Thursday saw 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 over 35% higher than that of the entire S&P 500 ( ^GSPC).
Yahoo Financial Reporter Jared Blikre joins Asking For A Trend to break down the market trends of the trading day.
For more expert insight and the latest market action, click here to watch this full episode of Searching for a Trend.
This post was written by Nicholas Jacobino
Video transcript
Moving on you.
Finance is Jared Blicker is joining us here now with more on getting trading day, Jared bad day for the semifinals.
In fact, I’m calling it the Chip Apocalypse.
And I say a little tongue in cheek because it wasn’t a disaster, but we’re not used to seeing so much red on our heat map screen and there you can see it right there.
I just want to quickly outline the price action on NVIDIA and I’ll show you a two month candlestick chart.
So you can see this big red candle right here and I want to show you another one on the chart from a year ago.
You can see we have one here.
So sometimes these are the beginning of a period of consolidation or minor correction.
And Josh, that’s what we can see here right now.
How about an MD?
Wasn’t that another name on your radar?
You know what?
Watch an MD, see all this right on the screen.
There is a MD.
My guess is that this is the reaction in some kind of trade in Paris.
You can see it’s up 4.62% 10% year to date today.
But this is far from NVIDIA.
By the way, I should also mention, tomorrow is a big option, expiration and also a rebalancing for a lot of S and P in the indices.
So NVIDIA has been um, there’s this kind of virtuous cycle.
This is a year-to-date chart where people buy call options on NVIDIA and the traders, the market makers who sell these call options, they have to cover them and buy the underlying stock.
And so that creates this virtuous cycle of higher prices in stocks that will stop tomorrow.
So on Monday, NVIDIA will be able to trade more freely to the upside and downside.
Okay, so much to see Jared blick point number two.
You bet this is something funny I came across in a Goldman note this is yachts versus yachts with.
Normally we talk about the rich and the rich.
No, it’s the yachts versus the haves.
And here we have the earnings revisions.
This goes back to June of last year and we have the top five stocks in the US Microsoft NVIDIA Amazon Google Meta versus the rest of the S and P five hundred.
And these are revenue revisions.
So we can see in those five top stocks that are up 38% and 495 down 5%.
It surprises you, you know, what surprises me is that the gap is actually that big, that it’s just a big chasm there.
And it makes you wonder if any other stocks are involved in this?
Except maybe those five.
The answer is yes.
So, you know, on average, maybe the average is zero, but there are some other stocks that are participating, but very quickly, this also relates to one more phenomenon and that is the Dow versus the NASDAQ today.
Find what?
The NASDAQ fell 1/10 of a percent.
The decline increased by 1/10 of a percentage.
So all kinds of links together here.
OK.
Jared’s final point of contention.
Yes.
Yes, we have bullish seasonality on deck in July.
So just thinking one, one or two weeks ahead here for the month of July, uh, that compares the 10 trading days and the last 10 trading days of each month.
So we got 24 bars here, two for each month.
What you will notice is July, it is the 10 days of July.
This is the biggest bar.
So going back to 1928, which is the strongest period to be in the market, doesn’t mean we have to go up, but that’s just a huge tailwind.
May I ask you about a seasonality?
We talk about it so often, isn’t it priced or why isn’t it priced?
Given how often we talk about it?
Jared.
Yes.
The thing is, I don’t know that you can ever price anything in Foley.
I think it’s just a tailwind.
So, I’ve seen studies done that show about a third of market gains can be attributed to seasonality, but it’s not even close to 50%.
So it’s just something that helps you.
If there is big news to the contrary.
Find what?
We will not go there.
I want to get out of here.
Didn’t the great Ryan Dietrich have second thoughts, I believe.
Yes.
Other thoughts that are very similar in conclusion.
Can this rally continue?
Note that July was nine years in a row for the S and P 500 with an increase of 3.1%.
Kind of a chart similar to what we just showed, uh, in this chart.
November is actually bigger.
But suffice to say, early July should be a good window for stocks, all things, uh, being equal.
You can always count on Dietrich to come with Boss Ryan Dietrich.
Thanks, Jared.