Closing Bell - Closing Bell: Second Half Set-Up for Stocks 6/24/24

Episode Date: June 24, 2024

Is the second half set-up favorable for the rally to continue? Solus’ Dan Greenhaus and NB Private Wealth’s Shannon Saccocia give their predictions. Plus, Nvidia sold off again in today’s session after snapping an 8 week win streak. Dan Chung – CEO and CIO of Alger – tells us if this is warning sign for this year’s tech-led rally heading into the second half. And, top technician Jeff DeGraaf called the sell-off in Nvidia. He weighs in on that stock’s move and reveals the sector he thinks is ripe to break out. 

Thanks so much. Welcome to Closing Bell. I'm Scott Wagner, live at Post 9 here at the New York Stock Exchange. This make or break hour begins with target practice and whether the loftiest of S&P predictions can actually be reached this year. We will ask our experts over this final stretch. In the meantime, take a look at the scorecard with 60 minutes to go in regulation. Big day for the Dow today, certainly relative to the other majors.

It's up three quarters of one percent energy and financial stocks are leading the way today. Well, Apple is contributing too, even though it is a down day for technology as a sector. There's Apple pushing higher by two thirds of a percent. Got to look at Nvidia shares. They're sharply lower again following a volatile week that included a nearly 15% correction. We're going to watch that very closely over this last hour,

see what it means to the markets at large. It does take us to our talk of the tape, the second half set up for stocks. Is it favorable for the rally to continue? Let's ask Dan Greenhouse. He's chief strategist for Solus Alternative Asset Management with me here post nine. Welcome back. It's good to see you. Thank you, sir. So about to make the turn, so to speak, right on the second half of this year. How things feel to you? I think they feel pretty good. You know, obviously, there's not without concerns the parabolic move in NVIDIA, which we're going to talk about in a minute, notwithstanding. The underlying economy continues to hold up. EPS expectations continue to hold up. The Federal Reserve is presumably marching towards rate reductions. So I think you still

have to feel pretty good with an acknowledgement that there are some signs of weakness to which we have to pay attention. Okay. Oppenheimer today says, this is John Stoltz, bull market appears sustainable as the rally broadens across sectors and as investors increase their exposure to stocks. UBS, while various economic and geopolitical risks remain, we believe solid economic and earnings growth, the prospect of lower interest rates and rising investment in AI should create a supportive backdrop for equities.

That make sense? Yeah, I think increasingly you have to kind of feel like maybe the Fed's going to get what it wants right now, which is a mid-90s type soft landing. And there's reasons why we didn't think that would happen to start with. Inflation was starting from a much higher level than was the case in the mid-90s. But I think you kind of have to feel like right now you're skating towards that type of an outcome. Now, again, the data can turn and you have to be aware of that as an investor. But that's true of any market environment. But right now it looks like that's happening. We've been talking about this for a year. The network's been talking about this for a year. That looks likely right now. All right. So

you mentioned NVIDIA. If we say, are these signs of froth? And I say to you that stat I read last week, NVIDIA added $880 billion in market cap in 21 trading days. That's stat number one. Stat number two, S&P 500, according to Bespoke, has gone 334 trading days without a one day drop of 2 percent. That number in and of itself or that stat in and of itself is astounding. Three, almost a year without a 2 percent pullback in stocks. You combine that with the NVIDIA number that I read to you to Did it make you pause at all and say, we're in for something a little dicey? Well, listen, I would offer a couple of contextualized observations. The first of which is, if we just look today, the S&P is on either side of flat right now. The RRSP, which is the equal weight ETF if investors want to use that as reference, is up 90 basis points the last time I looked.

And that's with, I just wrote it down, NVIDIA's down 6%. Amazon, Oracle, Adobe, Salesforce, all down 1.5%. Qualcomm down 4%. Avago down 2.5%. And you have, again, the RSP, which is equal ADTF, up call at 90 basis points last time I looked. So you, at least in the last couple of days,

since NVIDIA's peak, let's say, which, based on the chart was not completely surprising that there'd be a pullback. The broader market is higher since NVIDIA peaked, and I think you have to take an encouraging, there has to be an encouraging takeaway when you observe that. Yeah, because some people have wondered, well, if you have a crack in one of these high-flying names, the poster stock of the high-flying conversation, can the rest of the market withstand whatever pressure that brings you? And at least now, it appears yes, although a few days, one day doesn't, a larger trend obviously may.

