Will NVDA's earnings report drive stock prices higher?
Stock prices remained flat on Wednesday, with the S&P 500 index closing unchanged compared to Tuesday’s closing level. However, the market rebounded and ended approximately 1% above its daily low, indicating buying pressure ahead of NVDA’s key earnings report, which was scheduled to release after the session’s close. This morning, the S&P 500 is expected to open 0.6% higher as NVDA stock retraced its initial pullback.
Investor sentiment has weakened, as shown in yesterday’s AAII Investor Sentiment Survey, which reported that 41.3% of individual investors are bullish, while 33.2% of them are bearish.
The S&P 500 extended its short-term consolidation yesterday, as we can see on the daily chart.
Nasdaq 100: Fluctuating Around October Highs
The Nasdaq 100 index lost 0.08%, yesterday, continuing its recent fluctuations. Last Friday, it had fallen below a key support level, returning to its October trading range. Today, the technology-heavy index is likely to open 0.5% higher, breaking out of its consolidation. Resistance remains at 5,950, marked by the Friday’s gap down.
VIX Gradually Rising
The VIX index, a measure of market volatility, reached 18.79 yesterday, approaching the psychologically significant 20 level. This reflected a rise in investor caution.
Historically, a dropping VIX indicates less fear in the market, and rising VIX accompanies stock market downturns. However, the lower the VIX, the higher the probability of the market’s downward reversal. Conversely, the higher the VIX, the higher the probability of the market’s upward reversal.
S&P 500 Futures Contract Breaks Higher
The S&P 500 futures contract is trading higher this morning as the market appears to be shrugging off NVDA’s initial negative stock reaction. Support remains at 5,880-5,900, marked by the previous highs, and the resistance is at 5,980-6,000.
Conclusion
Stock prices are likely to open higher this morning, but the key question remains: will they resume the uptrend, or is this simply a consolidation after the recent pullback? Currently, it seems to be a either a downward correction or a consolidation following the recent rally.
For now, my short-term outlook is neutral.
I think that no positions are justified from the risk/reward point of view.
Here’s the breakdown:
- The S&P 500 is likely to rise on NVDA earnings.
- The market is experiencing increased volatility.
- In my opinion, the short-term outlook is neutral.
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Thank you.
Paul Rejczak,
Stock Trading Strategist