Nasdaq Uptrend, Market Breadth Concerns & Breakouts in CIBR, ABBV, CAKE and URBN

Nicole (0:00)

Welcome back to Opening Bell. Time for the very latest here from the floor of the New York Stock Exchange. Join me right now, Mario Lagana, Head of Technical Analysis, Senior Institutional Equity Trader, Roberts and Ryan is with me. And we were just talking about some of the technicals when we look at this market overall, right? I mean, we hit some highs last week. What are you watching now in this sort of week and months ahead?

Mario Lagana (0:22)

Well, thank you for having me, Nicole. We're looking at the Nasdaq. It recently hit a new high, and it just entered a powerful new uptrend.

We noticed that the index has been holding the 10-day moving average really tightly.

It's being accumulated. There's no selling pressure there. But the real standout is that it's a three-week tight pattern. So what that means is it's holding really, really tight and it should have a leg to the upside further. The S&P also is acting very similarly.

It's 50-day and 200-day are in an uptrend. So we're keeping a close eye on that. The real standout is the S&P equal weight. It just hit the... It stopped short of hitting the 200-day moving average and buyers stepped in. It seems like it's forming a rounding bottom. And that could be a sign that maybe there's some rotation. The breath has been kind of weak. So seeing that turn around and possibly hold that 200-day is a good sign. It did reclaim the 21-day moving average. So we're watching that. Unfortunately, the Russell 2000 is the weakest of all. It did undercut the 200-day, but it's not having any follow-through days. It's just sitting there and looking for support. So we're going to keep a close eye on that to see if we could possibly get an uptrend.

Nicole (2:01)

That's very different, right? The Russell, when you said, look, you know, maybe it shows some strength at times, but it's been weak and it's not really showing. With what you said with the Nasdaq, it's holding that 10-day. There's been accumulation. The uptrend is supported. It's a different story there for tech. And tech, really, I was just checking with Tom Wyatt about the four-year bull run. And that tech has been behind so much of that. Even when it pulls back or is 20% off its highs, it still has been a leader. We're waiting on earnings season now. Are you still bullish overall? Are you still thinking about tech here as you look at the group?

Mario Lagana (2:38)

Well, it's been a broad, narrow rally. So if you look at the tech and the AI stocks, that's what's really taking this market to these levels.

You know, if you do a deeper dive, 70% of the Nasdaq stocks are trading below the 50-day, and you have 60% trading below the 200, and the S&P is very similar. 65% is below the 50, and 50 is below the 200-day. So that's not a good sign. You know, 40% of the S&P stocks are down for the year. So you want to see this rally, you know, broaden into other sectors and other groups to make sure that we can have a nice big uptrend from here.

Nicole (3:22)

Let's talk about, so I mean, at this point, it sounds like you're sort of saying some caution, because even though you're seeing some highs, you are worried about market breadth, and the names 60%, 70% that are below X moving day averages, right? So there is some worry about market breadth and leadership. But let's talk about some of the different ETFs that you're watching. For example, you have the Cyber Security ETF, the Software ETF, some of those groups to watch.

Mario Lagana (3:49)

Yeah, so we have noticed that since June, the market has been very choppy with individual names. You had a lot of breakouts, you know, volatility moves. So it's really difficult to pick individual stocks. So we do see some money rotating into the IGF Software ETF. You know, that broke out. It hit an all-time high.

And it seems like there's no overhead resistance, so we can't push higher.

Nicole (4:17)

Right there. I mean, that's a great chart there. You see the lows in April. That was moving up higher for IGV. So that's good news there. And you continue to see strength there?

Mario Lagana (4:26)

Yes, definitely. We're making lower highs. So we are pushing higher and there's no overhead resistance.

Nicole (4:34)

Right. Let's talk about here, the next one, which is cybersecurity, CIBR, monitoring the breakout. Let's talk about that. That includes CrowdStrike, Palo Alto, and Fortinet.

Mario Lagana (4:46)

Right. So that's at an all-time high. We do see a lot of money rotating into that. And we could see a potential move 10 to 15 percent higher from here based on the volume that we're seeing and the stocks that are in that index.