NQ and NVDA Weigh on the S&P

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The biggest stumbling block for the ES is the NQ, which is now over 5% below its all-time high. Every time it rallies, it fails and takes the ES along for the ride. Essentially, the ES rallied off the open, as did the NQ (which is where the head fake came in), and then the NQ experienced rotation selling. The other rotation involved buying the YM — which hit a new record high — and selling the NQ. 

Also contributing to the NQ’s weakness was NVDA, which sold off to $124.37 and then flatlined late in the day, settling down 2.25%. It seems the markets are always waiting for something, and this time it’s NVDA’s earnings report on Wednesday after the close. The big question among some bulls is not whether NVDA stock will beat estimates, but by how much.

With the stock still 12% off its June high, Goldman Sachs (GS) strategist Scott Rubner — who previously predicted the short-term market top in July — made headlines last week by calling NVDA the "most important stock" of the year. He advised investors to “buy the dip” ahead of what he expects will be an earnings report significant enough to spark a market-wide rally. 

Additionally, Goldman analyst Toshiya Hari recently maintained a “buy” rating on NVDA and reiterated a $135 price target on the stock ahead of earnings. The chip stock has rallied an astonishing 156.5% year-to-date and 22.4% over the past three months.