I was going to say, a pullback in the stock, which we have up on the screen here, is different from a pullback in the story. And I think that's important for investors to take note of. Again, when you look at the chart on a shorter term time frame, I mean, any of us who've been in markets for more than 15 minutes would look at that chart and say, this is not going to keep going. And so whether it pulls back 5% or 10% or 20% top to bottom, we have no idea. But again, just eyeballing the chart here, it's probably going to have something of a correction. But as long as the story remains the same, the investment thesis, the CapEx expenditures, et cetera, et cetera, that's much more important. And again, there's nothing's changed in the last five days that I've seen to affect that narrative. Okay. So will that suggest that any sort of dip of

magnitude is going to be quickly scooped up because you suggest the fundamental story is still wholly intact. But mind you, you haven't even had a dip. And again, as I just noted, since I had a 15 percent pullback and felt like a blink of an eye. Yes. And I would tell you in the broader markets, again, NVIDIA peaked, I think, on the 18th. And I think the equal weight index is higher today than it was then. Jonathan Krinsky at BTIG talks about NVIDIA recently trading 100 percent over its 200 day moving average. It's the widest spread that any company has ever traded above its 200 day. 100 percent above its 200 day. You know, I saw I know John very well. Great guy. Great golfer. But I saw that. Is there a there's a but because I'm not

I have to. John has, I assume, has done more work than I did because I spent 15 minutes on this. But I looked back since 2010 at 38,000 observations of the current constituents of the S&P 500. How often does any stock trade more than 100 percent above its 200-day moving average. And I found only basically 1% of all days was one of the S&P 500 stocks trading more than 100% above its 200-day moving average. So I don't know that this is the most ever. I'm sure John is right and I'm wrong.

But based on my review, even if it's not the most ever, if it's the second most ever, the third most ever, it's really, really unusual to see a stock drift this far from its 200-day moving average. Does that mean it's a bubble? Is it too much fraud? That's not a bubble. That's excessive. That's money flows. That's positioning. And again, if it pulls back 20 or 30 percent, listen, Cisco, which is what everyone's talking about from the 90s, that's the topic du jour. Cisco pulled back 10%, 15%, and 20% just in 1996.

It pulled back 30% in 1997. It pulled back 40% around LTCM in 1998. Long-term capital management. Long-term capital management. For the younger viewers, go read the book. I apologize. So you had these multiple corrections, and that's just Cisco. I mean, obviously, that's true for any IBM, et cetera.

You had multiple corrections along the way on the way to what became the ultimate bubble. But this actually, I can use this as a moment to pivot. I brought along a screenshot of a New York Times article from July, I think it was, of 1995 from Floyd Norris. Here it is up on the screen. Floyd Norris, for the younger viewers, was the Mike Santoli before Mike Santoli, was the preeminent financial reporter. And this is a story, a bubble grows ever bigger about the tech sector, again, as the screen notes from July of 1995. And again, in the context of what we're talking about, of NVIDIA pulling back, there were multiple times

over the course of the late 1990s when people talked about the market being in a bubble. The famous Greenspan irrational exuberance speech was from 1996, and you still went on to have 97, 98, and 99. You're going to have these moments. And again, I'm not making any comment about NVIDIA as a company or NVIDIA as a worthwhile investment. What I'm saying for younger investors who did not experience the late 1990s or early 2000s, you're going to have these moments when charts do what NVIDIA has just done, where you're going to have a pullback of some size that may not, I'm not saying this is the case, but may not affect the larger networks. I hear you, but you disagree wholly with people trying to make comparisons,

not a ton of people, but there are comparisons being made between what's happening with NVIDIA to 99. Well, again, the point I've made, and I think Dan Ives has made as well, is that you had 95, 96, 97, and 98 before you had 1999. And everyone rushes. Post-GFC, everyone's trying to be the next great bear and call the top. And that's been false for the better part of 15 years, more or less. But everyone rushes to 1999 as if nothing happened before, as if years of

investment and profitability did not occur. And again, I'm tired of making the analogy, but it's apropos. If you view the chat GPT release in late 22, perhaps incorrectly, but if you view it the same as the Netscape IPO, that was 95. There were five years, again, of investment, of profitability, of CapEx, of build-out that went on. And again, unlike the 90s, when you had all these ancillary companies that were trading on eyeballs and zero revenues and et cetera, et cetera, you don't have that today. These companies are extremely profitable. Again, I'm making no comment about NVIDIA as an investment. We don't. No, I get it, but you make great insight. Their revenue is up 100%. Their

EPS is 100%. I mean, they're outpacing the street by exponentially larger numbers. It's just impossible to keep up with what they're doing right now. It's, again, not the stock that was standing, but you don't get 100 percent revenue growth every day. I think it's worthwhile perspective. I'm glad you bring it to us. Let's bring in Shannon Sikosha, another CNBC contributor of NB Private Wealth. It's good to see you, Shan. So as we get set, as I said, to make the turn here into the second half, how are you feeling about these markets? Yeah, from an economic perspective, I think we're, you know, from a fundamental outlook, we are, you know, more optimistic than we were to start the year.

