$NVDA Week
The Markets
Stocks are primarily on hold so far this week (large-cap tech stocks, anyway) as we await the NVDA earnings report after the close on Wednesday.
It has often been said recently that Nvidia is the market. The company’s impact is hard to overstate, with it making up more than 20% of the XLK SP Technology Fund and SMH VanEck Semiconductor ETF, more than 11% of the IOO iShares Global 100 ETF, nearly 8% of QQQ, and 6.5% of SPY.
Artificial Intelligence (AI) is still the biggest theme in the markets, and they are still the clear leaders in the industry. So, to put it mildly, the results will be meaningful.
With the last report, they announced positive earnings per share (9.3% higher than estimates), revenue ($1.45 billion more than anticipated), and a stock split, all of which combined to ignite a 47% rise in the stock over the following month. The stock peaked on June 20 and gave a pause in SPY, QQQ, XLK, and SMH, although they would be able to make a new high shortly after.
Before that report, it had gone through a months-long basing process. This time around, the stock is already up more than 40% in about three weeks. Expectations are high, and they must wow the Street to keep the stock moving higher.
The options market is pricing in a move of about 10% in either direction.
The chart shows a bullish consolidation pattern ahead of the news. Price is getting tighter, digesting the sizeable recent move, while the 8-day moving average adds support. Ordinarily, this would show an attractive opportunity for new long positions with a potential move up to or beyond the $140.76 pivot high and a sensible risk management level (stop loss) below the pattern.
However, earnings events are a coin-flip at best.
The Charts
SPY is still consolidating in front of new highs, with the 8-day MA pushing up from below. Some are mentioning the potential risk of a double top. It’s a real possibility. However, in the meantime, it's keeping the bullish short-term momentum, and we must be mindful that an eventual break higher is the more likely outcome.
✅ above all the key moving averages
✅ all moving averages are rising
✅ RSI in the bullish upper half
The only factors keeping it from a ‘perfect score’ are the lighter-than-average volume and the 21-day MA being below the 50-day MA.
QQQ is still weaker due to the rotation away from growth and tech into small caps. At today’s close, it was below the 8-day MA and has tested the flat 50-day MA several times recently. It needs to remain above ~$473, or we could have a different situation.
IWM gapped higher and sold off the rest of the day. But it did manage to stay above Friday’s close, preventing a tactical sell signal. More rest while the 8-day MA catches up should be expected.
DIA with a potential evening star candle today at a new all-time closing high.
TLT continues to rectify the widening range as the Bollinger Bands start to come back together.
DXY US Dollar futures get a slight bounce near the pivot low from late 2023.
BTCUSD is fighting to stay above the 200-day MA and maintain the validity of the recent breakout.
The Trade
Take trades and manage risk.
There are too many bullish-looking setups out there to ignore. Recent focus has been on IWM, HUT, PYPL, SBUX, and XBI, to name a few.
Yes, NVDA will have an impact. PCE on Friday could shake things up, too. But the unknown is always in front of us.
Take trades.
Scale in and out of positions.
Raise stops along the way.
And book some profit when the opportunities arise.
Thursday, we’ll take another look and see if NVDA pushes things higher, lower, or not at all.
Elevate Your Trading
Education, training, and support for your Trading Adventure.
Options Trades - Weekly trade ideas are delivered to your email or text messages in language you can easily understand.
Check out EpicTrades from David Prince and T3 Live. Epic Trades from David Prince
Community - Are you an experienced trader seeking a community of professionals sharing ideas and tactics? Visit The Inner Circle, T3 Live’s most exclusive trading room - designed for elite, experienced traders.
The Inner Circle at T3 Live
Prop Trading - Or perhaps you are tested and ready to explore a career as a professional proprietary trader? 3 Trading Group has the technology and resources you need.
Click here to start the conversation:
T3TradingGroup.com
The Disclosures
***This is NOT financial advice. This is NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.
Andrew Moss is an associated member of T3 Trading Group, LLC (“T3TG”), an SEC-registered broker/dealer and member of FINRA/SIPC. All trades placed by Mr. Moss are done through T3TG.
Statements in this article represent that person’s opinions only and do not necessarily reflect those of T3TG or any other person associated with T3TG.
Mr. Moss may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed. This may reflect the financial or other circumstances of the individual, or it may reflect some other consideration. Readers of this article should consider this when evaluating the information provided or the opinions being expressed.
All investments are subject to the risk of loss, which you should consider in making any investment decisions. Readers of this article should consult with their financial advisors, attorneys, accountants, or other qualified investors before making any investment decision.
POSITION DISCLOSURE
August 26, 2024, 4:00 PM
Long: CELH0830P40, HUT0830C12.50, PYPL0830C72, RDFN0830C12, SBUX0830C94, XBI0920C105
Short:
Options symbols are denoted as follows:
Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike
Gonna sit this one out guy. Accumulate some buying power, more education. This is a tough one. Nice write up. I can remember being 14 years old and nvidia was just a graphics card I could never afford but always eyed on PC gaming. Damn, that company has come a long way.