If waiting.
Waiting for something? This is a difficult question. I have been hitting declining trading volumes for a few days now. Volume remains light. Access to trading volume on the Nasdaq was indeed thin on a new level on Monday. That’s while the Nasdaq Composite itself managed to reach new levels, once again. The index was ranked higher by the likes of Tesla (TSLA), and Nvidia (NVDA). The Dow Industrials, more dependent on economic growth than perhaps the “newer economy” Nasdaq species, actually sold only a little, late lower by Boeing (BA).
What has the broader market done? At least the big caps? The S&P 500 added small, 0.3% upside to the header. Trading volume on the New York Stock Exchange remained meager, but increased from the sharp levels of Friday. Interestingly, winners on 11 Wall Street were able to accurately edge losers, but the declining volume consisted of tracking volume quite decisively (55%).
That said, even about inconsistent macroeconomic data, even about failing to put together a fiscal support package, even about what still looks like a spreading virus, even if it hopefully peaks, and even after postponing the review of the US / China of the last the winter trade, somehow this index stays on trend.
Is the market waiting to fall on another shoe? We have already seen the US dollar wrap lower against its currency reserve currencies. We have already seen yield spreads widen, and then work themselves back up again. We have set / called ratios, especially those directly related to index trading show some weakness. However, the trend is the trend, and the trend the Fed does not want to combat. The trend still believes in Congress for whatever reason, and ultimately, perhaps most importantly, the trend believes in an effective vaccine, as effective treatments versus Covid in the sooner rather than later.
On that note
Something else remarkable was found on Monday, and it was not the now most virtual Democratic National Convention. On Monday, U.S. Commerce Secretary Wilbur Ross announced that companies must obtain a license before selling any type of microchip equipment to Chinese telecom giant Huawei that is made using U.S. equipment or software.
This is an extension of the existing ban that such sales only occur if the chips in-house were designed by Huawei or one of its companies. In fact, the department has also added an additional 38 entities to the existing sanctions list in what amounts to an attempt to prevent Huawei affiliates from finding ways to enforce the ban.
Opinion Matters
I would suggest that most readers marked 6.7% of Nvidia on Monday and that Nvidia will report its quarterly performance just tomorrow (Wednesday). While most of the community of analysts expect a delay ahead in spending on the data center, a number of them came out Monday and raised the target prices for shares of Nvidia based on improving conditions in other companies. Intel (INTC) has already told us that spending on the cloud needs to take off a bit. Others have supported that.
Christopher Rolland of Susquehanna took his price target for the name from $ 450 to $ 540, Oppenheimer’s Rick Schafer made a similar move, setting up a new price of $ 500, up from $ 400. While the two seem to differ on exactly how healthy, if not so healthy the data center may or may not be advancing, there seems to be a broad consensus on strength in gaming, even in artificial intelligence.
In person? You all know how much I love Nvidia. Understanding that it is strictly matter-of-fact. I’ll have to shave something from that position prior to Wednesday afternoon’s numbers.
But wait, there’s more
I just had to explain to one of my sons on Monday who Dan Ives is. But why? Because my son Tesla is tall. Twenty-five years old. Do something else for a living. Owns one stock. Understands and accepts that one stock sometimes has a mind of its own. These are the people who believe in Elon Musk. It is becoming increasingly clear that their beliefs are not being misplaced.
Wedbush analyst Dan Ives, as most readers know by now, took his price target for Tesla from $ 1,800 to $ 1,900 on Monday morning, while allocating a price target “bull case scenario” of $ 2,500. Ives believes that the demand for electric cars in China continues to grow, even accelerating in the summer. Ives recognizes the growing level of domestic competition in that corner of the world. Ives also expects growth in Europe to offset the weakness of US industry.
I’m just glad I did that shortly before it became a monster. Gee whiz. 11.2% in one day.
One to see
Remember old Sarge fave Veeva Systems (VEEV). The Life Sciences software provider was part of our original virus group here at Market Recon. The trend is undeniable, and from the perspective of fundamental investment, the growth is there. What the latter has done lately is to form a short base pattern after a long successful run.
Take a look.
This basis has forced both Relative Strength and the daily MACD (Moving Average Convergence Divergence) to weaken. This, in my opinion, can do one of two things. Indeed, the shares will test the recent high, and potentially break out again. Two, these shares could be withdrawn after the 50-day simple moving average.
Meaning what Sarge? Means I would not add anything to this position, but not within this base. Or as support as on momentum – $ 246, as $ 273. I know that sounds crazy, but that’s for me at least this works. I need the Street behind me. That’s what they think. No joke.
Economy (All Times Eastern)
08:30 – Housing starts (July): Expected 1.23M, Last 1.186M SAAR.
08:30 – Building permits (July):1.31M expected, Last 1.258M SAAR.
08:55 – Redbook (weekly): Last -3.4% y / y.
16:30 – API oil inventories (weekly): Last -4.4M.
The Fed (All Times Eastern)
04:00 – Cracks: Reserve Board Gov. Lael Brainard.
Highlights of today (Consensus EPS expectations)
For the open: (AAP) (1.97), (HD) (3.38), (KSS) (-0.93), (WMT) (1.26)
After the Close: (A) (0.68), (CREE) (-0.19)
(Nvidia is a member of Jim Cramer’s Action Alerts PLUS member club. Would you like to be warned before Jim Cramer buys or sells NVDA? Learn more now.)
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