Saturday, August 26, 2023
This week, NVDA wildly exceeded revenue guidance, posting $13.5 Billion vs the expected $11 Billion, an increase of 101% over the same quarter last year. Impressive - no?
On Thursday, the stock hit a new intraday hi of 502.66 just after the opening, but then fell the rest of the day, losing 31 points and closing at 471.63, a fraction above the day's lo. [Graph 1, From Yahoo Finance.]
The most recent new closing high was 474.94 on 7/18, more than a month ago.
Here's a hard and unpleasant fact: even with this earnings blow out, the P/E ratio is 110.89. Will you scoff at me if I suggest that this is not sustainable? And the lack of a new closing high after this earnings report is not a good sign. Further, Friday's close was off 11.45 points, or 2.43%. I wonder - at this level, are there many buyers left?
Let's take a look from a longer view. Graph 2 shows daily closings from the middle of last year, along with trend lines and exponential moving averages. [Data source - Yahoo Finance]
Like just about everything else, NVDA dropped dramatically through the first 9 months of 2022. From the hi of 336.71 on 11/29/21 it slumped to a low of 112.27 on 10/14/22, a staggering loss of 66.36%. Then, at the end of the year, there was a higher lo, suggesting that the drop might be complete. This became an even stronger suggestion when the price crossed over the descending trend line [in violet] a few weeks later. From there it was up, up and away until the recent all time highs.
On 5/24/23 the stock rose 24.4% in a single day, and kept climbing for almost 2 more months. This leap carried the price far above the green up-slanting trend line, and this is what irrational exuberance looks like.
Graph 3 is a look at exponential moving averages of daily closings, from 5 day to 233 day periods.
The thin blue line is the 5 day EMA. It is more volatile and quicker moving than the longer EMAs. After its low of 116.83 on 10/14/22 the next intermediate low was 145.29 on 1/04/23. This also suggests that the bottom was in. This was confirmed by the cluster of long EMA lines in Early February. From Feb 1 to 21 the stock bounced around in the 210 to 220 range while all the EMA's continued rising.
All the long EMAs [55 to 233 day] continued rising right through 8/25/23, but the shorter ones have faltered. The 5 EMA line hit 462.9 on 7/19 then topped at 463 on 8/01, indicated on Graph 3 with the red horizontal line. It got close again on 8/24 and 8/25, but stalled under 462.
This looks to me like topping action. If 463 turns out to be a hard resistance line, then NVDA is going to falter. Right now it's hovering in tulip bulb territory, and a crash could be brutal.
If the P/E were to revert to a much more reasonable level of 30, for instance, the price would have to drop to about 125, for a loss of 73 percent from the 8/25 close of 460.18.
For comparison, Alphabet [GOOG] has a P/E of 27.57; Apple [APPL] is at 29.92; and Microsoft [MSFT] is at 32.46.
There's a lot of "if" here, and I don't have a crystal ball. The recent stall might be a pause to consolidate before the stock price doubles again. The market can stay irrational longer than most of us can stay solvent. NVDA ia a great company; but at these prices, I don't think it's a great stock.
Here is an interesting insight, for what its worth.
Monday, September 19, 2022
Saturday, September 17, 2022
After 4 up days ending in a gain of 5.15%, I was not surprised to see a pull back in the SP500 on Tuesday. But I was astounded by the magnitude, and then the follow-through. At Friday's lo, 3837.08, the index was almost 14 points [0.36%] under 3850.76.
This is the .786 retracement level from the 8/16 hi, the last reasonable level to support the current increasingly wobbly bull case. It's also in the midst of a support/resistence range between 3700 and 3900, dating back to June.
The only slightly bright glimmer I can find is that after hitting the day's lo shortly after noon, the Index rose 36.25 points [0.94%] into the close at 3873.33. Most of this rise happened after 2:30 p.m.
If the index continues falling next week, then the 6/17 lo is at risk. Then, if that is breached, The Index could reach as lo as 3200.
Thursday, September 1, 2022
It seems the Fed likes to keep the Federal Funds rate slightly above the 3 month T-Bill rate.
But the FFR almost always follows the T-Bill rate, and almost never leads.
Right now it is lagging, and that might be why pundits are expecting another .75% increase in September.
