Nvidia Takes the Stage, AMD's in the Spotlight, Meta Gets a Break
The one and only Jensen Huang speaks tonight, also, let's chart AMD and check on the Meta monopoly case.
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Zero dark-thirty. Wednesday morning. Hours and hours to go. A whole lot of hours. Still, it is time. Today is the day. The one publicly traded company most closely associated with the AI-trade, with the AI-focused infrastructure buildout, and with the AI-centric capital spend, will go to the tape after the closing bell. All of Wall Street and for that matter everyone on Main Street with a 401(k) plan or an IRA will be watching, listening, and refreshing their smartphones, laptops and computers.
There are only two individuals who can move entire markets with words either well-said or misspoken. One, is Fed Chair Jerome Powell. The other is Nvidia (NVDA) CEO Jensen Huang.
We may not hear from Powell this week (but we will see the Bureau of Labor Statistics market surveys, and financial markets will move on the perceptions created and anticipation of how Powell will react). We will hear, however, from Huang this evening. Nvidia will release quarterly financial results tonight. Wall Street is looking for an adjusted $1.26 per share in earnings, which would compare well to the $0.81 reported for the year-ago period. Wall Street is also looking for year-over-year revenue growth of roughly 57%. That would be roughly in-line with the pace of sales growth experienced during the second quarter.
Beast Mode
As gaudy as growth like that appears to be, this would put an end to the deceleration of that annual growth that has gone on at Nvidia for six consecutive quarters. Call that the law of large numbers. If Nvidia can stabilize annual sales growth in the mid- to high- 50%'s going forward, that would just be incredible given how large the numbers are that we are discussing. Nvidia is likely going to have generated more than $55 billion in revenue for the third quarter. We aren't talking about 59% sales growth at Palantir Technologies (PLTR) , where sales hit the $1 billion mark for the first time back in the second quarter of this year.
So, where is Wall Street, not the consensus, but on the whole, going into this evening? We have estimates, by my count, from 39 sell-side analysts. While consensus for the adjusted earnings per share print is at $1.26, the range of expectations spans from $1.14 to $1.34. The range for revenue generation spans from $53.5 billion to $58.5 billion. Of those 39 analysts, 30 have revised their estimates higher since the start of the period, six have revised their estimates lower and three have left their numbers unrevised. Put bluntly, analysts are optimistic.
Still, Nvidia along with Palantir and the mega-cap hyperscalers such as Amazon (AMZN) , and Microsoft (MSFT) have lost their 50-day simple moving averages. Meta Platforms (META) and Oracle (ORCL) have lost their 50-day simple moving average quite badly. You know who is still holding their own, technically? Alphabet (GOOGL) is still trading close to the top of the chart. I just took my profits in that one, by the way. Additionally, Nvidia's key competitor... Advanced Micro Devices (AMD) is still trading well above that stock's 50-day SMA despite having developed what appears to be a Double Top pattern of bearish reversal.
Everyone one of the above-mentioned stocks will move this evening, perhaps sharply in response to the numbers that Nvidia releases, and then on how well on the call, Jensen Huang can sell the idea that demand for high-margin product is through the roof with no end in sight. Wall Street, Main Street and most importantly, the now AI-infused, keyword-reading, high-speed trading algorithms that rule the world will all be listening.
Huang knows that.... His comments will be curated with those algorithms in mind. Does this rotation continue? Does the AI / high-tech trade sell off further? Or was this past couple of weeks all a set-up meant to shake out the little guy and gal so as to pick them off at a discount. We soon shall know.
Speaking of Meta...
On Tuesday, U.S. District Judge James Boasberg dismissed the Federal Trade Commission's claim that Meta Platforms, the parent company of Facebook, Instagram and WhatsApp had an illegal monopoly in social media. Boasberg stated that the FTC had not proved its claim and commented, "Whether or not Meta enjoyed monopoly power in the past.... the agency must show that it continues to hold such power now." While Meta may or may not hold a monopoly on the type of social media that connects people, social media has more or less evolved to the point where much of it is focused on short-form video entertainment. Meta competes in that space, but clearly does not dominate that arena.