And I think that things are kind of falling into place. Dan talked about the mid-90s. I mean, that's been the tipping point, right, for all of us who are talking about looking at soft landing, thinking about what could potentially happen. If you look back in years of low volatility, you know, 93, 95, less than a 5.5% pullback on the S&P 500. So if you're getting the economic data that you're looking for, which is really cooling inflation and a normalizing labor market, yes, there are some cracks from an economic perspective. But in the second half of

the year, if you think about what is the potential for earnings, are we going to continue to see some opportunity for multiple expansion? There's more support there. Now, in our view, it's not going to be without some potential choppiness this summer but i think as we look through the end of the year we are more constructive on the economy and there were more therefore more constructive on the ability particularly for certain industries and sectors to be able to grow their earnings in the second half of the year and support growth of the s&p 500 so by the way i want to correct something too um jonathan krinsky's watching our program. Thank you for watching. By the way, I read his note, okay, where I said, he said, NVIDIA recently traded 100% above its 200-day moving average since 1990, the widest spread that any U.S. company has ever traded above its 200-day moving average.

I may have stopped what I was reading at that point. The important distinction here is while it was the largest company. Okay. And he makes that distinction as well so thank you my bad i didn't i didn't finish the sentence well it's important well i'll talk to john afterwards and we'll confer on the data but you gave him a lot of props though so you know what he's feeling okay what a golfer but serious um does that give you pause at all, Shannon, about what we're all kind of watching in awe as it relates to NVIDIA? I think that the pause here is really more on a positioning standpoint.

Scott, we talked about this on Friday. There isn't evidence that there is a disruption in the force that is the AI megatrend right now. It's really the right sizing of a particular position that was seen as the easy button for AI. And there are other opportunities to invest in this theme however. This one is the easiest because it is that the

first true enabler. Of AI and so therefore. You know you have to understand that there is going to be some volatility you don't get all of the upwards without some of the down but I think your question earlier is there is going to be some volatility. You don't get all of the up without some of the down. But I think your question earlier is, is this going to potentially be the impetus or the impulse

for people that aren't in the stock right now? I think we'd have to see a little bit more of a pullback here for that. But I wouldn't be surprised to see some additional interest if we do get closer to kind of like 20% off the high. That's where you start to see people get engaged who haven't maybe been in the stock previously. Yeah, and I would just add, it's not, I mean, we talk about NVIDIA, obviously,

because it's the largest and the biggest name of the stories, but a lot of the other names that are involved in the AI build-out, if you will, on the industrial side of things, on the utility side of things, like Vistra, are all well off their highs. There's been a momentum. I mean, I'm sure Shannon has seen this,

but there's been something of a pullback in momentum more generally right now that goes beyond. Yeah, like if you look at Chipotle, we've been, that's a perfect example of it's not just AI related stocks that have had a bit of a pullback. It's just growth in general is what you're referencing, right? Yeah, I mean, Vistra's off the high. Micron is 10% off the high. We mentioned Broadcom earlier, Avago, I still call it Avago, but it's down 10 is off the high. Micron is 10 percent off the high. We mentioned Broadcom earlier. I still call it a Vago, but it's down 10 percent from the high. So there's been something of a change in the market right now. But again, and we all know this, but in the context of the rally that we've had over the last one week, one month, et cetera, some pullback was inevitable at some point. We're just experiencing it now.

Well, Shannon, the question was, and I guess still is, if you had a pullback in growth, okay, would you have a rotation into perceived value? Would the market broaden? Would it be okay if NVIDIA pulled back as if other sectors picked up the slack? So maybe you're getting a little sniff of that. At what point do you say, you know what?

I actually believe it. I believe in this story now. Well, I think you could get some belief in a tailwind from the election, Scott. I mean, we're turning the page here to the second half of the year. And you talked about earlier energy and financials performing well. They've really exhibited some leadership over the course of the last couple of months. And so if you get some emphasis, for instance, or attention being paid to the election and some potential policy changes, that sort of points you into some of these value sectors. It certainly makes deal making a little bit easier, which will help tech. But I think that it could be that impetus or impulse to be able to get some additional broadening out

because of a shift of focus away from interest rates, away from the Fed, and to potential policy in 2025? Well, there's never a full shift away from the Fed, as our senior economics reporter, Steve Leisman, knows, because there is a parade of Fed speak nearly every day, including today, whether it was Steve talking with Austin Goolsbee. You had Mary Daly today. And I feel, Steve, as though more Fed speakers are coming out now and talking about the risks of being too restrictive for too long. Yes. I guess you want to be a little careful with that assessment, Scott. It could be true. It could be just that the Fed speakers we've had have been those who have noted that.

