NVDA’s much-anticipated earnings report is today. We give a glimpse on how we are positioning for it and provide and actionable gameplan of levels to manage the session.
The Setup, More than NVDA
Bill Baruch joined the CNBC’s Worldwide Exchange early Tuesday morning to discuss his market outlook, tech with NVDA’s earnings in sight, and other parts of the market he finds interesting.
E-mini S&P (September) / E-mini NQ (September)
S&P, yesterday’s close: Settled 5644.75, up 7.75
NQ, yesterday’s close: Settled at 19,653.75, up 62.50
Today brings NVDA’s highly anticipated earnings report. Arguably, going back to last May, every earnings report from NVDA is more touted than the last. I will be traveling to NYC this afternoon to join the CNBC Halftime Report tomorrow, where we will certainly be covering NVDA’s results. Afterall, it has been one of our largest positions at Blue Line Capital since 2H 2022. It has also been a position in which we actively manage. Given some of the broader market exhaustion, too clean of a volatility event rebound, and the E-mini NQ’s failure to clear 19,925, all of which I have cited in my writeups here, we bought put protection in wealth portfolios ahead of Fed Chair Powell last week; the clip where I discussed this on the CNBC Halftime Report can be found on Blue Line Capital’s site here.
We believe today’s results will be strong, and I have discussed our reasoning at length. Firstly, CEO Jensen Huang would not be so squarely in the public eye if he was not confident in the company’s trajectory relative to expectations. Second, hyperscalers spent $52 billion in Q2, +54% y/y, up from +30% in Q1. This is the first comparative quarter of the AI investment cycle (via BofA and @dailychartbook). Lastly, we believe Huawei’s failure to supply China’s companies in the latest quarter has redirected revenues to NVDA. Regardless, NVDA could top results but not lift guidance as much as the market wants, and there are risks to the downside. Mounting options interest will also play a role, if the stock is not +10-15% or more, it could face dealer unwind, impacting the stock negatively intraday tomorrow.
E-mini S&P and E-mini NQ futures consolidated yesterday, rebounding from an opening bell dip and leveling out in a tight range for the rest of the session. This will increase the emphasis on today’s Pivot and point of balance in the E-mini S&P at 5637-5640.50 and in the E-mini NQ at 19,643-19,653. The strength of resistance directly overhead has increased and is highlighted in our levels below. The most crucial level for each of the E-mini S&P and E-mini NQ remains to the downside at…
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