S&P 500 Climbs as US Dollar, Rates Decline: Will the 5,000 Gap Fill Hold?
Michael Kramer | Feb 15, 2024 08:25
Rates and the dollar fell yesterday, giving stocks a chance to rally back. The S&P 500 caught this mechanical bid late in the day, of course right after I posted my YouTube video.
The rise in the market looks forced and mechanical, with that stair-step moving higher; you do not often see something like that.
Perhaps the bid had something to do with dollar weakness in some emerging market currencies, like the Mexican peso, which stirred up some risk-on enthusiasm. I don’t know.
I don’t concern myself much with why the index broke higher or lower on any given day. Like yesterday, the index rose just above the 61.8% retracement level from yesterday’s drop.
So, we do not learn much about where things go from here. Of course, there is still a higher gap at 5,025, and we know there are a lot of open calls for Friday at 5,000 in the SPX, so a move back to 5025 seems possible heading into Friday.
Nvidia (NASDAQ:NVDA) helped the index rise again today as well. As we get closer to earnings next week, we must wonder what happens next.
Does Nvidia pull a Meta (NASDAQ:META)-like wildcard out of thin air to keep the stock higher and issue a token dividend?
Does it just report results and hope for the best?
One thing is clear, IV for Nvidia will come down sharply post results, the question is whether the news whatever it may be will be good enough to offset the sharp decline in IV that comes, to keep the stock from dropping.
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In the meantime, Cisco (NASDAQ:CSCO) is falling after it issued weak revenue guidance, providing a range of $51.5 to $52.5 billion, well below its prior guidance of $53.8 to $55 billion and analysts’ estimate of $54.33 billion.
They are also cutting their workforce by 5%. I’m unsure how it all works, but Cisco doesn’t seem to be doing well despite all the “demand” for AI. Perhaps Cisco’s stuff isn’t used in any global AI build-out.
The stock is down about 5% after hours. You got me.
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