The Stage (And the Gap) Is Set for Nvidia
Here's the danger if there's a negative reaction to Nvidia's earnings Wednesday evening.
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Market participants had a convenient excuse for more selling on Tuesday after Ukraine fired U.S. missiles into Russia. Indeed, there was early selling pressure, but it didn’t last long, and stocks trended steadily higher during the rest of the day.
The internal action was good, with the Russell 2000 IWM and Nasdaq 100 QQQ gaining about 0.8% on breadth of 5,500 gainers to 3,900 losers. The Magnificent Seven MAGS were market leaders, with a jump of 1.9%. That sets the stage for the very important Nvidia NVDA report on Wednesday night.
One troubling issue is that none of the indexes have completely filled the gap on the chart that was created on the election results. Gaps like this often serve as a magnet, and there is a substantial danger that a negative reaction to Nvidia could trigger a gap fill.
Overall, this is productive action, with the euphoria and overbought technical conditions being corrected to a great degree as we head into the positive seasonality of Thanksgiving week.
Bears are getting loud with their arguments about inflation, interest rates, valuation, etc., but there isn’t any reason to expect that the market will embrace those concerns anytime soon. There are always great bearish arguments, what matters, though, is the timing. When will the price action start to reflect the negativity?
I continue to be optimistic about stock picking and traded some low-priced biotechnology names Tuesday. There are many stocks I want to buy, and the charts are developing. Thanksgiving week is going to be entertaining for aggressive traders.
Have a good evening. I’ll see you Wednesday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
