Thursday was the worst trading day for the semiconductor sector in seven weeks. Earnings revisions for some of the top tech stocks like Nvidia (NVDA), Amazon (AMZN), Meta (META), and Alphabet (GOOG, GOOGL) are currently more than 35% higher than the entire S&P 500 (^GSPC).
Yahoo Finance reporter Jared Blicker joins Asking for a Trend to analyze market trends for the trading day.
For more expert insights and the latest market activity, click here to watch the full episode of 'Asking for a Trend'.
This post was written by Nicolas Jacobino
Video Transcript
Moving on to you.
Finance Minister Jared Blicker is joining us here, and he'll talk more about the trading day, Jared's bad day for semis.
In fact, I'm calling it the chip apocalypse.
And I say that a little bit jokingly because it wasn't a disaster, but we're not used to seeing this much red on our heat map screens and you can see it right there.
I just want to quickly plot the price action in NVIDIA and I'm going to show you a two-month chart with candlesticks.
So you can see this big red candle here and I want to show you another candle on the year-to-date chart.
You can see we have one right here.
So sometimes this is the beginning of a consolidation or minor correction period.
And Josh, that's exactly what we're seeing here right now.
What do you think about MD?
Was this also not a name on your radar?
Do you know?
Look at the MD, see all this on the screen.
There is an M.D. there.
My guess is this is some sort of response to the Paris trade.
You can see that today it is up 4.62%, which is a 10% increase over the last year.
But it's a far cry from NVIDIA.
By the way, I must also mention that tomorrow there is a lot of options, expiries and rebalancing for S and P in indices as well.
So NVIDIA has been in this kind of a virtuous circle.
This is a year-to-date chart where people are buying call options in NVIDIA and the dealers, the market makers who sell those call options, have to cover them and they buy the underlying stock.
And thus it creates a virtuous cycle of higher prices in the stock which will just stop tomorrow.
So on Monday, NVIDIA will be able to trade more freely up and down.
Well, there's a lot to look at on Jared Blick point number two.
Believe me this is a funny thing I found in the Goldman note, this thing about having boats versus yachts.
Usually we talk about the haves and the have-nots.
No, it is a matter of ownership of boats vs yachts.
And here we have the earnings revision.
It was June last year and we have the top five US stocks as Microsoft Nvidia Amazon Google Meta while the rest are S and P five hundred.
And these are earnings revisions.
So we can see that the top five stocks are up 38% and the 495 are down 5%.
Does that surprise you, what surprises me is that the gap is actually that big, there's a huge chasm there.
And you wonder if any other stocks are participating?
Possibly other than those five.
The answer is yes.
So, you know, on average, probably the average is zero, but there are a few more stocks that are participating, but just really, this is also tied to another event and that is the Dow versus the Nasdaq today.
Guess what?
The Nasdaq fell 1/10 of a percent.
The Dow was up 1/10 of a percent.
So, there are all kinds of connections here.
Ok.
Final Jared Quarrel point.
Yes.
Yes, we have bullish season in July.
So thinking ahead a week or two for the month of July, it compares the first 10 and the last 10 trading days of each month.
So we get 24 bars here, two for each month.
What you will notice is July, that is, the first 10 days of July.
That's the biggest bar.
So going back to 1928, which was the most bullish period for the market, it doesn't mean we have to go up, but it's just a huge tailwind.
Will you allow me to ask you about the weather?
We often talk about this, is the price not included or why is the price not included?
How often do we talk about this?
Jared.
Yes.
The thing is, I don't know that you can ever put a price on anything in Foley.
I think it's just kind of a tail wind.
So, I’ve seen studies that show about a third of the market’s gains are due to seasonality, but it’s not even close to 50%.
So, it's just something that helps you.
If on the contrary there is any big news.
Guess what?
We are not going there.
I want to get out of here.
No, didn’t the great Ryan Dietrich have some other ideas, I believe.
Yes.
Other ideas that are very similar in conclusion.
Can this rally continue?
It is worth noting that the S&P 500 index has been increasing by 3.1% in July for nine consecutive years.
This is somewhat similar to the chart we just showed, in this chart.
The month of November is really big.
But suffice it to say, early July should be a good window for stocks, all things considered equal.
You can always count on Dietrich to come through with Boss Ryan Dietrich.
Thanks, Jared.