Nvidia announces earnings at the close today. The “Magnificent Seven” are 2 and 4 for the reporting season, defined as two companies exceeded expectations while four disappointed. It could be argued the immediate direction of the indices could be dictated by the announcement. Expectations are high the company will outperform, but the question is by how much and is such already discounted?
Equites were bifurcated as the tech dominated NASDAQ declined about 1.0% while the Dow dropped about 0.15%.
Shorter dated Treasuries rallied causing the curve to modestly steepen, the catalyst for the advance was perhaps the belief that the selloff went too far too fast.
An argument can also be made that the markets will be flat to nominally lower until the next data deluge that will commence in about 8 trading days. There is a dearth of both corporate and economic announcements to base investment decisions upon. Today’s release of the Minutes from the last month’s FOMC meeting should be a nonevent given the plethora of Fed speakers.
Last night the foreign markets were mixed. London was down 0.84%, Paris up 0.16% and Frankfurt up 0.42%. China was up 0.97%, Japan down 0.26% and Hang Seng up 1.57%.
Dow and NASDAQ futures are down 0.10% and 0.60%, respectively on worries as whether Nvidia can deliver blockbuster earnings to support its parabolic move in its stock price.
Many years ago, the 90-90 rule was explained to me by a noted technical analyst at that time (it was around 1992). He stated there is a 90% chance that a company will retrace 90% of a parabolic move but the question to ask is when such a “correction” would take place. Does this rule apply today or has the environment changed too radically?
