- Moving the markets
The market was eagerly waiting for Nvidia’s earnings report, which is due out later today. The chipmaker was expected to post impressive growth in both profit and revenue, thanks to its dominance in the artificial intelligence (AI) sector.
The bulls were optimistic and pushed the major indexes higher, while the bears took a back seat. The lower bond yields also helped boost the market mood, as the 10-year Treasury yield fell to 4.18%, down from 4.33% yesterday.
However, not everything was rosy in the market. The rally this year has been driven by a handful of AI stocks, leaving many others behind. The manufacturing sector has been weakening, while the consumer spending has been surprisingly strong. These conflicting signals have created confusion and uncertainty among investors.
The bad news continued to pile up today, especially for the retailers. They reported disappointing results that showed a more-stressed American consumer than the market had anticipated. This was the worst week for retail earnings since April, according to the Citi Economic Surprise Index.
The dollar dropped on the gloomy outlook, while gold rose over 1%. Crude oil also slipped, as demand worries weighed on prices.
In the individual stock universe, the bears had a field day. Peloton plunged 23%, as it faced lawsuits and recalls over its treadmills. Footlocker had its worst day ever, as it missed earnings and revenue estimates. Nike extended its losing streak to 10 days, as it faced supply chain issues and boycotts in China. Nvidia was one of the few bright spots, as it bounced back ahead of its earnings tonight.
The earnings report from Nvidia is critical for many reasons. It would determine the fate of the AI boom or bust scenario, as well as the direction of the broader market. Nvidia is seen as a bellwether for the tech sector, and its performance could have ripple effects on other stocks. Investors are hoping for a positive surprise from Nvidia, but they also know that expectations are high, and anything less than stellar could trigger a sell-off.
- “Buy” Cycle Suggestions
The current Buy cycle began on 12/1/2022, and I gave you some ETF tips based on my StatSheet back then. But if you joined me later, you might want to check out the latest StatSheet, which I update and post every Thursday at 6:30 pm PST.
You should also think about how much risk you can handle when picking your ETFs. If you are more cautious, you might want to go for the ones in the middle of the M-Index rankings. And if you don’t want to go all in, you can start with a 33% exposure and see how it goes.
We are in a crazy time, with the economy going downhill and some earnings taking a hit. That will eventually drag down stock prices too. So, in my advisor’s practice, we are looking for some value, growth and dividend ETFs that can weather the storm. And of course, gold is always a good friend.
Whatever you invest in, don’t forget to use a trailing sell stop of 8-12% to protect yourself from big losses.
- Trend Tracking Indexes (TTIs)
The market rallied today, as investors were hopeful that Nvidia’s earnings report would boost the tech sector and sustain the momentum. Nvidia, a leader in artificial intelligence (AI) and gaming, is expected to post strong growth in both profit and revenue. Its earnings report is due out later in the day.
The bullish sentiment lifted both of our TTIs, which measure the direction and strength of the market trend. The TTIs moved higher, reducing the risk of a possible sell signal that could indicate a reversal to a downward trend.
This is how we closed 08/23/2023:
Domestic TTI: +1.66% above its M/A (prior close +0.82%)—Buy signal effective 12/1/2022.
International TTI: +3.39% above its M/A (prior close +2.47%)—Buy signal effective 12/1/2022.
All linked charts above are courtesy of Bloomberg via ZeroHedge.
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