Jim’s Notes – NVDA Beats Now What?

Moving the Market – May 22nd

The markets traded lower overall on Wednesday as it waited first for the Fed minutes to enlighten everyone on what the Fed was thinking at the last FOMC meeting, and second, how NVDA would perform relative to earnings. The Fed minutes were essentially what the Fed has been saying for a while, interest rates will stay higher for longer if inflation continues. Stocks moved lower on this enlightenment… an interesting response since the storyline hasn’t really changed. What has changed is the hope that the Fed would take into account the slowing economic picture and shift their attitude towards rates… that didn’t show in the minutes and investors took it as a negative. As it relates to NVDA they beat estimated numbers and after-hours the stock was up 7+%. They increased the dividend by 150% and announced a 10 for 1 stock split. All said, impressive but the news was essentially priced into the stock. EPS was up 6% versus last year’s 27% average… is the AI party over or just leveling off? For NVDA they are leveling off similar to most companies when they reach maturity in a growth cycle and competition rises. It will be very interesting to watch the stock in the coming quarters as to how they mature. All said, we still have to move forward with the one nagging question that comes after the awaited news is released… what is next for the markets? Both the S&P 500 and NASDAQ have consolidated at the highs for the last week on below-average volume. Is NVDA the catalyst to move higher? Is there a test lower? Only time will tell but after the move higher in tech Thursday at the open we will have to see what is in store for the markets. Leadership on Wednesday was thin. Energy commodities were the leaders along with some crypto while the major sectors traded in place. Now is a good time to manage your risk accordingly and look for the next catalyst up or down.

The major indexes closed the day lower with modest moves on the major indexes. The focus on the Fed and the minutes from the FOMC meeting along with earnings. Transports, technology, and healthcare were the leading sectors. The direction short term is higher but we have stalled at the highs. The NASDAQ closed down 0.1%, DIA was down 0.5%, and the SP500 was down 0.2%. The major indexes closed lower on the day. The SOXX was up 1.1%. Small Caps (Russell 2000) were down 0.8%. The ten-year treasury yield was 4.43% up 2 bps for the day. Crude Oil (USO) was down 1.7%. (UGA) was down 1.7%. Natural gas (UNG) was up 5.4%. The dollar was up 0.3%. Plenty to deal with moving forward as we manage our money and emotions relative to the current environment.

Thursday Outlook: Broad indexes will respond to NVDA earnings. The expectations are for a higher open and then we watch what happens… will there be a letdown in light of the FOMC minutes? More housing data out along with PMI numbers in manufacturing and services. The Fed is out speaking and I am sure they will say more of the same. Watching how the technology sector responds to NVDA. Watching XLE, XLU, XLY, XLB, and IYR… all posted key moves on the charts Wednesday. Watching the leaders and the laggards relative to money flow… seeing some interesting developments short term that are worthy of tracking moving forward. The economic data as it relates to the PMI Thursday, will it show any progress or more slowing in the economy… it could matter. Remember the facts will eventually matter until then, you follow the trend. 1) Watching the dollar, does it bounce following the FOMC minutes? 2) Interest rates, do they rise in response to the FOMC? 3) Crude oil fell on supply data? How does that unfold? 4) Natural gas is up 40+% the last three weeks… 5) DBA was up the last three days to bounce off the lows. 6) Patience as the answers unfold.

Charts to Watch: See Notes on “Reality of the Markets”

Headlines Worthy of Note:

FOMC minutes were in focus on Wednesday but they were pretty much in line with what the Fed has been stating for some time. Some interesting takeaways but nothing major overall.

Nvidia earnings were strong as expected and after-hours was up 7%. The question is how investors respond once we get past the initial bump higher from earnings.

First Solar breaks higher taking TAN higher with it. The stock was up 18% Wednesday on “optimism” that the new tariffs on Chinese solar will benefit US companies.

Quote of the Day: “Judge a man by his questions rather than his answers.” — Voltaire.

Hot Topics

Jim's Notes latest update directly to your inbox!

Please enable JavaScript in your browser to complete this form.
Scroll to Top