Market Backdrop: Uncertainty Returns
Markets hate uncertainty. The period before the election was very uncertain because of the unknown outcome, especially for the AI trade. The result was a "blue wave," which raised the idea of more regulation and some slowing of the AI buildout. A massive selloff followed. Over the past week, with the election outcome now a "known known," stocks ground back higher.
Then came news involving Jensen Huang (Nvidia, NVDA) that pushed the market back into uncertainty. Nvidia is the poster child and leader of the AI trade; when people think "AI trade," they go to Nvidia. Huang is a technology visionary who drives the whole business, more like Steve Jobs than a business-manager CEO like Tim Cook (Apple, AAPL). Cook earns respect but was never a tech visionary. So a Huang departure matters far more than a Cook departure. The market has effectively traveled back to where it stood a week and a half ago, loaded with uncertainty, and must now digest the news.
This is a "fog of war" situation. The hope is this was just a bad decision and stops there, without crossing into criminal conduct, which would open a bigger mess. If criminality at Nvidia comes out, that would benefit its competitor AMD (AMD). There is always a trade somewhere.
AMD (AMD): First Pick
AMD, Nvidia (NVDA), and Intel (INTC) have competed in the same chip space for over 30 years. AMD had been catching up to Nvidia and broke out in September. It has since pulled back into its summer range, giving a good area to set risk against - take out that level and the trade idea is busted.
The logic: AI companies must buy chips somewhere. If things get worse for Nvidia, that may open opportunity for AMD. AMD spiked on the news but is down about 10% today, giving back a lot of gains, now at 525.02.
Technical setup: a sharp V-shaped whipsaw pulled price back to the 400 level, where a series of lows formed, followed by a rapid shot up. Price did not make much progress beyond the pre-earnings highs around 578, though it closed above that yesterday before a steep drop. A large red candle took price back near the previous downward-sloping blue channel. If it keeps falling, a gap could get filled near 460 (lower green line). If it moves up, there is a small gap, then a high at 606. Gaps are useful levels because they often mark a real change in the underlying price activity.
Three moving averages are coming together near 530: the 5-day, 21-day, and 63-day exponential moving averages (EMAs), representing one week, one month, and one quarter. RSI (a momentum gauge) crossed above its downward red trend line and the 50 midline quickly, then broke back below its short-term green trend line and the 50 midline. This kind of turnaround environment is hard to trade but can pay off if you catch an extreme price going the right way. Volume profile shows a heavy node between 472 and 528, and a much smaller pocket between 600 and 635.
CoreWeave (CRWV): Second Pick
CoreWeave is down about 10% today, just north of $50, and is backed by Nvidia (NVDA). Concern centers on Huang being a big part of that deal and backing, and what it means if he is no longer at the helm. A few weeks ago it was above 60.
The 60 line was support on the one-year daily chart, a "do or die" level: above 60 it is a trade, below 60 cut it. It fell below 60, washed out, then reclaimed 60 after earnings. The preference is normally strong breakout charts, hot sectors and themes, not "dumpster diving." But CoreWeave sits at a decision point - "one leg in the grave and another on a banana peel." It will either reclaim 60 and run back toward 100 (heavily dependent on Nvidia and Huang), or take out the lows, at which point you cut it and let it go, even if it heads to the teens or single digits. The earnings reaction drew a lot of money back in on the biggest volume day in the previous year, suggesting many traders think the same way. A dip buy may be possible.
Technical setup: the question is whether this is the time to go long or whether price retests the 52-week lows near 40.58. The two key horizontal levels are 60 and about 40.58. The 60 level marks the start of a downside gap and roughly the subsequent high. A small gap that formed after earnings has been filled, so price retreated to a supportive level and has not made much downside progress - a possible positive for a bounce. Technical trading suggests waiting for the move to materialize fully: a strong close and real breakout activity, getting in early but not so early you get caught in a false breakout.
Price is below the 5-day EMA (53). The 21-day EMA (one month, teal) at 57.43 is the next level bulls want to break. RSI has begun trending up but sits below the 50 midline. To avoid a false breakout, look for RSI making new highs with price above the 50 midline and above the key moving averages. Volume profile shows a small node from 59 to about 65, but most trading happened between 75 and 94, with the point of control at 81. There have been many weeks of volume spikes almost daily - an extraordinary time for this stock.
Walmart (WMT): Third Pick
Walmart reports the same week as Nvidia (NVDA), which is about the only link between them - though both sell chips (a missed pun). It is arguably the other important earnings report next week.
AMD and CoreWeave are speculative, aggressive plays. Walmart balances them as a safer play. It will never move like AMD or CoreWeave, but if uncertainty grows and the AI trade stays shaky, people look for strong stocks and themes. People still have to buy stuff; the economy keeps running. Christmas, Black Friday, and earnings all line up with a chart pressing against resistance and not far from the 52-week breakouts preferred here. The 52-week high is just north of 135; price is around 127, up about a third of a percent at 127.81.
Technical setup: over the past three years Walmart traded like a high-flying tech stock with a strong move up, but recently more sideways. Resistance sits at 135 as a kind of double top, with consistent lows in the low 100s. Short term, a sharp rally off the lows raises the question of a bull flag or bull pennant: a big push up, a small gap, then sideways consolidation. The setup would confirm on another push above the initial highs near 132, a wide-ranging setup that may not play out. The hope, if bullish, is a breakout to the upside after this consolidation.
The 5-day EMA (dark blue) at 126.50 is near today's lows, making the short-term triangular pattern an important area to watch. The 21-day EMA at 122.69 is the next stop on a downside break. RSI has come out of overbought but is breaking back above its downward trend line; re-entering the 70 threshold would be a more bullish sign. Volume profile gives a range of about 123 to 129; above 129-130 trading activity thins out, so a fast-moving breakout is possible. The earnings event is a potential catalyst.
