NVDA to the rescue.
Quick summary:
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Trend Shift: Short-term momentum on the 4-hour chart has flipped bearish after a gap down from the 750 peak, shifting the market into a mean-reversion phase despite the daily trend remaining structurally intact.
Decelerating MACD, negative RSI divergence, and rising volume on down days suggest exhausting buyer momentum, making a short-term pullback highly probable.
NVDA earnings are on Wednesday after close. Can they break the short-term trend? Or will they signal the beginning of the Sell-in-May-and-go-away correction? You tell us!
Macro Catalyst Outlook: Expect heightened volatility ahead due to a dense economic calendar featuring manufacturing PMIs, retail sales, inflation updates, and key FOMC communication.
Charts
Following a brief retest of the psychological 750 peak on SPY on Friday, markets have trended down. A gap down followed by a bearish engulfing pattern on the 4-hour chart signals that short-term momentum has flipped to the sellers (see chart below). While the longer-term daily trend remains structurally intact with the daily EMA stack (10, 20, 50, and 200) still sloping upward, the MACD is exhibiting early signs of deceleration and a negative RSI divergence warns of exhausting overbought conditions. Given the sudden pickup in volume on the downward moves, the path of least resistance over the next few sessions points lower as the market shifts from an aggressive grind-up phase into an active mean-reversion phase.
Instead of anticipating a rapid V-shaped recovery, the technical indicators suggest two distinct, likely scenarios for the index. In a more constructive, bullish scenario, the market undergoes a brief period of sideways consolidation, finding immediate buying interest and forming a clear “higher low” right around the critical 730 support level (again, see chart). Alternatively, if the 730 floor cracks on expanding volume, a more pronounced bearish correction takes hold. This would trigger a deeper pullback to test the primary trendlines and demand pockets near the 20-day EMA and the institutional support zone at 720, where options market maker hedging could heavily accelerate the downside momentum.
NVDA earnings
The catalyst that can make or break this support level will undoubtably be NVDA earnings, coming up on Wednesday after market close. Things are looking great for the chipmaker and the most valuable company in the world. However, do keep in mind that this doesn’t mean much.
Here is a quick overview of how NVDA’s stock price performed one and two days after earnings in the past 3 years (when the stock became a world-beater). It beat EPS almost every time except once (May last year), and it beat Revenue expectations every time. During 2023 and first half of 2024, this was heavily rewarded. The stock went parabolic after earnings, growing double digits two days later more often than not. But since then, for the past 7 quarters, it was down 2 days later (and flat the only time it missed earnings, in May 2025).
November 2025 was a particularly interesting move (see chart below). It shot up 5-6% after close, on an excellent earnings report, opened the next day very green (and pulling the market with it), only to finish the day negative! And again, pulling the market with it.
I remember that day well. We were long the market and lost, but I was watching SPY put prices, and they went 20X that day. Insane.
Again, none of this is financial advice, obviously. But one piece of advice is - be careful around NVDA earnings. They are not what they were two years ago. Seems like every push up post-earnings is a profit taking opportunity.
I guess NVDA is the kind of stock to hold, not trade.
The competition
The stock market remains a high-stakes puzzle of shifting narrative and macro signals, where predicting the next move requires balancing blockbuster corporate earnings against sticky inflation and structural energy risks from the Middle East. As sticky CPI data keeps the Fed on pause and the tape increasingly demands a distinction between secular AI growth and cyclical noise, it’s time to see which players successfully anticipated the madness in this week’s competition results.
Stay focused and keep climbing the ranks!
NOTE: For all those new to the whole thing, read more about it here or watch a video of Scott and myself guiding you through the survey, showing you all its features, and briefly explaining how the competition works.
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