters and four percent. They kept the federal funds rate steady, talking about a strong, you know, a strong economy. And, you know, so we'll see. No big, big surprises at the Fed meeting. We're going to get another key reading on inflation tomorrow. So we'll see how the market reacts. We did get some upward movement in that 10-year Treasury yield today as it kind of bounces off that 50-day moving average today. So as I mentioned this morning on IBD Live, the personal consumption expenditures price index is expected to be a little bit higher in September than what we saw in August. So inflation is not going in the right direction. But market seems to be taking this elevated inflation in stride so far. And so is the Fed. We'll probably get a rate increase at the December meeting. But, you know, they're pretty confident about the underlying strength in this economy right now. And, you know, probably get a quarter point hike in December and we'll go from there. Yeah. [00:05:14] Speaker ?: All right. [00:05:14] Alyssa Quorum: Well, in terms of earnings, we'll be taking a look shortly at the early reactions from Microsoft, Google, and potentially some others as well, because now it seems like the attention is focused on that. And we have the NASDAQ, as you mentioned, in a weaker position than the S&P 500. Can we get above those moving averages? We've also looked at the NASDAQ 100 represented by the QQQ coming right up and in a position where if, hey, things go the other way, potential shorting opportunity. We know that David Ryan shorting the S&P, but more bearish on the tech sector here. So a lot for traders to navigate between these major earnings where we are technically in the market and the midterms next week. Another potential catalyst or at least hurdle for the market to get over. [00:06:15] Ken Shreve: Yeah, we did have also news late in the day. Oracle had their big investor day today and Oracle had an outsized move in the in the stock market today. But again, this is just kind of a typical of a very, you know, big, big large cap technology stock that's really been, you know, beaten down in stock price. Obviously, a lot of debt concerns overhanging Oracle and spending and AI spending and all these things. But they gave they gave pretty bullish revenue outlook. They said that they're talking about two hundred and twenty five billion dollars in revenue going out to two thousand and thirty. That was that was a revenue outlook. So investors, you know, bid shares quite a bit higher today. What was the final? It was up more than 10 percent today. But when you look at the I mean, this is a stock that is pulled back so sharply. You look at a big percentage gain today and it doesn't really look like much compared to, you know, how much the stock has pulled back. And you can see it rose sharply. But, you know, it's getting some resistance already at a at a moving average here. So there were a lot of strong movers in tech today. But unfortunately, a lot of a lot of charts that look like this among large cap technology stocks, just stocks that have pulled back quite a bit, quite a bit off highs. And, you know, they're they're bouncing back. And a lot of them look like dead cat bounces at this point. So nice move for Oracle today at their because of positive comments at their investor day. Pretty good revenue outlook guidance for for for 20 out until 2030 and good move for the stock. But it didn't have a whole lot of impact on the broad market. I think the market was moving more on on the Fed speak and maybe a little bit on Oracle. But just, you know, modest gain for the Nasdaq by the close. [00:08:16] Alyssa Quorum: Good shout out there for Oracle. Let's get your thoughts on RSP here. This is the equated S&P 500 ETF flat on the day, still in recovery mode. So what does this tell us about the participation out there? [00:08:33] Ken Shreve: Well, it's encouraging to to see it to see it rallying back and more even more encouraging to see it holding above the 50 day moving average. So nice, nice move off lows for the for the RSP. And to just to see it holding above the 50 day moving average is also encouraging. Not surprising to to see RSP acting better. We have seen, you know, a lot more stocks, I think, acting better. We obviously the the weakness in the chip sector has been well documented. But, you know, in the technology sector, there have been plenty of software stocks that have, you know, taken up, taken up some good leadership or replacing semiconductor stocks. And then we've we've talked about the leadership and, you know, security software stocks, a large number of enterprise software names. And then, of course, the leadership of money has flown into, you know, medical and retail