And I think it's definitely become more a part of their discussion, this idea that the risks are more balanced and talking up issues like the extent to which there are concerns. Goolsbee twice today in my interview talked about the idea of needing to question just how restrictive the Fed is, given some of the weakness we've seen in some of the economic data. Not that it's all that weak, but it has definitely taken a step down. Those are two things to mark. And then Daley, who just talked to our dear Dara Bosa and also gave a speech, also talked about the gathering weakness that they have to watch. So, yeah, we're going to watch, Scott, to see if the others in the parade, there's a daily talking about the potential response if inflation is indeed higher or lower or the economy weakens more than expected. But we have had some weakness in labor and Fed officials

are making note of this. They're not necessarily pivoting to a different outlook, Scott, on monetary policy. They're not saying, well, OK, the data is weak. We need to cut. They're saying we're seeing some weakness and now it's time to maybe think about potentially changing policy. Well, I mean, I mentioned the parade of Fed speakers, Steve. You know, look, the so-called grand marshal of the parade, the Fed chair himself, as you know, because you were in the room, talked about the two-sided risks of keeping policy too tight for too long. And he said it more than once, too. So it's clearly on the mind of policymakers that they've gotten us this far, what most people would say is reasonably successfully,

and they don't want to overstay their welcome and ruin the story that seems to be pretty decent. That is 100 percent correct. You know, they're still trying to get that what what Daly called a benign outlook or benign outcome. But she did say that benign outcome is potentially less likely right now, given what's happening at the same time. Sort of talking out of both sides of her mouth, she noted that we may need that weakness to get inflation down. Look, Scott, it's a very big question right now of how far to push this. What are you really aiming for and how much are you willing to risk in order to get to exactly 2%? Daly just told Deirdre, hey, we're still going back to 2%, but there's this issue you and I have talked about, which is the sacrifice ratio. How much unemployment are you willing to risk?

How much weakness in the economy are you willing to risk to get to that 2%? Do you really need it? I've got a story I'm going to do tomorrow. I'll give you a preview of it, Scott, which says this. If we do 0.2 as opposed to 0.15 inflation, we're going to end up with 2.4% inflation year over year for every month forever. We'll never get at 0.2, which is just a very slight rise in the monthly rate. If that happens over time, Scott, we will never get to 2.4.

So what does the Fed do in that context? Is 2.4 good enough, or do you want unemployment to go to 5% or higher to get from 2.4 down to 2? So we're going to get PCE this week, and I think many assume that it's going to be a reasonably favorable reading. My question to you, I suppose, at this point is, what's it going to take? Is it even worth thinking about what it would take to make July a live meeting? You know, Scott, I think that's an excellent question. And I tend to think July is more live, perhaps, than the market does. We're looking at a 10% probability on July.

I'm just trying to think about, and here's what I'm gaming out. Is Dan still there? Because I'd love to hear what he has to say about this. I am, sir. I am. I'm gaming. All right, Dan, work with me on these numbers here. Is Dan still there? Because I'd love to hear what he has to say. I am, sir. I am. I'm gaming. All right, Dan, work with me on these numbers here. If the forecast is right, 2.8 to 2.6, and let's say you get 2.6 down, that's how many months in a row?

Let's count it. April was good. May was good. June was good. July would be good. That would be four months in a row of good inflation. And Powell's going to stand up there and say in that context, he's still not confident. Well, what's it going to take, Mr. Powell? Really, really good questions. What do you think?

That's exactly right. But to make July a live meeting, you'd have to have something materially change in the fundamentals of the economy. We know inflation is beginning to move. Again, as you mentioned, the PCE is going to be somewhere in the mid twos in short order. Obviously, they want to get it down to two percent, but that's not they're going to start adjusting interest rates before then. I think when you start getting down to two, six, two, five, a Fed that already sounds to me like they want to start reducing interest rates is going to get even more comfortable with talking about reducing interest rates. Is that going to happen soon enough for July? I doubt it. But why do you say that something meaningful has to change with the economy that insinuates that they won't cut simply because, as Steve laid out, the inflation prints have given them the confidence that they've been so dearly looking for. Right. No, that's right. What I'm

saying is how do I want to put it? The inflation, the reduction in inflation into the mid twos gives them some comfort talking about reducing interest rates rather than actually reducing interest rates. And the difference of what we're talking about, to be clear, is like two months, which in the big scheme of our lifetimes is completely. Well, that might be everything. Too much might be everything because it gives them a chance. It shortens the window in which they could potentially cut rates again. Well, no, because you're thinking about it on a calendar basis, and that's fair. Maybe you think they should cut the Royal. You think they should cut twice this year instead of once.

