Stocks are up slightly with blue chips leading the way, though action is largely random at this point after Thursday’s big sell-off.
If you look at the market’s foundation, big cracks are forming in a former leader, semiconductors (SMH) and the AI trade, even on the heels of a strong earnings report from Nvidia (NVDA).
While the numbers were strong, forward guidance was the big damper on sentiment as the AI trade continues losing steam. And the biggest question right now is will Nvidia and the rest of the chip stocks continue breaking down?
If NVDA pulls back up, we’ll be OK — but I don’t think that’s going to happen, at least not yet. It will likely consolidate for a couple of days after Thursday’s big 8% move down.
Then I believe we’ll see a little more downside, and this is what’s driving price right now across broad markets.
If you look at what happened at the open Thursday after Nvidia’s report, it had a nice pop and everything was going up. But as soon as NVDA started dropping, everything else went right along with it.
It’s crucial to know where your weakest link is, and the AI trade is the weakest link right now.
I’ll cover all that, my daily hitlist of longs and shorts and more in this morning’s “Premarket Must Watch” video!
Roger Scott
Roger Scott Trading
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