The Most Schizo Reaction I've Ever Seen
The Most Schizo Reaction I've Ever Seen
Are the Earnings in the Room With Us Right Now?
Today was an extremely strange day in markets, though with Fed Minutes and NVDA earnings being released today volatility was expected.
A lot of significant things happened today, and I’m still parsing their meanings. I’ll talk about all of them briefly, starting with the reaction to NVDA’s earnings.
Are the Earnings in the Room With Us Right Now?
All eyes were on NVDA’s earnings today. NVDA is an extremely volatile stock (both in price and in earnings) with an absolutely enormous marketcap, and it’s considered a bellwether/proxy for the AI trend as a whole. With all those factors combined NVDA’s earnings have become one of the most significant data points out there.
The really shocking thing today was the reaction to earnings. I saw NQ futures flash down 50+ bps in the immediate seconds following the earnings release, and earnings were a significant beat!
Things are settling with NQ up small-ish after a tough day, which I think makes sense. So much AI upside is being priced in (correctly, in my view) that it always felt like we had a lot more downside going into NVDA earnings than upside. Normally a good set up for some put buying, which I really considered heading into today. In the end, glad I didn’t pull the trigger.
I don’t think the immediate reaction to the NVDA earnings release was especially meaningful, but it’s comical to think about nonetheless.
If you want to read a bit more about NVDA I recommend checking out
’s piece below.
Oil Check In
Oil continues to drop which is good for inflation progress but a potentially bad indicator that the global economies might be slowing. Until we start seeing that in more of the data I would mostly look at oil dropping as a good sign.
In short, our high-risk tech stocks are more concerned about when the Fed will turn the pumps back on than if the economy slows a bit. Therefore inflation > growth in terms of what we need to watch.
*POP* Goes the Metals
As you may have read (elsewhere), metals have been having a moment, up substantially over the last month or so. The upward momentum came to an abrupt end today, and metals were down significantly across the board.
I’m not a commodities guy, and so I’ve mostly avoided the metals trades (except for Gold), except to keep an eye on them and worry about what they could mean for global inflation.
They are still at pretty elevated levels, so the related inflation concerns are hardly gone, but today was a step in the right direction.
Crypto
I haven’t written a ton about crypto, even though it is the asset I’ve traded most in my life. The reason for that is simple—I round tripped a massive gain in it earlier this year and have been trying to be more hand-off with it ever since.
I’m a big believer in crypto because the idea of being able to carry my net worth in my pocket and go anywhere in the world is extremely appealing to me. Granted, I don’t think that use-case is enough to justify widespread adoption, but it’s the basis of my personal interest in crypto.
In practice, I think it’s important to remember that currently crypto currencies trade like leveraged risk assets, and they’re extremely sensitive to central bank liquidity.
I do want to note however that ETH seems quite likely to get an ETF now. I have always been a big believer in ETH to become the mainstream “world computer” within crypto, though that belief was starting to show its cracks as ETH lost ground to BTC/SOL all year.
I think ETH has been very oversold, and the news about an ETF being likely, maybe even guaranteed, will lead to a period of ETH outperformance.
Granted, a lot of that move may already be behind us as it popped 20% on the news. But my view is that there is still another 20%+ ahead for ETH/BTC (Eth priced in BTC terms, or longing ETH vs BTC).
Because I am also expecting rising global liquidity and loosening global liquidity conditions I am inclined to long ETH outright because I like it vs other crypto and I like it vs the dollar.
Fed Minutes
We got some very hawkish Fed Minutes that spooked the markets today. If you are ever tempted to believe in the efficient market hypothesis just look at the reaction to these minutes, but keep in mind that the information contained within is from 3 weeks ago, at peak rate hike fears.
I sent a message out in the subscriber chat saying I would be tempted to long for a scalp, but was holding off because of fears about NVDA and being overly long already.
This is a good opportunity to remind you of a trading mantra I have.
The market over-reacts and under-predicts.
Fundamentally, this is how we can make money in the markets. Markets are, at their core, about human psychology. People are reactive, and they are not good at analyzing probabilities. That’s why forecasts are so useless, and that’s why time and time again you will watch the markets overreact to news and then retrace.
Druckenmiller talks about “fat pitches.” Well fat pitches exist in markets because of these truisms about human psychology.
So let’s find some fat pitches this year. Good luck out there.
Please also always remember... none of this is financial advice. I’m not a professional. I quite literally don’t know what I’m doing. I’m just a guy, with a keyboard, who scored high enough on some standardized tests to think I can beat the market.