I'm just thinking about it in a larger context, which is I don't think July is soon enough for them. And if they start cutting in September, let's say. Yes, sir. Steve, you get the last word. Let me give you another one. Make this the last one. Another way to think about this. You had six months of really good inflation in 23. You had, as Austin Gouldsby described it to me,

a lousy January and not a great, but not a terrible February, March. Why isn't the six months of 23, the second of 23, added to the four months if we do get those four good months and say, look, we had 10 out of 12 or 10 out of 13 good months of inflation? Why isn't that enough to give them the confidence to go? You're confirming, Dan, my sense that the Fed woke up in March, saw its shadow and declared six more months of inflation. Sure. That's right.

Listen, they're going to go. We're of inflation. Sure. That's that's right. Listen, they're going to go. We're talking about two months. Not a big deal. We'll see. We'll see. And that's the fun part. Steve, thanks as always. I appreciate you. Shannon, we'll talk to you soon. Dan Greenhouse as well. Thanks for being here. Let's send it to Seema Modi now for a look at the biggest names moving into the close. Seema. Scott, 38 minutes left in trade and we're watching the payment space. Buy now, pay later stock Affirm jumping more than 10 percent after Goldman Sachs upgraded the company to buy from neutral,

saying Affirm is the leading provider of modern credit solutions for consumers. The company, or analysts I should say, are also citing its strength in underwriting. You'll see shares have more than doubled in the last year. And freight company RxO climbing by more than 20 percent to a new 52-week high after announcing it has struck a deal to buy Coyote Logistics from UPS for more than a billion dollars. RxO CEO Drew Wilkerson told CNBC earlier today that the deal more than doubles its company's truck brokerage, calling it a transformational deal. UPS also slightly higher by 1%. Scott?

All right, Seema, thanks. We're just getting started here. Up next, we've got your second half playbook. Aldridge Dan Chung reveals his strategy for big tech and video, the broader market as well, as we head into the second half of the year. He'll join us after this break at Post 9, live at the New York Stock Exchange. You're watching Closing Bell on CNBC. We're back at video shares. Well, they're selling off again today after snapping an eight-week win streak, now down nearly 15 percent from its recent high.

Is this a warning sign for this year's tech-led rally heading into the second half? Let's ask Dan Chung. He's the CEO and CIO of Alger, joins me here at Post9. Welcome back. Thanks, Scott. How would you answer that question? I'm sure you, like everybody else, is getting asked a thousand times a day about NVIDIA and what to make of it.

Seems to be all we can talk about. I'll just note that a great growth stock, a great company like NVIDIA, is going to have a lot of corrections along the way. But this is another near-term correction. I think longer term, there's still a lot more upside in NVIDIA. It's growing over 100%. The multiple is actually not that high on the stock because earnings and revenues have kept up with the stock, really. And I'll note that in April, it had a near 20% correction and went on to new highs just recently. So I think this is an entirely natural process, and I would stick tight. You ever seen anything like it, though? Well, I have. 98, 99. So you yourself are making comparisons to back then. Sure. But my view is we're not in 98 or 99 yet with AI.

We're probably more like 96, 97. So there's a lot more to go. Before the you-know-what hits the fan. I mean, you mentioned evaluation. And, you know, some would point out, those who follow the stock very closely would say, you know, before the run started, the stock was at 60 times. Now it's around 40 times. So it's important to have that perspective. But nonetheless, they look at the price action in the stock and say, how's it possible for a stock like this to just almost go up every single day before this most recent correction, obviously?

I mean, we are fundamental investors and I think really we have some of the best tech analysts and portfolio managers in the business. Some who've actually come from the industry. So the key is simply NVIDIA's dominance in the industry. Right now, the shortage of capabilities in the semiconductor industry. I mean, you can't do AI without NVIDIA right now. And finally, as a stock, the multiple. The multiple on our internal estimates is actually quite a bit lower than the market. NVIDIA has been consistently beating on revenues and earnings, and we think it will continue to do so for a while. October 3rd, you made your call that we were in a new bull market.

We're up 29% on the S&P, so congrats on that. But this is a what-have-you-done-for-me-lately business, as you know. So now what? Well, I think it is summer. We're heading into the blackout period for companies and buybacks. Earnings season in July will be interesting. The last earnings season did show some definite slowing in the U.S. economy, but it really wasn't around Nvidia or tech or AI.

