Nvidia Earnings Aftermath - S&P Sell Off to 547 Likely

welcome back you Legends and let's get right into this quick post at inidia earnings stream let's get into the details Revenue 30.4 billion uh beat the estimates of 28.7 um and then we had earnings 68 cents beat the 64 cents estimate we also uh had Nvidia announce a 50 billion stock buyback happing so Nvidia beat both the Top Line the bottom line they also uh raised guidance and despite all of that the stock tumbled this pretty much explains it right so if we take a look at nvidia's past earnings you'll see that since October of last year every success of earnings report Nvidia has beat both EPs and revenue but those beats have been shrinking that's because expectations have risen and the rate at which the company has been growing at simply is not sustainable it has to slow down it's not because there's not demand enough demand for AI chips or anything like that it's because uh the company simply grew uh uh so fast last year that it simply cannot keep that same Pace it's way much much much bigger now than it used to be last year so expectations are higher and uh beats are shrinking that led to uh this kind of postmarket uh dump today in Nvidia so here's what to look for uh tomorrow so the expected move to the downside is uh about 115 bucks to the upside 142 bucks we already broke the downside we're now trading at the 50-day moving average a lot of people think that earnings reports are all about the numbers right did did the company Beat did they raise guidance Nvidia did all of that right they beat Revenue EPS they raised guidance and they approved a stock buyback and they still sold off that's because earnings are not about the numbers earnings are simply about sentiment right so sentiment was way too optimistic heading into the report and now that sentiment is getting paired back just a little bit here if we take a look at the SMP 500 and NASDAQ 100 charts both of them actually indicate that more downside is likely coming however how this specifically how this plays out tomorrow is going to depend on whether market makers are able to kind of lift price up back near to where it closed today it does not have to completely recover but if they open it let's say about a do short of where uh they uh closed it today that likely means they will sell all throughout tomorrow right because big market makers they cannot uh dump a lot of positions they can't open a lot of positions in after hours or the pre-markets so they have to do all their trading tomorrow in the real money market right so after the market open after the uh opening bell so what they kind of need to do now is they need to manipulate price higher back to where it closed yesterday this will create create the illusion that things are okay and then you have retail Traders jumping in in the first hour of the market that's usually what happens retail likes to trade near the open Big Money likes to trade uh near the close so what they'll what they'll try to do is they'll try to push price higher recover it very close to where we closed today and then they're going to try and uh sell through out tomorrow if they're able to do that now on the other hand if we actually open lower let's say we open significantly lower all the way down at 115 it will make absolutely no sense for any big name to dump inidia after such a huge down move so actually if they Gap it much much lower than where it is now so let's say5 it will likely mean that we will have bottomed by the open and then we'll get a rally if they open it close to where it closed today the likely sell it and if they open it much lower than where it is today you'll likely see something that looks like this a rally back and then they might try and sell it if they open it at 120 where it is right now you can expect something that looks kind of like this you you'll see some buying in the early session and then they'll try to dump it right they'll try to sell it as close as possible to where it closed today why do I say all that that's a lot of jargon right let's actually take a look at what happened over the last 12 months right I have the earnings tagged here at the bottom right so if we take a look at the L earnings report they gapped it higher and then they continued to Rally exceeded the prior highs and then that just gave us the all clear right once you exceed a significant level of resistance like this and open it higher that means you have the go ahead to continue to rip to the upside we actually have to go back significantly further back to see any kind of negative reaction to Nvidia earnings the last time uh it happened was in um the November 2023 report here's exactly what happened market closed near the highs Nvidia closed near the highs the market then opened and Nvidia opened very close to where they closed it the prior day they had this fake out rally and then they dump throughout the remainder of the day and for the next couple of weeks that's why I say if they open it close to where they closed it today they'll probably continue to dump positions if they open it much much lower than you can expect expect kind of a bounce back if we go uh 24 months back that means two full years back the only negative reaction with a gap down that is the market or Nvidia opened with a lower Gap the next day it happened only once out of the last uh eight earnings reports it happened only once this means if they open it lower tomorrow that'll be only the second time that happened and uh to me that'll signal a major uh sentiment change in Nvidia because this was kind of the sure thing trade for everybody basically in the market the common wisdom was just buy Nvidia and hold it and you'll be fine now that uh things are getting a a a little bit more turbulent especially if they open it lower tomorrow I think that'll sour a lot of retail Traders swing Traders a lot of these uh Quicken and out folks they'll start to think twice about going as aggressively into Nvidia going forward so let's actually take a look at the S&P 500 and why all of this makes so much