Yo Pit Crazies,
I’ve been on a mini vacation this week visiting my mom on the way to Florida for the Big Event.
If you haven’t signed up, you still have time to grab the virtual sessions online.
I spent Tuesday night and Wednesday trying to make a connection and slept in Newark for 12 hours.
Everyone was very nice on my venture outside of my rock.
Americans are generally friendly folk and it makes me optimistic about the future.
That brings us to Thursday’s action.
What Nvidia Corp (NVDA) and XYZ mean
Stocks got a pop after the SOTU address on Tuesday. Nothing earth shattering happened, so traders got busy buying stocks trying to get back to 700 SPY.
Optimism usually surrounds Nvidia (NVDA) earnings, and Wednesday night was no exception. The numbers crushed expectations, but this happened:
5 day NVDA Chart
The market decided that a five trillion dollar market cap for NVDA is enough.
The valuation ran way up early, and NVDA will have a very hard time generating continued growth for the next 10 to 15 years. At least that’s what traders think as of Thursday night.
Block (XYZ) on the other hand did the AI moon shot that everyone had feared for the last several weeks. AI was going to eat jobs, and XYZ did just that in real time, shedding some 4,000 positions.
Stocks sold off hard after the close as the Citrini article came out on how AI was going to destroy growth. XYZ was up over 20 percent after hours Thursday.
The Stuff Buried in the Headlines
Some interesting things came out while I was stuck in airports.
The Citrini Report on AI (search X for it or Substack) reads like the Communist Manifesto. A hedge fund that shorts tech stocks might have written it. The more news I see, the more that appears to be the case, but my research continues.
Jack Dorsey, CEO of XYZ, admitted on X they hired too many people for no purpose after COVID.
Five to six thousand people, and they did nothing with those hires. Jack did the same thing at Twitter if you recall. Elon Musk sacked 80 percent of the workforce.
Stocks will continue to gyrate on this AI related news with algo bots pushing things around.
The Big Mega Cap Mag 7 will have a hard time with multiple expansion at this point. That means the stocks are not really going up much. Remember Amazon (AMZN) went nowhere for years after 2020. Any news will make the 0DTE options fly in this sector.
VIX at 16 is the new 12 until further notice because of this cycle. Heck, 17 might be the new low for a while.
Rant and Rave
The State of the Union did address fraud.
Hard to believe that people who work don’t want fraud reduced. Congress is once again behind, with DOGE tagging all payments.
When will they get with it? Party gerrymandering from both sides is a bad political precedent.
It just entrenches the worst of both parties and makes states uncompetitive, unless of course pols do such a bad job that voters actually get rid of them.
To Your Trading Success,
AG