Don here...
NVIDIA earnings are due out after the bell today. Everyone expects them to save the rally. I think they might actually make things worse.
The S&P 500 is pinned in a 100-point range between 6850 and 6950. We've been bouncing between those levels like a pinball for weeks.
Tech is deeply fractured right now. Capital is flowing into Apple as a safety trade and straight out of Google, Microsoft, and Amazon. Microsoft is getting crushed. Amazon can't get out of its own way on a three-year chart.
That bifurcation is the problem. Even if NVIDIA posts a blowout, the sectors everyone rotated into during the selloff are set up to get hammered.
Energy has been a favorite hiding spot. So have utilities, consumer staples, and names like Walmart and Caterpillar. If tech comes back to life, those safety trades unwind fast.
The advance-decline line tells the real story. Despite the S&P 500 being up eight-tenths of a percent, we can't break off a 50/50 reading. Every rally this year has been about rotation, not broad participation.
Here is what I cover in tonight's video:
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The VVIX is sitting at 106, which is still close to "get under your desk" territory and signals the market is pricing in violent moves ahead.
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The weekly expected move on the S&P 500 is nearly $140, and we haven't used even half of it yet with two trading days left.
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I'm playing NVIDIA earnings bullish with a call butterfly targeting the 210 strike, a setup I call the earnings flip.
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Financials are flashing a classic bounce-and-fade pattern where each selloff gets bought, but the bounces keep getting weaker.
The market wants you to believe NVIDIA fixes everything. The VIX at 18 is still elevated versus the last nine months. The options market is pricing in massive moves through Friday. One earnings report does not erase weeks of structural damage.
Click here to watch me break down the NVIDIA setup and the sectors I'm targeting after earnings
To your success,
Don Kaufman
Chief Market Strategist, TheoTRADE
P.S. Nvidia earnings are set to hit the tape tonight. Tomorrow morning, Garrett Baldwin kicks the day off reviewing EXACTLY what this means for your trades. Don Kaufman takes over at the opening bell to walk you through his RESET WINDOWS strategy - one that has yet to fail him.
Join us LIVE tomorrow at 845AM.
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