Summary
Highlights
The week's main theme is uncertainty, with the odds for a December rate cut significantly reduced from 96% to 45.8%. This uncertainty is exacerbated by delays in economic data releases from the BLS, with September's jobs reports, unemployment rate, and non-farm employment change now scheduled for November 20th. This lack of clear economic data is contributing to the consolidation of the market at the 50-day moving average and significant drops in high-beta AI-related stocks. Conversely, mega-cap companies that are profitable are showing more stability, while Bitcoin has decoupled from the S&P 500.
Nvidia's earnings report on Wednesday, November 19th, is a crucial event. While a beat on earnings and revenue is widely expected, the guidance provided by Nvidia will be key to providing much-needed certainty to the market. If Nvidia indicates sustained strong demand and no slowdown in the AI sector, it could significantly boost market confidence. Additionally, further employment data releases are anticipated in early December, which could offer more clarity on the Fed's potential actions.
The market is comfortable consolidating at the 50-day moving average due to uncertainty. A positive indicator is the put/call ratio, which has been above one during local bottoms, suggesting a potential squeeze. Berkshire Hathaway's surprising new stake in Alphabet is also seen as a positive sign for AI, though its impact should be considered within the context of Berkshire's overall portfolio size. Google's $40 billion investment in AI infrastructure further supports the idea that the AI bubble may not have peaked.
Nebius, a high-beta stock, is down 41% from its highs and is becoming attractive, sitting at its 100-day moving average with a Goldman Sachs price target of $155. Tesla also looks interesting, having bounced off the 618 Fibonacci retracement level and filling a gap. A 1-hour break of structure on Tesla last Friday suggests a potential swing trade back to the $470s and possibly $500, especially given the positive gamma exposure concentrated at the $480 and $500 levels for its December 5th expiration.
Micro Strategy is another stock to watch, currently in a monthly fair value gap and almost in oversold territory on the weekly chart. Its movement is tied to Bitcoin, and a push below $90,000 for Bitcoin could create a buying opportunity for Micro Strategy. Meta is noted for its attractive valuation at 19 times earnings and strong operating margin, suggesting it's a solid company despite not having an immediate swing trade setup. Lastly, the Netflix stock split is expected to create a 'sell the news' event, offering a potential buyable dip and making it easier to sell puts due to the lower stock price.