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King Nvidia Please click here for a chart of Invesco QQQ Trust Series 1 (NASDAQ: QQQ).
Note the following:
- The chart shows that QQQ touched the low band of the resistance zone and reversed.
- The chart shows that going into NVIDIA Corp (NASDAQ: NVDA) earnings, QQQ has rallied to the downsloping trendline.
- RSI on the chart shows that the stock market is coming out of the oversold condition ahead of Nvidia earnings.
- The sum total of the foregoing is the technical setup for the stock market is positive going into Nvidia earnings.
- To fully understand the landscape going into Nvidia earnings, read the Morning and Afternoon Capsules from Monday and Tuesday.
- Today is one of those very rare days when earnings of a single stock become a macro event for the entire stock market. Nvidia, king of AI, has now become the de facto king of the entire stock market.
- Expect the momo crowd to aggressively buy call options on Nvidia, Advanced Micro Devices, Inc. (NASDAQ: AMD), Microsoft Corp (NASDAQ: MSFT), and VanEck Semiconductor ETF (NASDAQ: SMH) today.
- Expect professionals to engage in position squaring. In plain English, this means that they are going to assess their risk related to Nvidia and adjust the positions held.
- Short sellers who were going to cover their shorts ahead of Nvidia earnings have already covered their shorts.
- Wall Street positioning is very positive. Positioning is one of the important market mechanics. Understanding market mechanics can give you a big edge. Due to the high value of market mechanics, a majority of the truly helpful information is kept secret by those who know. There are several podcasts that give you a deeper understanding of market mechanics in Arora Ambassador Club.
- After yesterday's 24.15% drop in the price of sporting goods retailer DICK'S Sporting Goods Inc (NYSE: DKS) on a bad earnings miss, there is a shocking cut in earnings projections from Foot Locker Inc (NYSE: FL). Foot Locker is falling 31.72% as of this writing in the premarket. In sympathy, shares of Nike Inc (NYSE: NKE), Under Armour Inc Class C (NYSE: UA), and Lululemon Athletica Inc (NASDAQ: LULU) are coming under pressure.
- As shocking as earnings from DKS and FL are to the downside, earnings from teen apparel retailer Abercrombie & Fitch Co (NYSE: ANF) are a blowout to the upside. ANF is reporting EPS of $1.10 vs. $0.17 consensus. ANF stock is up 17.20% as of this writing in the premarket.
- The stock of Peloton Interactive Inc (NASDAQ: PTON), the pandemic darling of the momo crowd, is falling 27.61% as of this writing to $5.06 on poor earnings and loss of subscribers. Our long time members may recall that when PTON was trading about $170, almost all analysts were recommending strong buy. The Arora Report was cautioning against buying PTON, and the call was to look for opportunities to short sell PTON. Subsequently The Arora Report gave a short sell signal on PTON, and the trade was very profitable.
- Prudent investors also realize that right after Nvidia earnings there is a risk event ahead in Powell’s speech at Jackson Hole on Friday.
- As an actionable item, the sum total of the foregoing is in the protection band, which strikes the optimum balance between various crosscurrents. Please scroll down to see the protection band.
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Magnificent Seven Money Flows In the early trade, money flows are positive in Apple Inc (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc Class C (NASDAQ: GOOG), Meta Platforms Inc (NASDAQ: META), Microsoft Corp (NASDAQ: MSFT), NVIDIA Corp (NASDAQ: NVDA), and Tesla Inc (NASDAQ: TSLA).
In the early trade, money flows are mixed in SPDR S&P 500 ETF Trust (ARCA:SPY) and Invesco QQQ Trust Series 1 (NASDAQ: QQQ).
Momo Crowd And Smart Money In Stocks The momo crowd is buying stocks in the early trade. Smart money is