Deal Or No Deal: NVDA Edition
Deal Or No Deal: NVDA Edition
What's in the box Jensen?
I’ve gotten in a few disagreements with
this week over whether or not Powell took his shirt off on Friday.This week's price action has somewhat supported Citrini’s view that he didn’t. The market reacted and has since promptly repriced all of the gains.
At least, that’s what’s happened on the surface and in the equities markets.
Bond markets have told a bit of a different story.
I wrote about this on Friday and don’t want to rehash it. I think Powell was more dovish than expected on Friday and by a significant margin. The bond markets agree with me, and I think the equity markets do too.
So far this week, the equity markets have sold off more on fear of what NVDA will do than anything else—fear of that and fear more generally.
IWM is down 65 bps, SPY is down ~10 bps and QQQ is down 75 bps.
Those aren’t especially meaningful moves, although they feel big based on the price action.
Everyone is waiting for NVDA 0.00%↑ earnings tomorrow after the bell.
Enter Jensen Huang
The prompt for this week’s header image was “Jensen Huang wearing a leather jacket holding a silver deal or no deal suitcase.” The idea behind it being that everyone is waiting to see if NVDA’s earning hold a bullish or bearish surprise.
The current implied move in the front contract for NVDA post-earnings is 9.9%. Yikes.
We all know what that means for the indexes: A 9.9% move in NVDA would move QQQ 80 bps by itself, totally discounting the follow-on action. That number is 60 bps for SPY.
AMBA 0.00%↑ reported very strong earnings today. They are a semiconductor stock that is viewed as an AI play. Maybe their earnings bode well for NVDA.
Until we know for sure, there’s not much to say about the markets. My gut instinct is that NVDA will put up modestly bullish numbers, and we will move much less than expected. But I have even less confidence than I do in my usual guesses.
Gold
I wanted to write a little bit about gold today, as the all-time high breakout continues. I’m still bullish the ATH breakout, and you can read in more detail about why here.
Guys like
have been saying all year that gold is “flashing a warning signal.” He likens it to what happened during the GFC. Well let’s take a look.
QQQ crashed on the Lehman collapse about a year after gold began its clear breakout. How does that compare to today?
Gold and QQQ have pretty steadily moved up in tandem. Where are we supposed to draw the breakout on this chart?
Take a look at Gold and QQQ since 2007.
If you’d sold QQQ on any of those gold breakouts, you’d be an unfortunate trader.
Parting Thoughts
I bring that up just to make a point: Be very careful with guys like Michael and indicators like this one. Make sure you understand the reasoning beneath the indicator. Don’t blindly follow these guys with big followings who tout some random historical analog.
Dig in and investigate it for yourself.
Not much else to say today. Everything is on hold until after NVDA.
Good luck out there.
Disclaimer: The information provided here is for general informational purposes only. It is not intended as financial advice. I am not a financial advisor, nor am I qualified to provide financial guidance. Please consult with a professional financial advisor before making any investment decisions. This content is shared from my personal perspective and experience only, and should not be considered professional financial investment advice. Make your own informed decisions and do not rely solely on the information presented here.