Bulls Charge Into The Memorial Day Weekend On AI Excitement And Nvidia Earnings Momentum

The Markets

To say NVDA (NASDAQ:NVDA) crushed earnings is a drastic understatement. You won’t find fundamental analysis on this page. But it does make sense to pay attention to the smart and experienced traders that know the fundamentals. And the opinion seems to be pretty consistent.

--We’ve rarely seen a company of this size come out with such a substantial earnings beat and upward guidance revision.

--This is evidence that the artificial intelligence (AI) revolution is real, it’s here, and it will have a bigger impact on the world and the stock market than the internet did.

Nvidia’s stock rose as much as 30% on the news, adding $200 Billion to the company’s market capitalization. This is after already rising nearly 200% since the low of October 2022.

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With a new high in place and no price history at these levels, we can look at a Fibonacci extension for clues on what may be in store up above. The 1.618% level shows a price of $448.15.

Obviously a nice move for that stock. However, as mentioned in Wednesday’s Midweek Market Update, the broader implications for AI, semiconductors, technology, and the whole market are the bigger story.

Almost every other chip maker went up on NVDA’s news. The whole industry stands to benefit from this growth cycle. And it will likely impact other areas and businesses in ways not yet imagined.

It will be fun to watch and to trade.

The Charts

SPY (NYSE:SPY) capped off the strong reversal by closing near the highs of the day. Although it didn’t quite get past last Friday’s high, it did close over $420. The short-term MAs are rising and there is plenty of room above on the RSI. Momentum should persist here, barring further debt ceiling debacle.

QQQ (NASDAQ:QQQ) continues to carry the torch and jumped nearly 6% from the low on Wednesday. The extension persists so we should expect at least a slight correction or some sideways consolidation.

IWM (NYSE:IWM) The small-caps still have a lot to prove. But they’re not going down without a fight.

DIA (NYSE:DIA) Has a successful reversal from the 200-day MA. Now it needs to move past the 8/21/50-day MAs.

QQEW (NASDAQ:QQEW) - Remember the ‘bad breadth’ argument? The equal-weight Nasdaq 100 is close to breaking out.

The Closing Bell

The checklist still isn’t completed. But there is definitely a more bullish vibe going around now. And while Wednesday’s dip helped work off some excess, many things are still very extended. Don’t get complacent.

We need to see how this extension gets resolved.

--Does tech sell off sharply?

--Or does it move sideways?

While that’s happening are other stocks (DIA, IWM issues) getting bought? That would be one of the most constructive outcomes.

Weekend Weekly charts will be a day late this time. I’m taking off bright and early to head to the fishing camp.bukll

To all of you in the US, I hope you all have a fantastic Memorial Day holiday. To readers across the globe, remember that US markets are closed Monday.

So enjoy some rest and relaxation, all. We’re back in action Tuesday morning.

The Disclosures

***This is NOT financial advice. 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”) a SEC registered broker/dealer and member of FINRA/SIPC.  All trades placed by Mr. Moss are done through T3TG.

Statements in this article represent the opinions of that person only and do not necessarily reflect the opinions of T3TG or any other person associated with T3TG.   

It is possible that 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 take this into account 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 prior to making any investment decision.   

POSITION DISCLOSURE

May 26, 2023, 4:00 PM

Long:  GOOGL, META, NVDA, AMD0209P120

Short:  

Options symbols are denoted as follows:

Ticker, Date, Call/Put, Strike Price

Example: VXX1218C30 = VXX 12/18 Call with a $30 strike

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