NVDA carried the market higher as it blew away earnings on Wednesday and closed up 8.74% on Thursday. It filled its overhead gap, made a new relative high, and is now inching closer to its all-time highs.
Thursday’s earnings candle also had the largest bullish volume of the year, so this is a candle we absolutely do not want to see NVDA close below this week or next.
While this was a gap and go, it would be perfectly healthy for NVDA to chill, consolidate, and even retest Thursday’s candle slightly. In fact, the best-case scenario would be something similar to what PLTR did after its monster earnings candle. A retest of Thursday’s earnings candle followed by another push higher.
If NVDA continues to run, I think $265 is the low-end target for this move, with an upper target into the low $300s. If NVDA reaches $300 per share, its market cap would be roughly $7.25 trillion, which is absolutely wild to think about. But the technicals are laying out a path for it to happen, and everyone thought $5 trillion was nuts too.
As of right now, the setup on NVDA is a double bottom off the 100-day and 200-day SMAs, followed by a solid gap and go that closed with a high-volume bullish candle near the highs. A clean breakout into new all-time highs would put those upper targets into play and could also bring the AI trade back into the bullish swing once again.
NVDA Daily Chart
QQQ Is Doing the Right Things
QQQ just did the exact thing I have been wanting it to do. Held key support and gapped higher.
QQQ Daily Chart
On Monday, I wrote about the likelihood of a durable low forming soon because QQQ had just printed seven bearish candles in a row. Check out that whole thesis below.
Seven Bears
QQQ came within $1.11 of filling its island reversal gap from August 4th. We now have 7 bearish days in a row on QQQ, and it looks like all eyes are going to be on NVDA and the Fed.
Assuming Thursday’s candle does not get Warshed out by Friday’s Jackson Hole speech, the path of least resistance is higher, for now.
If the AI trade can join in on the bullish fun once again, we could be setting up for a solid September. There are so many AI names sitting right on their 100-day SMA or another key moving average, seemingly waiting for a catalyst to send them higher. Money is still rotating out of AI and into other areas like software, metals, and Bitcoin, but the market really needs the semiconductors and the Trillion Dollar Titans to join the party if we are going to get a sustained rally back to new all-time highs.
I know the market is down on the hyperspenders as a whole, but if NVDA keeps grinding higher, I think the AI trade could start getting some life back into it.
GOOGL is very close to its 200-day SMA and is holding extremely strong around $338, which is the 50% gap fill from the July 31st gap. As long as most of the big tech names continue to hold their key supports instead of breaking down, that should be enough for the bull thesis to play out.
GOOGL Daily Chart
AAPL looks like it wants to fill its overhead gap at $329, while MSFT continues to hold up and grind higher with some nice relative strength within the software trade. AMZN looks weak but is coming into a key support level. And META’s chart is hardly worth me even looking at these days. It looks like a downward-sloping EKG.
AAPL Daily Chart
Cybersecurity Continues to Lead
The cybersecurity sector is still on fire and is arguably one of the hottest areas of the market right now. These names have continued to power higher while the rest of tech has taken a breather over the last couple of months.
CRWD and OKTA both hit new all-time highs on Thursday following their earnings reports, while FTNT, PANW, NET, and ZS all had huge days in sympathy.
I will be watching for consolidations and continuation setups across all of these names, but keep in mind that they are getting pretty extended. Tighter stops and trailing stops using short-term EMAs can be useful here to help mitigate risk.
NET is one that I think should eventually join the others at all-time highs. My target is actually up into the upper trendline around $375, with an upper target of $421.
As long as the pivot from Wednesday holds, NET should continue grinding higher and making higher highs and higher lows.
NET Daily Chart
Overall, Thursday was a big day for the bulls. NVDA delivered the catalyst the market had been waiting for, QQQ finally broke out of its recent string of bearish candles, and several areas of technology are showing strong set ups.
All eyes are on Warsh’s Wyoming Words tomorrow morning to see if we get a full-on stampede or if it’s back to the ranch for the bulls.