sense so I discussed this key level 555 at my last video I said this is the first level of support minor support then we have the major level of support much lower at 547 why is this a key level of support and not 555 555 is a minor support because it held only once and it was part of this trading range this was a bearish distribution pattern we know now that for a fact because we had this diamond top pattern break to the downside today that breakdown was confirmed very early in the day right we had this clear breakdown that told me that we will sell down all the way to 50555 today if Nvidia misses and they did not really miss but they did have a negative reaction we will likely see a move all the way down to 547 once once that is done once that is complete that will likely be a tradable bottom for another move higher now there are no red flags in nvidia's report I have to admit uh it was a very good report beat Top Line bottom line raised guidance massive profits net income 16.6 billion they are printing money inidia is not in trouble okay Nvidia is not in any way in any sort of trouble trouble there making money hand over fist the company has an amazingly healthy balance sheet they honestly have very little competition the only competition they have is from AMD and AMD expects to make 4.5 billion in revenue for the entirety of this year from AI chips right 4.5 billion in Revenue not profit Revenue out of that 4.5 I believe AMD said they'll make about 1.2 something like that billion and profit Nvidia made more than 10 times that Profit just this quarter so just just I mean to bring it home Nvidia is not in any sort of trouble yet you you'll start to see more of that confirmation that Nvidia is in trouble when you see guidance getting lowered when Nvidia starts to actually miss I actually took a look at nvidia's earnings reports going all the way back to uh this period in 2017 2018 the way this kind of Crash happened with Nvidia is not because they missed earnings they did not miss what happened actually if we take a look the entire selloff happened between two earnings reports right so the company did not crash after a report the report was already out Nvidia beat and the Crash happened anyway goes to show you that uh uh stocks like Nvidia the AI trade is mostly a sentiment trade it's not a fundamental trade so a lot of folks will be looking for hints in the in the report oh maybe trouble is ahead whatever that's not what you need to be looking at look at this just one single quarter right Nvidia reports here continues to Rally after the the report right continues to Rally then completes a double top still has it reported crashes all the way down and then reports and still beats so it's a sentiment trade uh and don't try to overthink it too much it's mostly a sentiment trade around Ai and Fed rate Cuts coming next week and that's how that's how I'm looking at it that's how I'm trading it that's how I'm trading the entirety of the market to be completely Frank so going back to the S&P 500 we had a diamond top pattern breakdown a diamond pattern is a bearish distribution pattern it is only confirmed once we get a break below the support line that happened today this gives us a confirmation of the break now the full measured move for this kind of top is you measure from the top to the bottom then you take that distance and then you move it to the downside that gives you the full measured move full measured move is actually let's see 546 so it was just a dollar below my my already existing 547 Target so 546 is the full measured move that means this Gap could potentially get filled it may remain unfilled we don't know but I what I would say is inside of this Gap is where you'll find very strong Demand right we had significant demand significant demand when you see a gap and run like this you know there's very strong support at this Gap level so 547 546 major level of support likely we tag that level this week potentially next week I would say probably this week because the stochastic is now trending down but it has not entered over sold conditions we only buy after the stochastic enters oversold conditions and then produces a bullish cross I gave you a few examples of this this signal works very well in an uptrend in a downtrend it does not work that's why I don't use it to buy in a downtrend right I use it to sell in a downtrend and I use it to buy in an uptrend so it's a trend following signal Buy in the oversold condition when you get a bullish cross called the bottom here do that again here calls the bottom perfectly let's do that again here calls the bottom basically the market stays flat for a week but does not break the slow and then even as the market transitions from an uptrend to a downtrend you see uh uh this B uh this bounce at the bottom tags this major support line and then bounces back up and then when the downtrend is confirmed at this breakdown you only use it to sell and not to buy right here calls this top again here calls that top right and then you see that transition again from a a down uh Trend to uptrend and actually if I draw a trend line that connects these lows you'll see that it broke however if I connect the same kind of trend line in the Futures Market you'll see that it did not break and it actually coincides with that same 547 level on the sby ETF so this is a major major level of support if the Market opens very close to where it closed today expect some kind of weak counter rally to start the day and then continuous dump all the way to attack this level essentially tomorrow or the day after after we tag it I think we bottom we form a local bottom at least and then we get a counter rally if that counter rally fails to take out these highs then we actually confirm a major downtrend that connects these major uh tops and that will likely lead us uh all the way into uh Sometime Late October as is seasonally indicated right we usually get this major top at the end of August early September then we get a couple of months of significant selling September in October in uh election years