The Quotedian - Daily Edition
Showdown
“Wall Street’s graveyards are filled iwth men who were right too soon”
— William Peter Hamilton
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Well, NVDA came, saw and reported yet another blow-out quarter in terms of earnings, beating expectations for a 14th consecutive time since the initiation of the current AI-craze:
The market is largely shrugging it off, with the stock only marginally higher, but given its still lofty valuation, that’s more than ok. To me, the chart of the company’s stock price definitely looks like continuation as opposed to reversal:
It was ‘cute’ how Jensen Huang tried to reduce the damage done by AI on the software sector:
Let’s see how successful that endorsement will be, for now the iShares Software ETF (IGV) is trading lower pre-market.
The broader market (S&P 500) itself saw a decent rally, but remains boxed:
However, the upside participation was broad, with 71 companies in Europe (SXXP) hitting new 52-week highs versus 15 trading at new 52-week lows. And the ratio was 61:12 for US stocks (SPX). Also check our daily dashboard for breadth indications (lower left corner).
Hence, no surprise then to see that the equal-weight version of the S&P 500 (proxied via RSP ETF) closed only a quarter of a percentage point off a new all-time high:
In conclusion, the overall stock market constellation looks ripe for a move higher, maybe to new all-time highs, over the coming sessions …
… HOWEVER …
we unfortunately have this looming and overshadowing overall sentiment:
Pulling up that impressive military presence in the Middle East comes at elevated costs to the US taxholder, hence Trump is unlikely to walk away with some mediocre concession on the behalf of the Irani regime. And the Irani regime, counting on “not much more” than air strikes, may even speculate that this could rally public support behind them, something that is much needed after the recent riots.
In other words, some kinetic action over the coming weekend is an elevated possibility.
What does it mean for investors? Could it throw a stick in the wheel of equity bulls. Probably.
Should the oil price move higher?
Well, it does continue to move within a defined uptrend (see chart above), but it is difficult to assess how much of a kinetic escalation is already in the price. Nevertheless, entering a long here with a tight stop somewhere below 65 would be a low-risk, high potential return proposition. Also, see our chart-of-the-day today.
Long gold?
Perhaps, though pre-empting a breakout out of the triangle could be costly and a stop below 5,000 would surely be a good ‘hedge’ for an alternate outcome.
But, maybe in gold it is the better value proposition to invest via the miners, which will continue to do very well, even if the Gold spot price ‘only’ holds current levels.
I like second tier players such as Alamos Gold (AGI),
and B2Gold (BTG):
We briefly discussd the oil price above and the its current positioning in an uptrend channel. Zooming out on the same (WTI), we note that the USD66 level, previously crucial support, has now turned into what could be an all-defining resistance level:
A break above, could bring a whole new set of previously uninterested investors on to the long side …
ECB’s Lagarde speaks at the EU parliament
M3 Money Supply for the Eurozone is due
US Initial Jobless Claims
Fed’s Miran on Fox Business and Fed’s Bowman Testifies Before Senate Banking on Regulation
And, of course, US/Iran negotiations in Geneva
Everything in this document is for educational purposes only (FEPO)
Nothing in this document should be considered investment advice
Investing real money can be costly; don’t do stupid shit
Leave politics at the door—markets don’t care.
Past performance is hopefully no indication of future performance
The views expressed in this document may differ from the views published by NPB Neue Privat Bank AG