and a lot of consumer stocks as well. So that that has helped breadth in the market and has helped RSP recover nicely off lows, you know, the biotech ETF nice breakout for IBB today. And Mark Minervini even brought up a biotech ETF that I had not been familiar with, FBT operated by the first first trust. FBT had a nice clean breakout today as well. So the biotechs will take we'll take a look at one in just a little bit. But biotechs continue to act pretty well here. [00:10:16] Alyssa Quorum: Mm hmm. And I did just want to pop up the SMH here leading again on the days now three or four days in a row here, Ken, with chip leadership, though, of course, we know how badly beaten down the sector is right now. But today's gain about one point seven percent. We're going to continue to see earnings from the chip names as this the next couple of weeks progress. So we'll be watching to see if we can get more of a recovery and a retaking of the leadership mantle here for chips. [00:10:52] Ken Shreve: Yeah, we've got Intel coming up Thursday just tomorrow after the close. That's going to be a big one. And then AMD next week. So Intel, AMD still to go. And I know KLA and the chip equipment group that has been a really beaten down group in the in the chip equipment area. They reported after the close so we could check in on on them. But Intel will be a big one tomorrow night. And like I said, AMD, AMD next week. So we'll be very busy in terms of earnings next week as well, maybe even busier next week than than this week. So good day for AMD, though, back above the 50 day line. And this one looks better. Probably one of the better looking chip stocks at this point. Mm hmm. No doubt. [00:11:35] Alyssa Quorum: OK, let's take a look at a couple of other names. We have an earnings mover from the restaurant group Brinker International. Ticker here is eat the parent of Chili's shares up over 12% today. Acceleration in earnings, which were up 44%. Another quarter of acceleration of top line growth as well up 9% on the quarter. So a big move here today. And unlike Oracle, which, as you mentioned, was just badly beaten down and it wasn't earnings related. But just a big percentage move, double digit percentage move definitely looks a lot better on this chart. Ken, and arguably actionable, not at new highs yet, but a retaking of a key moving average that 50 day. [00:12:27] Ken Shreve: Yeah, yeah. And, you know, this is this is a stock, you know, it is actionable for some traders. I look at Brinker just as as a stock that is kind of repairing itself. Any time a stock, you know, breaks out and goes on an uptrend, it it's always going to take a break, take a breather and digest gains and basically form just consolidate gains and take a breather. And that's what that's what Brinker did when it started to consolidate and it went underneath its 50 day moving average. And now this is what this is how a stock starts to repair itself. And a strong earnings report fueled a nice move above its 50 day moving average volume picked up volume picked up the pace. And this is the parent company of Chili's very successful restaurant chain and, you know, Chili's is is obviously the flagship of the flagship restaurant for Brinker. They also operate an Italian chain that isn't isn't doing nearly as well as Chili's, but that's called Maggiano's. But the Chili's continues to deliver just tremendous results for Brinker, the same store sales up an impressive 10.1%. And the same store sales at Chili's are, you know, this 10.1% is very, very impressive for same store sales growth. And it is it's high like this every quarter, sometimes it's 8%, 9%, but 10.1%, very, very strong customer traffic up 6.4%. That's a very strong number as well. So Chili's continues to perform very well for Brinker. So this stock is repairing itself and I'm just going to watch and see if the stock can continue to recover and just kind of form a base here. And we'll see if it can, you know, get closer to that 250 level and see if it can form a base and eventually continue its move higher. So I'm not necessarily a buyer right here, but for restaurant stocks, I think Brinker has been a good long term name to buy. And I think it's a good name to watch here just for just a really just good, good steady track record of growth and a really another outstanding earnings report from the company. [00:15:00] Alyssa Quorum: Yeah, we'll see what happens next. Can it hold on to this big move and tighten up and give us a lower risk entry point. Next on our list, we want to take a look at MedPace. Can you cover this one on IBD Live this morning breaking out in the medical research group? We had earnings come out a couple of days ago and we did see some deceleration