this is when we have an open field when it's more a run-of the mil kind of election year we tend to get a much much stronger November and December that's basically the only difference we tend to bottom lateer in October in both cases but in an open election year we tend to uh we tend to get a much much weaker November and December okay I hope I covered all of the scenarios that we we could be facing tomorrow I'll check your questions very quickly if you have any questions I'll try to answer them as uh quickly as possible and then we're going to this stream oh my goodness 680 views thank you guys smash that like button right in the face uh because we have 55 likes and 680 viewers and only 55 likes come on guys come on guys okay uh somebody asked about Bitcoin so Bitcoin had this beautiful kind of bottom tag this major support level right if we uh zoom out a little bit here you'll see that Bitcoin has been trading perfectly within uh an uptrend clear uh support at the bottom clear resistance at the top and since then we've been trading inside of this bull flag now I do expect this bull flag to break out sometime let's say October let's say sometime uh late October early November I think we'll tra we'll continue to trade inside of this flag until early November when we get a breakout after that breakout is complete I think we rally all the way to $120,000 Plus for for Bitcoin uh due to main big big reasons number one rate Cuts Bitcoin loves rate Cuts it's a rate sensitive asset number two inflation and not the kind where you have expensive groceries I'm talking about devaluation of the dollar lower dollar stronger Bitcoin lower interest rates means even more declines in the dollar means even higher for Bitcoin okay so Bitcoin will kind of rally very strongly into at the end of this year maybe early next year until we actually hit a recession after we hit a recession I think Bitcoin kind kind of uh completes that cycle and crashes back down until then rally inside of this flag and uh break up probably November um in the medium term near term we had this H very beautiful tag of the bottom then we had this cup and breakout very similar to what looks uh kind of what happened here tags it then we have a cup then a breakout again we tagged it here cup and a breakout unfortunately what happened differently this time is that Bitcoin after it broke out instead of holding kind of this level as it pulled back it broke right it had this nasty breakdown uh posted market yesterday and it kind of looks like what happened here right we had this cing formation breakout then it flagged and then it broke down the second move higher match the prior highs we did not get much much higher than that that tells me that likely we will get a bounce back in bitco coin probably tomorrow or today is the bottom for Bitcoin and as the market bottoms at 547 and the rest of it I think Bitcoin will rally back and at least match these prior highs let's do super micro very bad report came out from Hindenburg that they were cooking the numbers now here's a stock that was kind of going crazy right huge breakouts a long consolidations massive breakouts then consolidations unfortunately it's it's kind of the trade where if you miss the breakout the first breakout on the consolidation or the second breakout after the consolidation really you can't go long here you can't go long here you cannot go long here you'd be kind of guessing because it just keeps ripping and there's no pullback now unfortunately when we had this pullback when we had this consolidation bull uh uh Bull Pen and pattern it broke right here then it moved significantly lower moved back up did not tag this again this was very bearish it failed to even back test this prior level of support that is now resistance crashes again where do we look for a major a major level of support not far not far actually this is where I would look for a major level of support to uh reestablish itself kind of in here 355 357 somewhere in here despite what Hindenberg says despite all of that I think the uh the company has sold down enough look at this 67% we go back to this Kik key level and if it holds that that'll be a 72% retracement then I I I'll be looking at uh some kind of support here unfortunately though the long-term trend has already been ruined right because right it had these consolidations breakout consolidations breakout consolidation breakout consolidation breakout consolidation break down right so this is very bad if you're kind of uh trapped in this name I'd be looking at some kind of support to hold in here then for a counter rally back at least to this neckline at 500 about 500 potentially slightly higher very likely will not exceed these highs for several months several months so not my favorite setup now I'd probably completely just avoid trading this kind of setup because uh it failed right it had this very beautiful absolutely gorgeous uptrend breakouts after each consolidation and that completely failed very recently so this uptrend is clearly now ending and we're now establishing a new downtrend somebody asked about Tesla so let's do Tesla very quickly in here let's check out Tesla Tesla right so Tesla had this very clear prior level of resistance this is now a level of support right we had this move all the way back down to 190 this was the major support level major by we had now a a counter rally a pullback at this range between 200 and 210 in my opinion this is still an attractive level for Tesla I'd be looking for Tesla to uh continue the rally and move back back at least to these prior highs right so something that looks like this at least back to these prior highs after we establish that bottom on the SNP and uh um the NASDAQ right after we complete this local bottom expect a a counter rally and then again if that counter rally in the S&P fails to make a new high we'll have confirmed a new downtrend otherwise this is just a pullback in a longer term uptrend and again if I take a look at the uh S&P 500 futures still looks like an uptrend tagged this trend line once twice we