The Week Of NVDA- Do Or Die?
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Not to give you the old Bait-’N-Switch, but we actually aren’t going to discuss NVDA itself this evening, we’re going to simply point out that NVDA earnings may be an overarching influence on the market once NVDA reports earnings after the close on Wednesday. I keep a thick chicken wire in front of the stage capable of stopping used up semi chips just for moments like this. Don’t worry, we will touch on it before earnings, though we tend to avoid most tickers immediately prior to earnings.
Friday and today saw nice follow-through for IWM, which we said on August 21 “looks potentially bullish, a move to 220+ being possible…” IWM was at 215 at the time, not quite in the mud pit, but still dripping as it was wallowing near the edge of the trough. Today, IWM reached 222.45, well within the area GEX and our chart indicators pointed at as a potential target. What’s next for the index of unprofitable small caps?
IWM chart: TradingView
Looking strictly at Keltner channels, we can view 225 as a possible target, which is still a few points higher. If we add the dynamic of market positioning as extrapolated using gamma (GEX), we can see that we are already in a potential sell zone, so the air may be thin at this altitude. The shorts are crying and the longs are weeping tears of joy. The dealer cluster zone gives some room a little closer to 225, so an overshoot wouldn’t be unheard of, given the strong upside move. If I were a bull at this level, the volume at 210 and the lack of significant GEX levels above this general area would give me pause..But that’s just me, a stodgy old prude of a trader, stuck in the ways of old, where I am more afraid of losing money than missing out on capturing the next 0.5% using 100x leverage.
IWM GEX Levels: www.GeeksOfFinance.com
Let’s shift focus to SPX, starting with the chart: Consistently making incremental short-term highs, though below the July 16 high, and not yet closing higher than the prior day’s high for the last 3 days (ok that sounds a little confusing). Worryingly, we closed below the Hull Moving Average, which (in my book) is a signal to lean toward the short side.
SPX: TradingView
SPX GEX is comin down after making lower highs, now technically in the neutral zone under 1B, though I don’t yet see neutral as a signal to go all-in short. You can see that we’ve flirted with this neutral area a few time since mid-August, and so far, resolution has been toward maintaining a bullish GEX picture. Keltner channels (as shown above) look less bullish, and GEX continuing to fade or stay firmly in neutral territory may give credit toward more downside before we see more upside.
SPX Historical GEX: www.GeeksOfFinance.com
QQQ looks even more bearish than SPX, opening below the Hull and streaming lower, though we will note that today still didn’t close below last Thursday’s close, yet. I also circled a few examples of why we tend to lean short below the Hull and long above it.
QQQ: TradingView
QQQ GEX took a nastier turn than SPX, flipping negative at half a billion, technically within neutral territory, but we don’t often see QQQ at this level, unless we are in a painful downtrend. So this is a potential red flag in the short term for the market as we head into NVDA’s earnings Wednesday. Can we see a sharper pullback tomorrow into Wednesday, then a rally post-NVDA release? Hey, it’s at least one contrarian whipsaw view of how things might play out. We will look at further clues from implied volatility and GEX in the next two days for additional clues.
QQQ Historical GEX: www.GeeksOfFinance.com
What Else Do We Need to Fret About This Week?
In yesterday’s newsletter, we laid out a few specific tickers we’re watching, so now we will shift focus to a parallel list of other events we’re watching, ranging from housing data to various bond auctions,consumer sentiment/confidence, and income/PMI data Friday.
Economic Events: www.Econoday.com
In addition to NVDA, we also have a few high-end and discount retailers reporting, and PC manufacturers HP and Dell. Plenty of excuses for a few small market thrills as the week progresses. Join us on Discord and we’ll share some of what we’re seeing as we see it!
EarningsWhispers Week Of 8-26 Earnings Calendar
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