Apple and Nvidia Battle to Be the King of the Market
As we check on the technicals and price action, let's take a close look at the stark difference in how these two Magnificent Seven names are trading.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
I’ve been distracted by the impact of Hurricane Helene in North Carolina, but I am working to get back in sync with the market action. I want to understand what is leading and lagging and why. What sectors are hot? How is the technical and price action developing? What narratives are driving the bulls and bears and so on?
Overall, market action on Monday is mild, with a slight negative bias. Breadth is running about 4,100 gainers to 4,900 decliners, and the 12-month highs are down to around 300 names.
Apple AAPL is exhibiting good relative strength again and seems to have regained its position as the king of the market. Morgan Stanley MS says that lead time for the Pro iPhone has stabilized, and that is "an unexpected positive development." That doesn’t sound like a "super cycle," but the stock has always been viewed as a safe haven, and fundamentals don’t matter.
Morgan Stanley has a $273 price target. I don’t understand how you can justify that based on the numbers, but the market doesn’t care.
Nvidia NVDA, on the other hand, is struggling, and it looks like it may retest the 50-day simple moving average. Nvidia's numbers appear much more compelling to me, and I’m inclined to add to my position on weakness, but these two are a good illustration of how the Magnificent Seven names trade more on emotions and a "story" rather than fundamentals.
I see a fair number of good chart setups and small-caps have been developing. The calendar is rolling over to November, and that will cause some end-of-the-month volatility, but then we will have to wait for earnings season to start to determine if the market can develop another leg higher by the end of the year.
Technical conditions have stayed extended for a long time but are no longer as overbought as they once were. Upside action has been much slower lately, and that is helping many names consolidate.
The Chinese names are seeing some wild chasing and offering opportunities for short-term traders who like the volatility. Themes like this can often last longer than seems reasonable, so don’t be too quick to believe that the move is over.
I continue to hold high cash levels and see little that I want to rush to buy right now. There are some good charts, but I don’t believe they can generate sustained momentum given market conditions. Earnings will be the key.
At the time of publication, Rev Shark was long NVDA.