on the top and bottom lines. Earnings were up 25% revenue up 9% here. And I also want to go to the weekly chart. Shares are closing in on that 700 level. But if you take a step back over the last week and a half or so, really clearing a long area of resistance at the 600 level. [00:15:52] Ken Shreve: Yeah, this is one of these companies that has a very low earnings stability rank, which is actually, you know, good because it just tells you that MedPace has a really outstanding track record, outstanding long term track record of earnings. It's what's known as a CRO, a contract research organization. So whether it's a biotech, a pharmaceutical, even a medical device company, contract research organizations basically help biotechs, pharmaceutical companies manage and execute trials, clinical trials. So there's a lot of work that goes into executing and managing clinical trials. And that's what MedPace and other contract research organizations do. So they handle basically the beginning, middle and end of all the trial work. And and MedPace says and many others is a very crowded industry. There's a lot of contract research organizations out there. So MedPace has been a longtime leader in this space and good looking relative strength line here. And again, it's all about earnings and revenue and execution. And it was another strong quarter for MedPace here. Still in a buy zone here with with a healthy relative strength line in the early stages of of breaking out. You can see that blue shaded area still in the in the five percent buy zone here. And I think it looks good. And it's in a very, very strong industry group. So you just have a lot of contract research organizations that are showing relative strength and a lot that are reporting strong earnings. So another another solid name in the market here. So, you know, we've got semiconductor stocks that are selling off, but a lot of good earnings reports in this industry group. And we clearly see where the where the money is money flowing into health care and specifically into into this industry group for sure. [00:17:57] Alyssa Quorum: Absolutely. And now we want to check out IOVA. This is IO Vance in the revenue biotech group and explosive move after the last earnings report in early August can sending shares from about five to 15 in a pretty quick ascent there. And now a new tight pattern forming near those highs just under 15. We've got earnings coming up next week though here. So do you want to point that out? [00:18:28] Ken Shreve: Yeah, it's earnings coming up. We're kind of right in the middle of earnings season. I have to put my glasses on. I just want to because this is a 15 almost a $15 stock, but look at the look at the market cap here. It's a $6.6 billion company and look at the look at the dollar volume 172 million dollar volume here. So this is I would I would call this an institutional quality stock. Also, look at the the revenue growth here. It they're not they're not making money. It's not profitable, but they are generating meaningful. They are generating meaningful revenue. And I think what is interesting about this company is that they have basically a one time cancer immunotherapy treatment that basically that basically uses a patient's own immune system to fight solid tumors. It's called a T. I. L. therapy. It's a kind of a complex name, but it's it's a extremely innovative therapy and they are generating revenue. And this is all about fighting tumors and just, you know, really super innovative. And I think it's even though they're losing money. It's got it's got nice sponsorship. And when you look at the you look at the breakout here from that from that consolidation and the fact that the stock has just, you know, has moved up really has just consolidated briefly. And now it is just really holding really tight near highs. You really want to just pay attention when a stock is moving this strongly and trading tightly up near highs. It doesn't doesn't mean that it's destined to double from here, but we call this type of pattern sort of a flag, a flag pattern. And it's just a way a stock shows strength and shows strength in a kind of an uncertain market. So really strong breakout from a base and really strong relative strength after the breakout. And basically you can see how much it's it's more than doubled in price, but it's just not giving up any ground. And it's got just extremely innovative immunotherapy to fight solid tumors. And I love the fact that it's generating revenue and again, not profitable yet, but they've got some good, good funds in here. And, you know, the innovation in the biotech area is really quite unbelievable. And IO Vance is, you know, no small potatoes. It's a six billion dollar company