The S&P 500 rose by about 20 bps yesterday, while the NASDAQ 100 rose by about 1%. The S&P 500 just continues to grind here, basically marking time since the highs last week. It seems apparent investors are trying their hardest to hold the SPX around 3,400 for options expiration on Friday.
What happens after Friday will, of course, be what matters. But right now, the index is pretty much just getting into a tighter zone. The wedge is contracting quickly now.
Typically a rising wedge is bearish, but I have seen it work the other way at times too. So the bottom line is that something significant is about to happen in the S&P 500. There is either going to a break out of massive proportion or an enormous breakdown. I guess we will know one way or another by early next week.
Either I will be proven right, and the market will see a sizeable pullback of the 10-15% kind, with the potential to fill the gap all the way down to 2,860. Much of my analysis suggests that this what is likely to happen.
Or I will be proven wrong, and I will put on my big boy undies and admit defeat, throw myself at the feet of the market begging for forgiveness, be labeled a laughingstock, and need to regain everyone’s belief in me again.
Whatever the case may be, it is not an easy task to try to and predict anything, and I never claimed to be right all of the time, nor have I ever mocked anyone for being wrong. Whatever it is, it is. This is the bed I have made.
NVIDIA
NVIDIA (NASDAQ:NVDA) reports today, and I’m sure they will beat earnings and revenue by a mile, and probably give fantastic guidance. That is what NVIDIA does, and considering Advanced Micro Devices's (NASDAQ:AMD) results, I don’t see why NVIDIA would disappoint. I’m not sure that the results can reach the $500 the stock is worth, but that is another story. The stock, for now, is pausing at resistance from uptrend that existed 2-year ago. Who knows.
Micron
Micron Technology (NASDAQ:MU) is about the only stock that goes down these days, with the stock breaking support at $45.50, and likely on its way back to $42.
Dollar Index
The Dollar Index continues to get crushed, and that is terrible news for Japanese and European equities, as these are mostly export economies. What it does mean is that we could see selling pressure in these two markets overnight, and that could pressure US stocks. Be mindful of this.