Wednesday, August 24, 2022
Tuesday, January 11, 2022
Monday, January 10, 2022
SP500 at the close --- 4,670.29 -6.74 (-0.14%)
DJI30 --- 36,068.87 -162.79 (-0.45%)
NASDAQ --- 14,942.83 +6.93 (+0.05%)
Russell 2000 --- 2,171.15 -8.66 (-0.40%)
The SP500 started negative, took a deep dive to 4582, the lo, off 95, before 11:00; and, coincidentally, 95 points below the critical support level. But it recovered the rest of the day, and finished with only a small loss.
The DJI opened at 36175, the hi, off 56 points. It dropped to 35640, the lo, off a stunning 592 points before 11:00. From there it also recovered, finishing with a moderate loss.
An encouraging point is that both of these indexes finished on up-ticks and volume surges.
The NASDAQ opened at 14752, off 184 points, and dropped to 14530, its lo, before 11:00. It rose the rest of the day to finish at its high for a minuscule gain.
The Russell opened flat at the day's hi, and dropped near 2133, the lo, before 11:00. After a slight rise it fell again, hitting the lo, off 45 points, before 1:00. From there it rose into the close, finishing with a moderate loss.
All the indexes followed similar paths with deep declines in the morning and strong recoveries later in the day, mostly for losses. If the upward momentum can continue tomorrow, this could be the end of the decline. But that is no sure thing, so we'll have to wait and see.
Wednesday, January 12, 2021
SP500 at the close --- 4,726.35 +13.28 (+0.28%)
DJI30 --- 36,290.32 +38.30 (+0.11%)
NASDAQ --- 15,188.39 +34.94 (+0.23%)
Russell 2000 --- 2,176.06 -17.95 (-0.82%)
The SP500 opened at 4729, up 16 points. It rose to 4749, the hi, up 36, at 10:45, and dropped to 4707, the lo, at 11:15. The rest of the day it chopped mostly sideways around 4720 and concluded with a small drop on a volume surge, ending with a small gain.
The DJI30 opened at 36336, up 84 points. It reached 36453, the hi, up 201, then fell to 36168, off 84. It chopped around the rest of the day, dropping slightly below neutral a couple more times. At the end, it slid a few points into the close on a volume surge.
The NASDAQ opened at 15263, up 110. It reached the hi, 15319, at 9:45, then dropped to the lo, 15117, between 11:00 and 11:30. The rest of the day was mostly sideways and slightly positive, ending with a slight gain.
The Russell 2000 opened at 2195, up less than a point. It reached 2210, the hi, at 10:00, then fell to, 2169, the lo, at 11:15. It spent the rest of the day in the red, and finished with a substantial loss.
The other 3 indexes were positive to small extents. The Russell is often an outlier, but represents a far greater number of issues. And even in that case, the day's hi and lo are both higher, so the span moved up, though the close was down. So this day is inconclusive. I hope.
Monday, January 3, 2022
Monday, December 31, 2022
Green Arrow Up
SP500 at the close --- 4,796.56 +30.38 (+0.64%)
DJI30 --- 36,585.06 +246.76 (+0.68%)
NASDAQ --- 15,832.80 +187.83 (+1.20%)
Russell 2000 --- 2,272.56 +27.24 (+1.21%)
The SP500 opened at 4778, up 12 points, and after a rise dropped quickly, hitting 4758, the lo, before 10:00. It stayed below 4786 until 2:00, then rose to close within a fraction of the late day hi, for a solid gain. It achieved a new closing hi, but not a new intra-day hi. This is an outside day, with the hi higher by 10 points and the lo lower by 7. The index is still stalled near 4788, the critical resistance level identified last week.
The DJI30 opened at 36322, off 17. It first rose, then fell to 36246, the lo, off 92, before 10:00. It stayed below 36495 until 2:00, then rose closing within a point of the late day hi, for a solid gain. It also achieved a new closing hi but not a new intra-day hi. It had an outside day, with the hi higher by 11 points, and the lo lower by 58. it also seems stalled near the earlier highs from November.
The NAQSDAQ opened at 15733, up 88. After a brief rise it fell to 15644, off a fraction before 10:00. It stayed below 15785 until after 1:30. It stepped up to 15820 after 2:30, then went mostly sideways to close at 15832, the hi, for a substantial gain. It had a higher higher by 55 points, but the bottom was flat. It remans about 70 ponits under the early November highs.
The Russell 2000 opened at 2247, the lo, up over a point. It reached 2284, the hi, up 38 at 10:30. It dropped to 2260 after 11:30, and stayed at that level until after 3:00. After a slight dip it rose into the close, 12 points under the mid-morning hi. It had a clearly up day by 26 points at the top and 2 at the bottom, and remains about 200 points under the early November highs.