with very, very liquid. And I just think it's worth worth looking into and doing a little work on it myself. And I just like to see really strong performance like this that are showing really strong technical action, especially those that are innovating like IO Vance is. [00:21:35] Alyssa Quorum: No doubt. Great thoughts there, Ken. Let's take a look at some of the earnings movers out after the close. Here's Microsoft. The early reaction here is positive. Shares up 4%. Start with the good news. [00:21:51] Ken Shreve: Yeah. [00:21:52] Alyssa Quorum: Yeah, exactly. We'll start with the good news. However, I will, I will be the Debbie Downer on the good news and just point out the fact that Meta's initial after hours reaction was also positive. And then the regular session came and not so much. Hopefully it's a different story with Microsoft. We do know that the software sector has been performing really well lately. And this, a big name, of course, in that area. And also in terms of its AI spend and looking at the cash flow. That's also going to be very important this earnings season. And we'll need to read more into the Microsoft report. But it seems like Alphabet, a little bit of an issue there. But before we get to Alphabet, your thoughts on Microsoft. Yeah. [00:22:44] Ken Shreve: Microsoft, there's lots of things we'll be looking at in Microsoft's report. You mentioned the software sector has been very, very, very strong. Obviously, the Azure, the cloud, the cloud segment of Microsoft's business has been doing well. I think they've actually been showing accelerating growth in recent quarters. And I know the Azure. 48% for Azure. Well, that was for this quarter, 48% growth. Yeah. So that was much better than expected. I think the street was looking for 44%, if I'm not mistaken. So that is much stronger than expected. You know, looking at cash flow as well from Microsoft. Not sure what the estimate was there. I'm seeing it. [00:23:30] Alyssa Quorum: They had free cash flow just shy of 19 billion. Yeah. 27% lower. [00:23:37] Ken Shreve: So, you know, a stock that has been showing a lot of relative strength after a breakout. Hasn't even come down and touched its, you know, 50-day moving average. So showing a lot of relative strength in anticipation of a good earnings report. It looks like it delivered. So we'll go ahead and check out all the details here. But probably a good reason why the stock is up. [00:24:03] Alyssa Quorum: And if it can clear this 550 level in the regular session tomorrow, I could see some folks making the case, Ken, for an ascending base. [00:24:14] Ken Shreve: Yep. I mean, this setup, we sure have seen a lot of setups like this. Because you do have those three pullbacks, just like you noted there. We've seen a lot of stocks breaking out, pulling back during this kind of hesitant market. The ascending base breakout three pullbacks. We've seen a lot of setups like this in recent weeks. Yeah. [00:24:37] Alyssa Quorum: Well, so hopefully it can keep the momentum going. On the downside, though, Google down almost 9% at this time. So while Microsoft's free cash flow did decline, Alphabet showed negative free cash flow for the quarter. Last week, as did Meta, its cash flow went negative. So maybe that's helping Microsoft to stand out here a little bit. And it also, I'm seeing, come across the wires. It looks like Alphabet's Q3 CapEx, the expectations missed. And I know a lot of folks are also keeping a very, very close side, not only on the cash flow, but CapEx for AI. [00:25:24] Ken Shreve: Exactly, exactly. You can tell this is sort of a total story of two different technical pictures here. You have Microsoft that's been showing relative strength in its industry group, and Alphabet that has really been a laggard in the tech sector. And so it's almost like Microsoft has been anticipating strong earnings. Alphabet, you know, it didn't have a good reaction the last time it reported earnings. Most likely for the same reasons. And, you know, it's been on a downtrend for quite some time. And so it looks like the results this time around, you know, the market is not too pleased. I mentioned this morning on IBD Live there have been some good headlines. There was a headline yesterday about Oracle is going to be using the company's Tensor processing units. This is Google's advanced AI chips that are seeing increased demand. Broadcom helps design and manufacture the chips for Alphabet. And OpenAI is going to be using the chips along with Anthropic. So this is going to be a nice revenue stream for Alphabet, but not helping the stock at this point, unfortunately. So, you know, these are good solid AI chips, but it looks like the market is just focusing on AI spending and