will likely tag it again in the next 24 to 48 hours uh and then bottom and then rally back up gold it had this very clear consolidation pattern with higher and higher lows actually it doesn't just look like a consolidation pattern this looks like textbook a volatility contraction pattern that's right volatility contraction pattern high volatility still high lower volatility lower lower lower so when you see volatility kind of Contracting like this that is very bullish volatility tends to accompany downside moves lack of volatility is bullish a volatility contraction pattern indicates that volatility is escaping this kind of trend right we had this large range then we established uh this smaller range now we're establishing an even smaller kind of range my upside Target is still at 240 for gold it is not overbought enough in my opinion to form a top uh and the dollar is still declining in fact if I take a look let me check where's the dollar have it somewhere in here boom here's the dollar the dollar actually broke below a major level of support major level broke it this is very bullish for dollar bullish for Stuff uh excuse me for gold for Bitcoin for Commodities in general especially defensive Commodities and metals like gold and uh if we actually just draw on here this kind of range right and then when we get a range breakout that looks like this this kind of a range breakout right multiple attempts at a breakout the last uh breakout held at the top of the range this typically means we double the range let's take a look at what that looks like boom 240 exactly so I could just redraw stuff I don't I don't need my notes okay so 240 sell my target for gold silver not as bullish here's why I'll show you why silver is not as bullish let me add gold on here so you guys can see so silver up top and then we have gold down here in the blue and black right so this is gold this is silver some some I don't know why miraculously silver still has my notes gold doesn't anyway so here's why silver is kind of trash low lower low lower low lower low lower high lower high lower high right while it's once gold is making a low higher low higher low higher highs so really you don't want to be trading silver when it's underperforming gold like this just stay away if you want to trade defensive medal to go stick to Gold I don't like silver here maybe maybe if it breaks Above This resistance line I would reconsider it otherwise just stick to Gold it's Superior in this uh case let's talk about recession somebody asked about recession so let's discuss recession uh down below is the 102 yield curve each inversion guys uh usually is followed by a recession about 12 to 18 months later right recession following uh the yield curve inversion here it is Boom yield curve inversion recession inversion recession inversion even before the pandemic recession and then inversion and we're still awaiting the recession I think it's absolutely inevitable that a recession is coming I think there's absolutely no question that a recession is coming anybody who says otherwise I think it is just fooling themselves no chance in heck we have a yield curve inversion this deep this long and we don't get a recession recession usually means 30% right to 50% declines in the S&P and in tech stocks that usually means a lot more than that 70 80% think about Nvidia crashing from 130 all the way back all the way back down to 500 400 that kind of recession so with that being said it's really not time to panic until and unless three things happen and I discussed these kind of three things in a couple of videos in the past so let me go over them very quickly right number one we have a yield curve inversion the first major I would say red flag is going to be once we normalize once rates begin to normalize that means the 10year note produces a higher yield okay versus the 2year node once that happens once the 10-year yield is again higher than the two-year yield that means the yield curve is normalizing again that is an exceptionally good tool at timing the market top not the recession but the actual top in the market here are a couple of examples that I already annotated on the chart so in the 2000 2002 recession the yield curve normalized about 3 months after we had the market uh top in 2007 the yield curve normalized several months before the top about 3 months before the top in 20 um9 we had the yield curve normalized about 6 months before the market topped 6 months 3 months something like that the market top will usually develop between 3 to 6 months before or after the yield curve normalization with that being said 3 to 6 months not not tight enough you know I need to know for sure right six 6 to three months not great not great so in that instance let me pull up the per imminent Doom indicator that is TLT relative to the S&P 500 or what I dub the imminent Doom indicator here are the two rules to follow with the imminent Doom indicator number one you absolutely need a yield curve inversion without a yield curve inversion you'll get a bunch of fake out signals like this so number one you need a yield curve inversion check okay check number two by the way smash that like button okay number two what else do we need we need the 10 month 10mon moving average this little orange line right you see it you see that little orange line you want to see the imminent Doom indicator close above the 10-month moving average on E monly candle tried to do it this month failed tried to do it several months before when we were actually Bing failed tried to it multiple times as the market was stopping failed when did it last succeed when we actually had a yield curve inversion well take a look at this beautiful beautiful chart here it is 10mon moving average closed above it called the top perfectly right so you want to see basically what what this chart tells you is that when you have number one an inverted yield curve and number two when long-term treasuries begin to earnestly right earnestly establish a significant lead over the S&P 500 that's basically what this chart looks at right