AI hype being tested
Hey team.
The much anticipated volatility sent the markets into an emotional role coaster after Nvidia earnings beat forecasts, kindling hopes that the AI frenzy continues.
Let’s discuss today’s session and see what’s next for the market.
Impact Snapshot Tomorrow
Consumer Sentiment - 10:00am
Market Evaluation
Nvidia’s results have been a focal point for Wall Street, as traders hoped for signs that the excitement around AI is not waning.
However, the majority of the stocks in the broad market index turned negative Thursday, indicating a lack of market breadth.
US business activity accelerated amid a pickup in inflation reinforced bets the Federal Reserve will remain on hold.
Growth in activity at service providers this month was the fastest in a year and manufacturing output expanded at a quicker pace.
Such resilience is making it difficult for inflation to cool, helping explain why the Fed is intent on keeping rates higher for longer.
Markets Breakdown
Since the start of the week, our main focus for this market was to clear the “unfinished business” left on the weak all time highs and print “excess” above.
Early this morning in this post that we’ve shared here, our observation highlighted that the spike above the all time high was “not new money buying” but short covering.
Market participants kept trying to short the same “weak reference” and had their stops right above, leading to a spike right after the market poked and advanced higher, leading to them being forced to buy back to cover their shorts.
There is a significant difference between forced position buying and new, stronger market participants pushing this market higher to new all time highs.
The market saw a “rejection of new prices” right at the open which lead to a complete rotation to the downside, targeting the unfilled gap we’ve been highlighting since the 5/15.
Heading into the weekly close, our main focus will be market’s strength to fill some of the single prints left towards the 5300s which bulls must reclaim for solid acceptance back into the multi-day balance range.
Further liquidations will see us find acceptance back to a prior 3-day balance range towards 5232.
ES
Some targets we’ll be watching thought the overnight going into tomorrow’s US open:
Upside Levels: 5306/5317/5334
Downside Levels: 5264/5250/5232
That’s all we got!
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