NVIDIA
The market made a huge leap today after the latest inflation gauge has all but guaranteed an interest rate cut from the Fed in September, but a handful of AI names are sitting on the sidelines.
That’s a warning.
Namely, shares of the biggest AI name NVIDIA (NVDA), whose stock is only 0.5% for the day.
NVIDIA shares have been mired in a technical battle that could result in another 10-20% drop ahead of the company’s earnings on August 28, more than a month away.
The stock has been bouncing between critical price support at the $110 and its 20-day and 50-day moving averages. More than a week ago NVIDIA’s 20-day trendline turned bearish, indicating that “traders” had turned into sellers of the stock.
Much of the shift in sentiment towards the stock has to do with the sudden attraction to small cap and other interest rate sensitive stocks as investors look to take profits from the over valued “AI Trade” and rebalance into more “value” oriented areas of the market.
Next week is critical for this and other AI stocks as Microsoft, Amazon and META will all provide their quarterly earnings results. This will truly be the “most important” week of earnings in the last two years as any disappointment will open NVIDIA and those other AI names to a deluge of technical selling.
Maintain a close eye on the $110 price on NVIDIA as we make the way through next week’s trading. A break of this price will result in a fast and aggressive move to round-numbered support at $100.
3M
Outside of the large cap technology world, shares of 3M (MMM) shot 25% higher today as the material company crushed their earnings targets.
The company company announced its quarterly earnings this morning, beating estimates by $0.25, sending the stock to new two year highs and leading the Basic Material sector. In addition, the company beat on their revenue target for the quarter and raise their fiscal year 2024 earnings per share. In line with the expectations of Wall Street.
With today’s 25% gain. The stock closes above $125.00 for the first time since January 2022 and firmly puts the company in a long term bull market trend. Shares are trading higher by 41% for the year compared to the basic material sector, which is only up 8%. Next paragraph.
Investors should expect that shares of 3M will do some consolidating over the short-term as today’s moonshot puts them into oversold territory with incredibly heavy volume. Technical support should kick in at $120.00 per share.
From a technical perspective this would be a buying opportunity for a long term value play in the materials sector.
Bristol-Myers Squibb Co
Shares of Bristol-Myers Squibb (BMY) are trading 11% higher today after the company beat their earnings estimates by 25% this morning.
The pharmaceutical company announced their quarterly earnings report before the market opened, beating earnings per share expectations by 25%. In addition, the company posted revenue for the quarter that was 8.7% higher than last year and beat analysts’ expectations.
The 11% move in the stock put Bristol-Myers Squibb shares above the $50 level and the stocks 200-day moving average. This is the first time that Bristol-Myers shares have traded above the 200-day moving average since February of 2023, when the stock fell into a long-term bear market trend.
Those shares are up sharply. The stock is still trading below the 20-month moving average, which is the line of demarcation between a long-term bull and bear market. That trend line sits just above $55. Giving the stock 10% upside before running into the next level of resistance.
Expect that shares of pharmaceutical companies like Bristol-Meyers Squibb will trade with volatility as the November elections approach, as healthcare and pharmaceutical companies will remain a target of both political campaigns.
The stock has a long-term neutral outlook with technical resistance at $55.