All things considered, this is a pretty good start to the week. But the situation is still ambiguous.
Monday, December 27, 2021
Monday, December 27, 2021
SP500 at the close --- 4,791.19 +65.40 (+1.38%)
DJI30 --- 36,302.38 +351.82 (+0.98%)
NASDAQ --- 15,871.26 +217.89 (+1.39%)
Russell 2000 --- 2,261.46 +19.89 (+0.89%)
The SP500 opened at 4733, up 8 points, and immediate;y rose to 4750. It then rose more slowly, reaching 4774 at noon and 4784 at 2:30. After a slight draw back it rose into the late day hi, closing less than a point lower. Last Thursday the index came within 4 points of a new intra-day hi. Also on Thursday it reached a new closing hi by 13 points, and today it exceeded that by 65.
Elliott Wave analyst Avi Gilbert identifies 4677 as a critical support level to maintain the short term bullish case. A significant break of that level means that a corrective phase is unfolding with further declines expected. He also identifies 4788 [top horizontal line on the graph] as critical resistance. An impulsive break through suggests further gains ahead.
The DJI30 opened at 35954, up 4 points, and immediately rose to 36077. It chopped up and down for 45 minutes, then climbed again reaching 36187 at 12:15 and 36265 at 2:30. After a slump to 36200 after 3:00 it rose sharply to close 4 points under the late day hi. This index is approaching new highs, but has not yet achieved them.
The NASDAQ opened at 15697, up 43 points, and quickly rose to 15763. After a brief draw back it climbed to
155844 at 12:15 and after 2:30. Following a slump to 15825 before 2:30 it rose to close within a fraction of the day's hi. It is still 200 to 400 points under recent all time highs.
The Russell 2000 opened at 2242, up a point. It slumped to 2230, off 11, at 10:00, then quickly rose, reaching 2255 at 11:15. It ran horizontal above 2250 until after 3:30 when it climbed sharply into the close for the day's largest gain. It remains about 200 points under the recent all time highs.
This is a nice follow up to last week's gains, and a good start to the week. Maybe there is a Santa Clause.
Wednesday December 29, 2021
Yellow Arrow Sideways
SP500 at the close --- 4,793.06 +6.71 (+0.14%)
DJI30 --- 36,488.63 +90.42 (+0.25%)
NASDAQ --- 115,766.22 -15.51 (-0.10%)
Russell 2000 --- 2,249.24 +2.74 (+0.12%)
The SP500 opened at 4789, up 2 points, and dropped to 4778, the lo, off 8 points at 10:15. It stayed under 4793 until 2:00, and reached 4804, the hi at 3:50, the dropped hard into the close for a small gain.
The DJI30 opened at 36421, up 23, quickly reached 36509, up 111, then dropped to 36396, off 2, the lo, at 10:15. It stayed below 36509 until 3:00, and reached 46572.the hi at 3:50 before dropping hard into the close for a modest gain.
The NASDAQ opened at 15795, up 13, and dropped to 15680, off 102 at 10:15. It then stayed below 15777 until 3:30, hitting 15792 after 3:50, followed by a drop into the close for a small loss.
The Russell 2000 opened at 2246, off a fraction, and dropped to 2237, off 10, at 10:15. It climbed to 2253, the hi, after 11:00. it snaked around neutral, staying above 2243 the rest of the day, then rising from that level after 3:30 to close with a small gain.
Today's action appears to be counter-current to the presumed short term up trend. The SP500 has stalled within a few points of 4788, the critical resistance level identified by Avi Gilbert. Pushing through that level with an impulse will validate the bullish case.
Monday, December 20, 2021
Monday, December 20, 2021
SP500 at the close --- 4,568.02 -52.62 (-1.14%)
DJI30 --- 34,932.16 -433.28 (-1.23%)
NASDAQ --- 14,980.94 -188.74 (-1.24%)
Russell 2000 --- 2,139.87 -34.06 (-1.57%)
Not one minute was spent in positive territory by any of these indexes. And they all lost more than a percent. This is a thoroughly dismal start to the week.
Elliott wave analyst Avi Gilbert identified the range 4550 to 4585 as a critical support level to preserve the short term bullish case. Today's minimum was 4531, and the index stayed below 4550 from about 10:30 until 1:30, finishing squarely in the support range. The red line on the chart is at 4550.
So, despite the weak performance, the trend direction is still ambiguous.
