MARKET WRAP

Today was another day full of intraday volatility with a couple of bad news stories hitting the tape. However, stocks closed green with traders clearly trying not to get caught offsides ahead of NVDA’s print. Speaking of NVDA, it’s higher by about +4% after hours on a beat and raise. We’ll see if it can stop the bleeding we’ve been seeing in tech. On the day, SPX +0.4%, QQQ +0.6% and IWM flat.

Elsewhere, those two negative stories today to hit the tape was first, no jobs number tomorrow after all. Later FOMC Minutes that reiterated uncertainty about a December rate cut. Those stories significantly reduced the odds of a Dec rate cut, now just 33%. Yields were higher, but not by a ton. The US10YY is now 4.14%. Treasuries made most of their move following the last Fed meeting and Fed Fund futures seem to be playing catch-up. Gold was quiet, as was oil. The VIX fell to 23.66, and if NVDA is able to hold or add to its after hour gains tomorrow, we could see vol decline a lot more.

After Hours: NVDA is +4% or so. PANW is -4%. Conference calls to come. The QQQs are +1% while SPY is +0.5%.

Today’s MRKT Call: Guy and Dan are joined by Michael Obucina of Robinhood. They break down tech’s continued weakness ahead of NVDA earnings, the outsized weight of the Mag7, recent market volatility and BTC action, and wraps with what TJX and HD are signaling about the consumer.

MRKT MATRIX: TODAY’S TOP STORIES

• S&P 500 rises as Wall Street ahead of Nvidia earnings (CNBC)

• JPMorgan Trading Desk Says Buy the Dip in Stocks (Bloomberg)

• BLS Cancels October Jobs Report, Couldn’t Collect Some Data (Bloomberg)

• Bond Market Wagers on Fed Rate Cut Crumble on Jobs Data Void (Bloomberg)

• Fed minutes show divide over October rate cut and cast doubt about December (CNBC)

• Mortgage rates hit highest level in a month, pushing loan demand down 5% (CNBC)

• Housing numbers point to an unusually strong buyer’s market. There’s a catch (CNBC)

• Target to Invest Billions to Upgrade Stores as Sales Slump Continues (WSJ)

WHAT’S NEXT?

Today’s action featured several counter-intuitive moves, a strong first half hour that had the S&P up more than +1%, then that began to unravel. Near the bottom of that move, headlines arrived that tomorrow’s already-delayed jobs data wouldn’t be released after all. It’s very possible that rumor was circulating on desks earlier, because after a quick spike to the lows, the market found buyers—likely with some earlier in the day short covering near the lows.

The whipsaw wasn’t done. Late in the session we got the FOMC Minutes. It wasn’t a lot that we didn’t already know, but the details were enough to slam December rate-cut odds even further, now overwhelmingly pricing in no cut. 

However, traders mostly shrugged off those headlines, for various reasons including it’s not exactly new news. But most likely, we just encountered some near-term oversold dynamics, with SPX again close to a -5% pullback this morning. Now that NVDA reported, and if we assume it does hold its after hours gains, and interesting set-up is in play as we closed with a near 24 VIX and a ton of short gamma into Friday’s expiration. Should NVDA add to gains tomorrow, and drag other big tech names with it, we could see a fairly significant rip higher into Friday as there is not much overhead supply to stop it. Vol would eventually compress into Friday, with a VIX likely 20 or so, but the room for a sharp move higher (+1.5 to +2% in SPX is possible) will be there before that window closes.

On the other hand, if NVDA’s earnings move were to fail, and the stock went red at some point tomorrow, things could get very ugly as there’s not a ton of reasons for the past two day’s lows to hold. In that case we could be seeing a +30 VIX into Friday’s close with a move lower that could be -2% or more. (There’s a third scenario where NVDA holds its current modest gains, in which case the action to Friday remains whippy like the past two days.)

For tomorrow, a very large expected move in SPX of 1.2%, accounting for NVDA’s assumed gap. Walmart before the open, and Gap with a very large move priced for after the close:

Thursday, Nov 20th:

• Pre-market: WMT 4.5%

• Fed Speak: Cook, Goolsbee, Miran

• 8:30am - Philly Manufacturing

• 10am - Existing Home Sales

• After-hours: GAP 12%, ROST 6%

SPX expected move: 1.2%

TODAY’S EPISODES

Watch MRKT Call’s newest episode: The World Waits On $NVDA

A look at the continued tech weakness heading into the big NVDA print—including pressure on META—and the staggering size of NVDA and the other Mag7 names relative to sectors like energy, which helps explain why strength elsewhere hasn’t been enough to support the broader market. Michael Obucina joins to break down the recent volatility, preview NVDA earnings. Then Guy and Dan wrap with thoughts on TJX and HD and what their reports say about the consumer, plus one last check on BTC and names like MSTR.

Analysis - NVDA, META, XLE, AMD, ORCL, BTC, HD, TJX, MSTR

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