TQQQ - Nvidia Reversed The Market Watch These Indicators To Navigate It
2024-03-11 00:40:25 ET
Summary
- NVIDIA stock experienced a sharp reversal after news of a possible stock split, potentially moderating its unsustainable rise.
- The VIX and 10-year Treasury yield are important indicators to watch, with the VIX showing rising hedging and the 10-year breaking down.
- The upcoming CPI report will be crucial, as a positive result could lead to a strong week for tech stocks like NVIDIA.
I am starting to feel bullish as we might be sailing past the "Ides of March"
On the surface, the price action of NVIDIA ( NVDA ) could be a concern, especially as we once again see key economic data – the CPI revealed on March 12, and the PPI revealed on the 14th. So the question is, is the sell-off starting on Friday out of expectations of bad news next week, or was it a discrete action? Here’s what I mean. Early Friday morning, Bloomberg published an article that NVIDIA will split the stock and the stock shot up to 950. The original article was published March 8, 2024, at 7:16 AM EST, here is the link to the article Bloomberg If someone else would use this as an explanation for the price action, I would be the first to say that correlation is not causation. However, there was no other news that I could find that would propel NVDA to break above 950 at 7 am. Then, once the market opened, traders leapt up on the stock and pushed it up to 974 before it tumbled and closed 100 points lower at 975 a full 100 points lower. Market technicians call this price action a “Key Reversal.” This is when a stock reaches an all-time high and falls below the previous trading day’s low. This is not a positive development for the stock price, generally. I can also say that in the long run, it is good for the stock and our market in general. The stock was headed to an unsustainable parabolic formation. This reversal could serve to moderate the unsustainably sharp rise and perhaps maintain the overall market rally. Of course, the big trend that in my opinion has already been establishing itself is the wider participation of stocks from various sectors, which we will look at later. The point I want to summarize here is that there is a good chance that most of the selling on Friday is not the fear of the CPI, but more about the reversal of NVDA. Below is the about 3 weeks of trading. The first thing I want to illustrate is the sharp reversal and settling precariously at 875. I suspect that the next support level of 850 will be tested on Monday, the next level is 820. Perhaps the price gets as low. I think buyers will come in again....
Nvidia Reversed The Market, Watch These Indicators To Navigate It