Weekly market preview Feb 20 – 23 and review Feb 12- 16 part 1 ( upcoming NVDA earnings , post 15 OP-Ex week, shortened trading week with Presidents holiday )
Hello everyone & happy presidents holidays to US Readers, sorry for the unannounced absence since Feb 1st entry, because I was on medical emergency from Feb 3 – 8th , followed by holiday and family emergency matters subsequently.
Broad market overview
Mid and small cap, Transportation underperformed Benchmark indices.
While equal weighted perform a tiny bit better than Benchmark indices. Overall, mix performance and not much insight can be gleaned.
Though notably, DJIA breakout is still not quite confirmed by Transportation, which has been range bound for many weeks ( between 15200 – 16200 )
SPX
Technically speaking,
1)momentum divergence point to potential for pullback
2) 5030 was twice rejected, but pullback can only be confirmed after 20D MA is breached with follow through action ( to the downside )
NDX
Technically speaking,
1)momentum divergence point to potential for pullback
2) Pullback can only be confirmed after 20D MA is breached with follow through action ( to the downside )
And of course, going forward the most anticipated event will be Nvidia earnings on Feb 21 after market closing. And how the institutions mange their fund flows , by way of de-risking ( Volatility targeting regime funds de-risk due to higher realized volatility, CTA de-risk with their Trend following algorithm signal ), or only rotation to other sectors will determine the next moves in the market.
S&P 500 11 sectors
Materials, staples and energy are the top ranking sectors while Communications, real estates and Technologies are the bottom ranking sectors.
In terms of weekly performance
Energy, materials and utilities are top ranking sectors. While Communications, discretionary, and technologies are the bottom ranking sectors.
Preview for the week ahead
Nvidia earnings on Feb 21 AMC
These are all the current key earnings , financial ratios and technical levels, which are well price in ( and front run ) in the market.
Options market are pricing in a 10-11% move post earnings ( around USD730 +/- 11% = USD660 - USD810 per share movement ). Given that Nvidia has run up that high, it has to outperform and surprised to the upside on multiple front, Revenue (in particular data centre ), Gross margin, and very upbeat guidance.
Given the outsized contribution of Nvidia to benchmark market rally in the past 14 months, market next phases depends crucially on this earnings.
Seasonality perspectives
On average, 2nd half of February tend to have consolidation/pullback of sorts.
Given that 2024 is an election year, we will likely see some consolidation starting from mid Feb or around mid March.
Option-expiry and presidents holiday combo stats
According to Quant advisors Wayne Whaley, past history suggest the shorten trading week performance has been lacklustre.
Asian Market
Hang Seng Index
Market inability to go higher than 16450 is bearish near term.
In addition, downtrend line is getting steeper, waterfall decline phase may or may not happen. 50 - 50 situation.
Either consolidate before waterfall decline
or
Base building for next leg up higher.
Bitcoin
The good news ? Breakout above 50K level. The bad news ? Pause and consolidation follows normally after a big move.
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