It All Boils Down to Nvidia

Is the decline over the S&P 500 and Nasdaq?

Technical Edge 

• NYSE Breadth: 37% Upside Volume

• Advance/Decline: 43% Advance

• VIX: ~$17

I’m glad that we used Tuesday’s gap-up open to take some profits in our QQQ and CRM call positions. 

This week’s QQQ $360 calls went from the $2.50 to $3.00 range on Friday to opening at $8.00 on Tuesday. The CRM September $210 calls have gone from sub-$6.00 to $9.00+ (and that’s being generous). 

I’m not highlighting these to be a blowhard; I’m noting these because it highlights a key theme in trading: Picking your spots and being patient. 

We had a pretty robust three- to four-month window for trading, but have toned down our trades significantly this month given where the markets were and the typical seasonal weakness we tend to see in August and September. 

That said, we waited patiently for the CRM and QQQ setups to come to fruition, then pounced when we felt the odds favored us. Using options helped navigate the risk well, too. 

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Thursday and Friday are going to be key in the short term. As the S&P and Nasdaq have bounced nicely over the past few days, it’s simply a countertrend bounce…for now. 

Nvidia reports after the bell tonight and will be a key driver for Thursday’s session. On Friday morning, we’ll get Fed Chair Powell and his Jackson Hole speech. 

On Monday, Nvidia added $100 billion to its market cap with a pre-earnings rally, then made new all-time highs yesterday before reversing. The bulls are not back down on this one. One example? One trader bought 1000 December 2025 $850 calls, while simultaneously selling the $400 puts. 

The firm’s results will likely impress, there’s no question about that. But will it be enough to deliver another big response? Shares are already up over 200% so far this year (a triple!) and are up 50% from when it last reported earnings in late May. 

SPY

From a bull’s perspective, Tuesday’s action was exactly what they should have feared: A rally to the 50% retracement of last week’s range and the 10-day/10-week moving average area, followed by a harsh rejection of the gap-up. 

As of 8:00 a.m. ET, we have a mild pre-market gain in the SPY. So keep an eye on yesterday’s low at $437.57 (if that number sounds familiar to you, it’s because it was Friday’s high and on Monday, we considered it a key pivot level). 

A break of $437.57 to the downside and failure to regain this area could put the $435 level in play — which is the 78.6% retrace of the current rally and this week’s low. 

• Pivot: $437.50

• Upside Levels: $441, $442 to $442.50, $445

• Downside Levels: $435, $433

SPX

• Pivot: 4382

• Upside Levels: 4420, 4435, 4455-60

• Downside Levels: 4370-75, 4355-4360, 4335

S&P 500 — ES Futures

Keep an eye on 4394-4400 area — the Globex low and Tuesday’s low. If we break this zone and can’t regain it, it opens the door to this week’s low near 4375, then potentially last week’s low down at 4350. 

Also, keep the larger support zone in mind that we highlighted on Monday as one potential scenario. 

• Upside Levels: 4425, 4440-50, 4465-70, 4482, 

• Downside levels: 4394-4400, 4375, 4350

NQ 

~15,100 rejected the NQ yesterday and is doing so again this morning. It’s why yesterday we said to take profit into the zone and sniff for 15,175 with the remaining long. 

Now, we must keep an eye on the 14,930 to 14,950 zone on the downside.  

• Upside Levels: 15,100, 15,175, 15,270, 15,340

• Downside levels: 14,930-950, 14,860, 14,800, 14,720

QQQ

“If we fade off the open, holding the $364 to $365 area is key.” We didn’t do that, with the QQQ closing at $363.38. 

At the end of the day though, NVDA’s results tonight are going to drive a bulk of the NQ and QQQ’s move in the next 24 hours. 

• Pivot: $362.68

• Upside Levels: $365, $367, $370 to $372

• Downside levels: $359.25 (key), $357.25, $354.75

TLT

TLT with a nice bounce on Tuesday and more follow-through this morning. However, if we see $94-and-change (aka a test of the 10-day), any active longs in this name should consider trimming the position and moving to a B/E stop. 

Bonds have not been trading well and while you can pick active bounce spots, you have to be quick when trading the countertrend. 

Why mention TLT? Because bonds are a key component to keep an eye on. If the bounce continues, yields are likely in decline, aiding equity markets. 

JPM

JPM is re-approaching our prior breakout level in the $142.50 to $144 area, which is sandwiched between the 50% and 61.8% retracements and contains the 21-week moving average. 

Currently, it’s down into the Q2 high, which JPM snuck in on June 30th. It’s also into the 50% retracement.

If you’re not into the banks right now, I can’t blame you. An overshoot could put the 200-day moving average in play, but the $142.50 to $144 area will be key for the remainder of this week. I’m in more of a risk-off mindset right now, so if I do pounce, it will be at a lower entry point than here and with smaller size. 

Economic Calendar

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!