An erratic Nasdaq composite reversed back into negative territory Thursday and closed down more than 0.5%, as tensions in the Middle East bubbled up again. Chip giant Nvidia rallied nearly 0.8% as it tested a key technical level, the 50-day moving average. And fellow chipmaker Taiwan Semiconductor Manufacturing delivered a sell signal on the stock market today.
Taiwan Semi was not the sole chip play down. The iShares Semiconductor ETF lost 1.8%, falling for the fourth session in five. At 206.53, SOXX has now corrected 14% from its March peak.
Overall volume edged down a touch on the Nasdaq and also eased on the NYSE vs. Wednesday, data showed.
Meanwhile, options traders showed more fear.
IBD's put-call volume ratio spiked to 1.19 on Thursday, marking the highest level since 1.20 on Jan. 17. This means for every 100 bullish call options traded, 119 bearish put options exchanged hands. IBD research has found that at excessive levels of investor pessimism, the stock market tends to prove the herd wrong and turn higher.
Track the put-call volume ratio on the General Market Indicators page, available on the Market Trend landing page, at the bottom of every Big Picture column, or in the psychological market indicators section of Investors.com.
Stock Market Today: Indexes Lack Clear Direction
The Nasdaq composite at first edged down before bullishly reversing to post a moderate gain. But then the index began to sell off at around 12:30 p.m. ET amid reports that Israel is planning a counterattack on Iran as early as Monday. Meanwhile, the Wall Street Journal reported that the U.S. is pressing Israel to accept a proposal to recognize Palestine as an official state and, in return, gain official diplomatic relations with Saudi Arabia.
Crude oil futures edged 0.3% lower to $81.91 a barrel, while natural gas rose 1.6% and made a session high of $1.78 per million BTUs. Light sweet oil futures continued to outperform U.S. stocks with a 15% gain year to date.
Now the Nasdaq has fallen more than 3.5% for the week, marking the worst performance since the tech-centered index slid more than 3.2% in the first week of January.
Uptrend Still Under Pressure
Check out Wednesday's The Big Picture column for details on why Investor's Business Daily's current outlook has deteriorated to "uptrend under pressure" with a suggested stock market exposure level of just 20%-40%.
The S&P 500 lost midday gains and reversed 0.2% lower Thursday. It headed into the session up 5.3% year to date. Among IBD's 197 industry groups, hand tools, hospitals, automakers, design software makers and data storage software firms fell 1% or more.
The Russell 2000 moved up 1% in early afternoon trade, but the gains began to wither shortly after noon ET. The Russell backtracked 0.3% lower. The Dow Jones Industrial Average gained 22 points. At 37,775, the 30-stock blue-chip average is up less than 0.1% since Jan. 1 after advancing 13.7% in 2023.
Stocks Up, Treasuries Down
Meanwhile, the benchmark U.S. 10-year government note yield rose 5 basis points to 4.64%. The yield has risen nearly 80 basis points since Jan. 1.
Stock market investors are focusing on the outlooks given by companies reporting quarterly results. Netflix and Intuitive Surgical reported Q1 results after the regular session's close. Netflix traded lower while ISRG gained in extended-hours trading.
Also in the medical space, Tenet Healthcare delivered a sell signal amid no obvious news on Thursday. Shares tumbled 5% to 91.08 and finished well below their 50-day moving average. Volume bulged 113% above the stock's 50-day average to the highest level in nearly five weeks.
Meanwhile, keep an eye on the bitcoin spot exchange traded funds ahead of the anticipated bitcoin halving event. Some observers believe the event will create more scarcity of the key cryptocurrency, boosting prices in the long term.
The ProShares Bitcoin Strategy exchange traded fund rallied 4% to 27.77 in very dull turnover. The ETF still traded below its 50-day moving average but snapped a four-session slump. The fund has rallied as much as 91% since it ran past a 17.70 buy point in a long double-bottom base.
Stock Market Leader Nvidia Ekes Out A Gain
Nvidia, the leader in data-center chipsets for accelerated computing and artificial intelligence, whipsawed traders as it briefly fell but then rebounded for a gain of as much as 2.5% on the stock market today. By day's end, that advance got shaved to around 0.8%. Volume ran 17% below usual levels.
Readers can go to Leaderboard for a full analysis of the Nasdaq megacap tech's chart action. The company maintains a three-quarter-size position on the model portfolio.
The Santa Clara, Calif., firm is expected to report fiscal Q1 results on May 22. Since the fiscal second-quarter results last year, earnings pole-vaulted 429%, 593% and 486% vs. depressed year-ago levels. The current estimate for the just-ended April quarter calls for 473% growth to $5.20 a share on a 240% boost in sales to $24.5 billion.
Taiwan Semi Stock Analysis
For Taiwan Semi, the chip manufacturing behemoth sank more than 6% in rapid turnover in the early going, but trimmed that loss to under 5%. Nonetheless, the stock spurred a profit-taking signal by dropping sharply below its 50-day moving average. The chip giant also slashed through its 10-week line for the first time in more than five months.
The company reported a 9% rise in profit to the equivalent of $1.38 per share. Revenue of $20.4 billion was virtually unchanged. Still, Taiwan Semi snapped a slump in the bottom line that had lasted for at least four quarters. Investors apparently focused on the company's revision to its 2024 sales outlook.
Management also said the company would take a 50-basis-point hit to profit margins, according to MarketWatch. Taiwan Semi said the massive Taiwan earthquake, while not causing major structural damage to facilities, rendered batches of its chips useless.
Big Picture: Stock Market Rocked By This Chip Equipment Name
Stock Market Today: Watch The Financials
In the stock market today, banks pressed the bullish case Thursday.
Comerica jumped 1.7% despite missing Wall Street's revenue estimate. Comerica posted adjusted earnings of $1.29 per share. That was down 48% from a year earlier but still 17 cents above analyst estimates.
The news helped boost peers including JPMorgan Chase, a Dow Jones stock, Wells Fargo and Bank of America.
Wells Fargo, up 2.7% in rapid turnover, rallied past a breakout point at 58.44 in a nearly five-week-long tight, narrow consolidation. The stock is also rebounding off the 10-week moving average, justifying a follow-on entry.
Bank of America is trying to reclaim its rising 50-day moving average, a bullish sign.
Elsewhere on the cyclical side of the stock market today, D.R. Horton attempted to retake its 50-day line with an initial surge of more than 6% on the stock market today, but that gain shrank to 0.1%.
The homebuilder reported March-quarter earnings and sales that beat expectations. Gross margin held in the 26% range.
Shares recently triggered a loss-cutting sell rule when they fell 7% below a buy point of 157.93 in a nine-week, cup-style base.
Looking For New Breakouts? Check Here Each Day
Auto Parts Play Triggers Early Entry
Genuine Parts soared 11% in the heaviest turnover so far this year. The auto replacement-parts titan cleared an early buy point at 157.77. It arguably triggered a new entry via a trendline near 156-157.
Atlanta-based Genuine Parts reported a 4% rise in quarterly profit to $2.22 a share as sales of $5.78 billion edged $18 million higher vs. a year earlier.
Please follow Chung on X/Twitter: @saitochung and @IBD_DChung