it looks at TLT relative to the S&P so when bonds significantly outpace the outpace the market in an environment where we have an inverted yield curve that has already normalized that's when you get the recession that's when you want to exit the S&P when you want to exit stocks and really uh hone in on bonds and gold yield curve normalization number two the imminent Doom indicator and number three number three was um let me find number three it was boom it was this chart it was xlu so uh S&P 500 utilities or Staples doesn't matter relative to the S&P 500 so xlp relative to spy and I want to take a look at the weekly chart boom so what do I want to see on this chart this is the defensive sector in the S&P 500 relative to the rest of the S&P it makes total sense it is under performing the S&P in the long term however we do have some periods of outperformance where at defensives lead the S&P and these usually coincide with troubled waters right when the market um not the market when the economy is kind of teetering is in trouble and when we have en nasty old kind of recession right this is the S&P down here this is the relative ratio chart so what do you want to see on this chart pretty straightforward first you want to see eminent Doom indicator signal trigger check mark right boom yield C normalization boom check mark final check is xlp relative to X excuse me S&P you want to see it close above the 50 we moving average that is this green moving average once that happens once you get a weekly closure above the 50e moving average like this example it coincides with the market top fairly accurately not perfect next best thing I would say next best thing let's take a look we had not not perfect here right because we had kind of sideways Rao chart so in this example I'd be looking at the ratio chart to exceed these prior highs kind of happened here and if I drop a line it coincided with the topping process right but in this example it's more difficult because the market or I should say the ratio chart is moving sideways uh which is completely different from this look right it is moving down so any close above the 50 we moving average would signal a major change in Market leadership away from the S&P AI trade Nvidia Etc and into defensive uh Staples so let me just cover uh the vix let me end with the vix in here so the vix is now trading inside of this kind of channel right one of the Hallmarks of a Major Market top is when the vix does what when the vix does what when the vix does this breaks out comes back down and forms a higher base that's a pretty bad sign it usually means Market top pretty pretty close not there but pretty close let me show you what happened 2008 cuz it kind of looks identical to this let's go back to 2007 2008 here it is okay take a look take a look at this this is the vix we had this breakout in the vix went back down to make a higher low right then broke broke out again look at this major break formed another higher low right keeps establishing these higher ranges right so we are in here so not not really at the top but pretty close let me add the S&P so we can kind of visualize where we are in the cycle this is the S&P 500 and um kind of in here actually not even in there we're kind of here first kind of pullback we're in here right not back at the prior High likely will exceed that prior high in the next couple of months and then top sometime early next year late this year right somewhere in here let's actually measure that let's take a look at how many days we're looking at so three months yeah perfect yeah that that makes total sense to me sometime uh topping sometime this year or potentially early next year that's kind of what I'm looking at and the vix kind of says the same thing and let's go back to the vix so the vix did break out today as uh participants were hedging Market participants were actually hedging today unlike yesterday they they were not interested in shorting the market market yesterday today they bought a bunch of puts and turns out they were kind of right because Nvidia is kind of uh getting dumped post Market with that being said we did not exceed this prior High even though the market moved lower today we did not exceed this prior high this tells me likely we get another Spike tomorrow that'll call very likely call the Market bottom near term bottom that is and we'll get a a breakdown back in the vix as the market Ries let me again add the S&P so you guys can see what I'm talking about in here so this is the S&P 500 and if we actually take a look at the S&P it matched this prior low almost exactly almost exactly 555 the vix did not exceed this High that's bullish so if we get another flush down tomorrow in the S&P then the vix does something like this maybe forms kind of um a hammer candle that looks kind of like it's not as big as this let's let's do this again kind of like this right to me that that will tell me that likely the market has bottomed especially if we tag that 547 level of support let's close this out with uh key events tomorrow we'll have the GDP numbers for Q2 this is the first estimate so it's important and then Friday we'll have pce PC is a lagging indicator we already have the CPI coming couple of weeks back usually PC will follow the same kind of read in the CPI still expect bullish CPI lower than expected inflation and then if the GDP numbers are uh fairly good then again likely expect that fake out move to the downside tomorrow flush out those weak hands in Nvidia complete that bottom on on the S&P 500 at 547 for um for the for the NASDAQ 100 that likely means potentially we fill this Gap I'm not sure yet I don't really base my entries and exits based on what the NASDAQ 100 does kind of finicky it's a kind of finicky uh kind of uh index so I'll be looking at the S&P and if we hit 547 mean that'll that'll probably mean we have botom if that means uh the NASDAQ is at 463 465 doesn't matter that will likely mean both indices have bottom I hope that helps smash that like button on your way out and that's all I have for you tonight bye oh wow