It was around the consumer, around industrials. I think we'll see more of that. But ultimately, I think we're going to talk about this AI tech-driven cycle being as big or even bigger than the late 90s. How are you thinking about Fed cuts? Right. We're just having this conversation about what they may do still this year and how many times they may cut.

Does I mean, your bullishness, is it is it factored by what you think is going to happen from the Fed or is it the Fed irrelevant to your perspective at this point? Actually, I was very concerned that the overestimation of how many cuts the Fed was going to do this year, which was six cuts just seven to nine months ago, that the overestimation and the disappointment by going now to essentially one or none would be a sign of where the market really is. The fact that the market actually has gone on to new highs since we've learned there won't really be any Fed cuts before the election, at least,

I think to me indicates we're in a very strong bull market for many years. Well, for many years. Years. So the earnings power is going to continue to carry this market higher? Is that principally what we're talking about? So you don't think we're late cycle then? I don't think we're late cycle at all, no. I think this is similar to a mid-cycle slowdown, which we saw in 94, 95. And then as the economy was recovering,

which I think we're still seeing here and globally, then the internet drove upgrade cycle in computing, a whole flock of new companies that, of course, led the 90s. And I think we'll see a similar pattern here. We'll make that the last words. Good talking to you, Dan. Thanks. Thank you. Stan Chung, Alger, joining us here post-night.

Up next, the man who called the sell-off in NVIDIA, top technician Jeff DeGraff is back with us. We get his reaction to that stocks correction, what he thinks happens next. Plus, the sector he's saying is ripe to break out right now. Closing bell's coming right back. All right, welcome back. NASDAQ again selling off. Semis taking another leg lower today. Our next guest says the charts show a rotation out of that red hot tech group and into another. Renaissance Macro Research's Jeff DeGraff joins me now to explain. It's good having you back because you were darn right when you said that chips looked vulnerable,

that NVIDIA looked vulnerable, and we had this 15% correction. Now, who knows whether it's going to be quickly bought and we're back on the run again. But what led you to view that at the time you did not that long ago? And then now where does it go from here? Yeah, again, the what have you done for me lately business, right? I told you, yeah, it's it's a good point. It's it's it was really driven by sentiment, Scott. What we do is we parse the option activity. And when we look at when the premiums being paid for upside are substantially different than that being paid for downside, it just says the expectations are too high.

There's a few other things that we do around that. But that's where we just say, look, this is not a high probability outcome for us. It's not something we feel comfortable with. That's not bearish overall. It usually ends up being about a three-month consolidation. We had something very similar as an example back in February. We got that 20% correction that your previous guest was mentioning. And I think that's what we're in for today.

The only difference I'd say about today versus, say, the spring is we really are crossing the seasonal Rubicon here for semis The the summer months particularly the third quarter ends up being the worst quarter for semiconductors Basically historically if you follow the seasonal trends you want to be a seller of semiconductors In late July and you want to sit on your hands until the mid part of October and then that's where the strongest seasonality kicks in so if you're playing that calendar and interestingly enough I think a lot of things are supporting that both sentiment momentum the failure of an oversold condition etc I think that's what we're what we're setting up for the good news is I think Nvidia is

still in the long term uptrend I think these corrections probably proved to be viable I think you just have to temper that sentiment, and I think that will happen. We probably take it down to close to par, so 100, 101 is gap support. But that's where we'd start looking and sniffing around to add to positions there. The only thing I guess I would say to that is it's difficult when you start tying historical precedent to an industry that is, you know, part of it is being reborn by the whole AI transformation. So the calendar doesn't know about AI. You know what I'm saying? So this could be different. From a seasonal perspective, 100%, I agree with you. I would just say behaviorally, it is very much like what we've seen before, right? The circumstances are always different, but the way people react,

I always tell clients, there's three things people can do. You can buy, you can sell, you can hold. And there's really an infinite number of reasons to why to do all of those things. But when you put the behavior together with the momentum, that's what has us more concerned. I would look at seasonality as just icing on the cake there. All right. So if it could get worse from here in semis, which is principally the call you're making, what conversely could break out from here that maybe not enough people are focused on? Well, I think there's two things happening today in particular that are interesting. Obviously, the weakness in semis, but the day is generally a broad day.

