The End To Market Stagnation May Finally Be At Here
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NVIDIA
Stocks ended the day mostly lower, and perhaps more notably, Nvidia (NVDA) finished flat. For once, it had little to no influence on the broader market, a positive development. Even better, call volume was significantly lower, with just 1.7 million contracts traded. We’ll see how this plays out moving forward.
Historically, Nvidia’s stock price struggles when 1-month implied volatility (IV) exceeds 60%. So, keep an eye on the 1-month IV—if it continues rising, it could signal a short-term top forming in the stock price.
RISING WEDGES
Anyway, the S&P 500 continues to form a rising wedge pattern. The futures look clearer to me, as I can simply wait to see when, or if, the pattern breaks.
The Nasdaq futures are right at the crucial point, having hovered along the lower trend line over the past couple of days. It’s at a tipping point now—either it breaks or it doesn’t. The setup’s appearance suggests it’s ready and positioned for a break lower.
The S&P 500 Equal Weight ETF (RSP) already broke the pattern today.
The Dow futures also appear to have broken the rising wedge pattern.
The PHLX Housing Index (HGX) has broken the trendline, which was part of the bump-and-run pattern.
The Nikkei 225 dollar futures also had a rising wedge, and it has broken lower.
Even the DAX is close to breaking its uptrend.
GE
GE was hit hard, dropping 9% after reporting results. It broke its bump-and-run pattern and found temporary support around $177. The results didn’t live up to expectations, with revenue missing estimates. Given that the stock has more than doubled over the past year, it’s no surprise expectations were high.
GOLD
The last time gold traded with an RSI above 80 and above its upper Bollinger Band on the monthly chart, it peaked and then returned to its lower Bollinger Band two years later. Gold is starting to look very overextended here.
Once again, the market appears primed for a drop, with multiple indexes already breaking down. Nvidia’s options activity seems to be running out of steam, so maybe, at last, we can see a break from this stagnation—which has been absolutely exhausting to endure.
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Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary for informational and educational purposes only. Michael Kramer is a member and investment ...
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