Marketplace
What a strange day. Traders and investors came into the Tuesday session looking to see if the bears could add a Day of Confirmation to the Day One reversal and pause that had already hit the tape. On the surface, participants and spectators might think that this occurred and that Tuesday was indeed an awful session. That just would not be the truth. This is that story.
There was some more "better than terrible" macro. Factory Orders were hot in August. The National Association of Homebuilders Housing Market Index improved for November. Net Long-Term tenancy in common flows flooded across borders into the U.S. for both August and September. Oh, and the ADP weekly private sector Employment Report showed a loss of 2,500 jobs for the most recently completed week. Not good, but much better than the 11,250 jobs economists had projected to have been lost. Oh boy.
The S&P 500 gave up 0.83% for the day, a fourth consecutive day of losses, while losing contact with its 50-day SMA. The Nasdaq Composite surrendered 1.21%, also losing contact with its 50-day simple moving average. That index has been down for seven of the past nine sessions. But the small cap indexes showed some green on the session as did the KBW Banks. The Dow Transports stopped selling off as well.
Breadth
Here's where it gets wonky. You probably felt like Tuesday was a down day. That said, six of the 11 S&P sector SPDR ETFs closed out the regular session on Tuesday in the green with Energy (XLE) in the lead. Yes, Technology (XLK) and the Discretionaries (XLY) were roasted again, but there were spots of evident positive rotation.
Perhaps surprisingly, winners beat losers at the NYSE by a 7-to-6 margin and also by just a smidgen at the Nasdaq. Advancing volume took a 56% share of composite Nasdaq-listed trade and an even more impressive 60.4% share of composite NYSE-listed trade. This is perhaps the most interesting takeaway from Tuesday's market action. Aggregate trade contracted 0.9% on a day over day basis across NYSE-listings and a quite notable 11.7% across Nasdaq-listings.
In other words, traders walked away on Tuesday, especially for the names most likely to be impacted by Jensen Huang's dog and pony show this evening. Technically, losing the 50-day SMA at the index level normally forces portfolio managers to reduce long-side exposure. With reduced participation, we have to wonder if there has just been more of a buyers' strike than an actual increase in pressure created by those looking to turn equity into cash. Fascinating stuff, if I could only be a spectator and not trying to pay my bills through the generation of alpha. Game on, My friends.
Going the Wrong Way
According to a Recent Harris Poll, conducted Oct. 23 through the 25th.
- 55% of employed Americans are concerned about losing their jobs.
- 62% of households have acknowledged that their everyday costs have risen in the past month. Just under half of those respondents feel that these increases have been difficult to afford.
FOMC Minutes Later
Nobody cares.
AMD: Breakout of Breakdown?
Double Top with a downside pivot of $224? There is that unfilled gap from early October that needs a $170 tick to fill. Then again, this could be a Double Bottom with a $263 pivot.
What happens tonight really matters. Could be huge that AMD has not yet surrendered that 50-day line.
Economics
(All Times Eastern)
07:00 - MBA 30 Year Mortgage Rate (Weekly): Last 6.34%.
07:00 - MBA Mortgage Applications (Weekly): Last 0.6% w/w.
10:30 - Oil Inventories (Weekly): Last +6.143M.
10:30 - Gasoline Stocks (Weekly): Last -945K.
1:00 p.m. - Twenty-Year Bond Auction: $16B.
The Fed
(All Times Eastern)
2:00 - FOMC Minutes.
2:00 - Speaker: New York Fed Pres. John Williams.
Today's Earnings Highlights
(Consensus EPS Expectations)
Before the Open: (LOW) (2.95), (TGT) (1.72), (TJX) (1.22), WSM (1.87)
After the Close: (NVDA) (1.25), (PANW) (.89)
At the time of publication, Guilfoyle was long TJX, NVDA, PANW, PLTR, MSFT, AMD equity.