Last I looked, the Russell was about 700 names up versus 300 down, so that's a decent day. And then you have biotech, which the NASDAQ biotech index is actually breaking out here, which is really, really good news. It's coming out of a big base formation. The fund flows have been pretty negative. So it's also a more speculative group. And that's what I like to see, which is we're not taking names, sorry, money away from, say, semiconductors and some of the high octane names and going into staples. They're actually just rotating those dollars into other areas that have the growth

opportunities. I think that's more bullish than it is bearish. I see you're also looking at the metals and miners. Yeah, this is a tape where, you know, when we look at strategist forecasts and what they've been doing, they've been really kind of clamoring all over themselves to have the high forecast on the street. We follow that historically. And when that starts happening, it's not necessarily bearish for the market, but it is points where you don't have to be really aggressive and chase. And so our whole point to clients is look for oversold conditions that are in good uptrends.

Metals and mining are absolutely one of those industry groups that's in that uptrend that recently got oversold. And so this is the area that we reallocate dollars to those oversold conditions and take away from some of those extended names that we think are due for a pause. But you're feeling pretty good overall about what this market can do over the next six months? I do. I think it's going to be a grind, though. I think it's going to be rotational. That's why these oversold conditions are going to be important. I think we have to temper some of the enthusiasm. I think that's going to happen a lot with this correction that we think we're

going to get in semiconductors. But I think it's all still a bullish setup for at least the back half. We've got a 5800 price target on the S&P that we put in place back December of last year. We're still comfortable with that. We've been hitting those milestones as we see it. The sentiment's the one thing that I think just needs to be cooled off a little bit. And we know from history that sentiment

usually responds to price. And so some type of correction, consolidation here in the summer should set up for a pretty good end to 2024. All right, we'll catch up with you again soon. Jeff, I appreciate it. Thank you. Jeff DeGraff joining us once again. Up next, we're tracking the biggest movers into the close. Seema Modi is back with that.

What do you see now? Well, it's got a choppy session for the cruise lines, but there is one stop close to hitting a new high. We will reveal which name after this break. All right, 15 to the bell. Let's get back to Seema Modi now for a look at the stocks that she is watching. Seema. Scott, let's start with IBM.

Stock is higher. Goldman Sachs analysts writing that IBM has made a, quote, significant overhaul of its software portfolio and that the company's AI offerings under Watson X have finally begun to pay dividends. Goldman initiated coverage with a buy rating, a price target of 200. That implies 15% upside from current levels. And Royal Caribbean trading in record high territory, up another 2.5%. JP Morgan raising its price target from 173 to 175 a share and maintaining its overweight rating, citing stronger bookings.

This as competitor Carnival gets set to report earnings tomorrow morning. Scott. All right. Thanks, Seema. Still ahead, the crypto space feeling some serious pain to start the week. Bitcoin tumbling below 60,000. What's behind the big move lower and how the crypto related stocks are faring? That's coming up. The bell's coming right back. Now to the most important news of the entire hour.

We have a new addition to the CNBC family. Christina Partsenevelos and her husband, Justin, welcoming their son, Sebastian Axel. Born on Friday, June 21st, 8 pounds, 4 ounces. Mom and Sebastian are both happy, healthy. There's a beautiful baby right there. And we wish the entire family our love during this exciting time. And we'll see you back here soon. Look at that.

Up next, we're drilling down on some big moves in the energy space what is really behind the rally in that sector and what it could signal for the broader market that and much more we take inside the market zone. All right we're in the closing about market zone CBC senior markets commentator

Mike Santoli is here to break down these crucial moments of the trading day. Plus Pippa Stevens on the rally today in energy stocks and Kate Rooney on the sell-off in Bitcoin and crypto. You first. First day of the week. We've got PCE this week. We have NVIDIA in a correction of some kind. What do you take away? Pretty significant stakes given the fact we are closing out the quarter in the first half. You know, I mentioned all last week that the week after the June options expiration,

which is this week, opened up a window, perhaps, for some greater index level volatility, maybe some sloshing around. It's not really happening at this point. You basically have a very well-behaved market reacting to the pullback in the semis as well as you might expect. Obviously, as everybody is saying, market breadth in general is positive. Laggard groups are being picked up. Whether that is just kind of the mechanical after effects of this very, very persistent dispersion trade where people are kind of betting on index calm and then divergence below the surface is an active trade. It's not

just an observed pattern. That keeps paying off. Also, when you consider that the June NVIDIA 140 call was by far the most active options contract traded last week, it expired last week. NVIDIA printed a high of 140 and change. A lot of money was lost on this stock on the last little lunge higher. And that's being spilled into the market. Nobody seems to really worry about it. Volatility is still low. So all that's great. Can we wish for it to continue? Yes. Can you expect it to be perfectly choreographed like this? I'm not quite sure about that. It still seems like a fully positioned market. PCE probably has to be cooperative. We have a pretty good bid in long