cash flow and not liking what they're seeing at this point. But technicals have been weak in Alphabet for several months now. [00:27:11] Alyssa Quorum: All right. Anything else we should visit? [00:27:15] Ken Shreve: Yeah, just just a couple. I mean, a couple that I've been we have some security software stocks that were interesting. I want to take a look at Fortinet, F-T-N-T. Oh, ouch. Fortinet. [00:27:28] Alyssa Quorum: 22% decline, Ken. [00:27:29] Ken Shreve: Oh, that's that's. Yeah, this has been a this has been a pretty strong performer in the security software group. A lot, a lot of strong performers there. So we'll see Fortinet in in tough shape. Let's take a look also at I want to take a look at ServiceNow in the software area. ServiceNow. Let's see how that one is doing. What is going on? [00:27:51] Alyssa Quorum: This one's down a 17%. [00:27:53] Ken Shreve: ServiceNow. Yeah, that one has, you know, also had been acting well after a breakout holding above short term support levels. Okay. How about Tenable in the security software group? T-E-N-B. [00:28:06] Alyssa Quorum: Not seeing a whole lot of movement. Shares down less than 1% right now. [00:28:10] Ken Shreve: Okay. Maybe they haven't haven't reported yet. How about eBay? eBay has been doing well. eBay. [00:28:16] Alyssa Quorum: eBay. All right. Showing us something good here. We like it. 5% after an upside reversal right at the 21 day line today. So this could clear a trend line, get above 120 in tomorrow's session. So that one is set up and reacting positively. [00:28:33] Ken Shreve: eBay. eBay's got a relatively new CEO in place there. Got the company doing well in the collectibles business. And then another interesting company that has been doing well, ophthalmology, medical device company in the ophthalmology field, Glaucos, G-K-O-S, G-K-O-S. [00:28:55] Alyssa Quorum: Let's go there. A big move up almost 14% in reaction. So this would be a breakout above the 191.62 cup by point. Shares currently trading around 2.05. Yeah. [00:29:08] Ken Shreve: That's going to be a breakaway gap. So we want to keep an eye on that one tomorrow. Glaucos in the healthcare sector as well. And then the only other one I had, Allie, was a former chip equipment group, which has really been hurt in the chip sector, KLA, which is K-L-A-C. [00:29:28] Alyssa Quorum: Badly beaten, as you had mentioned, but it is up 3%. That's still well shy of the 200-day. [00:29:37] Ken Shreve: Yeah. So this is probably the worst performing area of the chip sector. But, of course, all these chip equipment stocks are big suppliers to the memory, a lot of the memory firms that have sold off sharply. So KLA up a little bit, but pretty beaten up. [00:29:56] Alyssa Quorum: Yep. So it seems like of the ones that we looked at, Google, that could have an impact on the tech sector tomorrow. And then two software names, both Fortinet and ServiceNow, to see those down big double digits. We'll see what management says on the call. We'll see what analysts come out with as they digest and crunch the numbers. And if those stocks do have those big declines tomorrow, one could imagine a little bit of a spillover, perhaps, into software. But then on the other hand, you have Microsoft, which, of course, we know it's more than just a software company at this point. [00:30:39] Ken Shreve: Definitely, definitely a major hyperscaler. And, yeah, they're a big leader, no doubt about it. And ServiceNow is an 800-pound gorilla as well. But, yeah, software sector is a big, big, big, big sector. So we'll see. Interesting. But Fortinet, too, is a big leader in the security software group. [00:30:59] Speaker ?: Right. [00:30:59] Ken Shreve: But there's a lot of strong performers in that group as well. So we'll see. [00:31:05] Alyssa Quorum: Yeah. We'll see. The bug ETF right now down about 4.6%. So we'll see what the impact is like. [00:31:12] Ken Shreve: And inflation report in the morning, too. Could be interesting. [00:31:16] Alyssa Quorum: All right. Well, thanks, Ken. We appreciate you breaking all that down for us. All right. Take care. Thanks, everyone, for tuning in. That's it from us for today. But at 5:00 p.m. Eastern, our weekly Investing with IBD podcast, hosted by Justin Nielsen, is happening. And this week, he is joined by Connor Bates of Revere Assets Management. So make sure you check out that podcast live on YouTube and also on demand wherever you get your podcasts later this evening. And then we'll see you in the morning on IBD Live with the Thursday crew, hosted by our very own Rachel Fox, investors.com/IBDLive for all the details, starting 10 minutes before the opening bell. And then, of course, we got you covered tomorrow after the close. So we'll see you then.