Monday, December 13, 2021
Monday, December 13, 2021
Red Arrow Down
SP500 at the close --- 4,668.97. -43.05 (-0.91%)
DJI30 --- 35,650.95 -320.04 (-0.89%)
NASDAQ --- 15,413.28 -217.32 (-1.39%)
Russell 2000 --- 2,180.50 -31.31 (-1.42%)
The SP500 opened at 4710, the day's hi, off 2 points, and fell to near 4670 from 11:30 to noon. It recovered to near 4690 from 3:00 to 3:30, then fell into the close, less than 2 points above the late day lo, on a volume surge.
The DJI30 opened at 35959, the day's hi, off 12 points, and fell near 35620 from 11:00 to noon. It slowly rose to 35790 at 3:45, then fell almost 140 points into the close on a volume surge.
The NASDAQ opened at 15621, off 9 points. It dropped to about 15420 for a while near noon. It rose to 15520 after 3:00, then fell hard after 3:30 to close only 5 points above the late day lo.
The Russell 2000 opened flat at 2212, the day's hi. It dropped to 2169, the lo, at noon, then recovered to 2195 at about 3:15. then fell15 points into the close for the day's largest loss.
This is a dismal start to the week, with each index starting at or near the high, then tumbling to finish close to the day's lo.
At this point, I have no idea if the current trend is up or down. I can justify an up trend continuing based on the SP500 chart; but the Russell 2000 looks like it is heading down.
Tuesday, December 14, 2021
Red Arrow Down
SP500 at the close --- 4,634.09 -34.88 (-0.75%)
DJI30 --- 35,544.18 -106.77 (-0.30%)
NASDAQ --- 15,237.64 -175.64 (-1.14%)
Russell 2000 --- 2,159.65 -20.84 (-0.96%)
The SP500 opened at 4643, off 26 points. It fell to near 4607, the lo, off 62, from noon until 2:00. It reached 4650, an intermediate hi, after 3:30, then fell under 4630 before a slight rise into the close. At the lo, it was near the 13 and 55 day EMAs, and still above potential support from early September.
The DJI30 opened at 35606, off 45 points. It bounced around near 35442, the low, from 11:00 to 2:00. It rose to 35640 after 3:30, then fell under 35500 before a slight rise into the close. At the lo, it was near both the 13 and 55 day EMAs, and a potential support zone from mid August.
The NASDAQ opened at 15216, off 197 points. It reached 15318, the hi, off 96, at 9:45. I stayed near 15097, the lo, off 316, from 11:00 to 2:00, and rose to 15290 after 3:30. It then fell to 15210 before a slight rise into the close. It is hovering in what could be a support level from early September.
The Russell 2000 opened at 2179, off 2 points. It reached 2190, the hi, up 9, before 10:30, and fell to 2153, the lo, off 27, at 2:00. It rose above 2170 at 3:30, then fell to 2156 before slight rise into the close. At the low, it was in the vicinity of a support line going back a year. A strong breach of 2160 would be a very bad sign.
The idea that the current trend is up is still supportable for the SP500 and DJI30, strained for the NASDAQ, and highly suspicious for the Russell 2000. One way or another, the picture should offer some clarity before the end of the week. Maybe. I hope.
Monday, December 6, 2021
Monday December 6, 2021
Green Arrow Up
SP500 at the close --- 4,591.67 +53.24 (+1.17%)
DJI30 --- 35,227.03 +646.95 (+1.87%)
NASDAQ --- 15,225.15 +139.68 (+0.93%)
Russell 2000 --- 2,203.48 +44.17 (+2.05%)
The SP500 opened at 4548, up 10 points, and reached its lo, 4541, up 2 a few minutes later. It hovered near 4613, the hi, from 1:30 to 2:30, then slid 21 points into the close
The DJI 30 opened at 34633, the lo, up 53. It hovered near the hi, 35357, up 777, from 1:00 until after 2:30. It then slid 130 points into the close.
The NASDAQ opened at 15111, up 32 points, and quickly dropped to its low, 1492, off 153. It hovered near 15282, the hi, from 1:30 until after 2:30, then slid 57 points into the close.
The Russell 2000 opened at 2160, up 1 point. It hit it's lo, off 5, a few minutes later; and it's hi, 2218, up 59, after 2:00, then slid 15 points into the close.
It's been a rough road since Thanksgiving; but this is a nice start to the week. The slips at the end are the only negative. As I write this at about 8:30 pm, index futures are up slightly.