bonds today. That's all very helpful. So I'm not raising any alarms. I'm just observing that this is as good as it gets for absorbing that kind of a shock in the leadership. And you know what? The Fed's been a non-factor in the greater conversation for a few weeks now, a couple of weeks, maybe. Yeah, I would say a non-factor in the sense that they're reminders that they're in no hurry to cut. Well, the market's not obsessing about it every second, as we once were. No. Whether that comes back to the forefront by the end of the week, if the market is still in some kind of digestive state around NVIDIA

and things get a little rocky, here we are again. I think the stakes are rising because you now have a September cut priced around 70% and a drumbeat starting for July. You really are seeing people saying the Fed has enough if PCE is tame on Friday to go in July. Maybe we'll be live. And therefore, if the Fed pushes against that, yeah, maybe you have the opportunity for some turbulence. All right. Pippa Stevens, what's happening in energy today? Yes, Scott. Well, by far the best sector today, although still one of just three sectors in the red on the month.

And the group has also lagged oil itself for June, meaning we could see a bit of a catch-up trade. Now, the drillers are leading the way today as Brent tops 86, and NatGas gets a bit of a lift. APA, Devon, Cotera, and Oxy all up more than 4%. Some positive read-through as well on drilling activity, which is also helping the services names like SLB and Baker Hughes. But on the flip side, the refiners, that's Marathon Petroleum, Valero and Phillips 66, the relative underperformers amid ongoing soft gasoline demand. Now, Wolf Research today noting that two names to watch are Chenier, that's breaking through its 200-day, which could push it back to the $180 level. And One Oak, the firm said the pipeline company's

solid uptrend has stalled. But if NatGas moves higher, the stock could see a breakout to the upside. Scott? All right, Pip, I appreciate that. Pip of Stevens. OK, Kate Rooney, talk to me about crypto, specifically Bitcoin. I'm looking at it right now. It's 59.8. So that's, I mean, what was the high? The high was like 70-something, right? 73,000 is the high, so still well below that. There's this one industry-specific headline that did add to some pressure earlier, Scott. So this crypto exchange that actually went bankrupt about a decade ago said it's now going to start repaying creditors this summer. That was Mt. Gox, if you've ever heard that name.

So the payments are going to be made in Bitcoin. You did see this knee-jerk reaction to that with prices ticking lower overnight in Asia. There's also been outflows from ETFs adding to some of that pressure really since the last FOMC meeting. There's been about a billion dollars or so, slightly more when it comes to those outflows. And then you got Bitcoin and that sensitivity to macro data, anything that would affect the Fed's path. High growth and momentum names are lower today. That's one factor. Bitcoin has really been trading in that bucket,

and it's actually been quite correlated to NVIDIA, which, of course, you've been talking about. $60,000, though, this was seen as a key technical level for Bitcoin. I was going to say if it falls below that, but here we are. The next support level could be around $51,000. Scott, it's still up about 40% or so this year. Back over to you. Kate, thank you.

That's Kate Rooney. Kate was saying I was literally writing down NVIDIA plus crypto. I mean, that's where we're at, right? Yes. And there was a big overshoot in NVIDIA to the upside relative to crypto. You know, it doesn't say that they're closing the gap, but they are definitely both softening up in the same direction. You know, Bitcoin has been pretty good in terms of foretelling the short-term rhythms,

even in NASDAQ 100 in general. They just feed off of that same next big thing attitude and that kind of money flow. So again, it's more of a coincident indicator, and it reflects other things that we're watching right here in terms of kind of the rotation inside the market. We are losing a little bit of altitude here as, again, that perfect choreography maybe breaks down just a little bit. And some defensive stuff performing better, you know, pure defensive, Coke and things like that. Oh, I thought you were talking about Alphabet and Apple. Yeah, exactly. Well, look, they serve that purpose, too. But I was talking more about

really old fashioned in the bunker defensive, which haven't been performing at all. So, you know, I don't think that means that we're worried so much about the economy. To me, it just means there's an engine out there hunting for laggards to pick up on a relative trade. And that's what's been working here today to some degree. Banks working today as well. Banks working today. A little bit of news about maybe some slightly relaxed, you know, Fed standards in terms of some regulatory stuff. But they were conspicuous laggards, even as Treasury yields came down over the prior couple of weeks. So again, it's almost a luxury that the market has this ability to just kind of shift things

from one pocket to the other and react to its own dynamics because the macro has been relatively quiet and reassuring for a while. Yeah, a corrective market, but not disruptive. Scott, your point's well made. Mike, thank you. That's Mike Santoli. We'll go out with the Dow having a pretty good day. It's going to be negative for the NAS and the S&P.

I'll see you tomorrow. We'll go to OT.