By J.C. Parets & All Star Charts
Thursday, 25th May, 2023
1/ Nvidia Soars to New Highs
2/ Nasdaq Reacts Higher
3/ Bitcoin Forms a Top
4/ The Pound Breaks Down
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1/ Nvidia Soars to New Highs
Nvidia (NVDA) just became the first mega-cap tech stock to make new all-time highs, rallying 24% today on the heels of a historic earnings report.
The company’s guidance and artificial intelligence (AI) business resulted in a massive sympathy bid that dragged the entire technology sector and Nasdaq 100 higher today.
Nvidia stock is up about 250% from its October lows, making it the best performer in the S&P 500 since equity markets bottomed last year.
Not only is NVDA at fresh all-time highs on absolute terms, but it is also making new record highs versus every benchmark under the sun. This stock is the definition of secular leadership. And based on today’s earnings reaction, it appears to have the fundamentals to back it up.
As long as this breakaway gap holds in the coming days, there is potential for a fresh leg higher for this stock.
2/ Nasdaq Reacts Higher
The Nasdaq 100 (QQQ) was up about 2.5% today, primarily due to Nvidia’s earnings, which propelled the entire growth complex higher.
As shown below, after a pullback to the August highs, buyers jumped in, causing the price to rebound to fresh 52-week highs.
Notice that momentum is in a bullish regime and the 200-day moving average is turning higher. All this evidence reinforces a shift in the trend in favor of the bulls.
As long as this breakout remains intact, the path of least resistance is to the upside for tech and growth stocks.
3/ Bitcoin Forms a Top
The sideways action in Bitcoin (BTC/USD) that has taken place this quarter has resulted in a potential distribution pattern.
As you can see in the chart below, the price is threatening to violate the lower bounds of a head and shoulders formation.
The question we’re asking now is whether this topping formation resolves lower or if it could result in a failed pattern, like what happened in Q1, and result in a price reaction to the upside.
If it’s the former, the bias is lower, which could lead to further downside. However, if buyers can quickly reclaim the $26,500 level, we could see a swift reaction back to this year’s highs.
4/ The Pound Breaks Down
The U.S. Dollar Index (DXY) booked another day in the green. Volatility is hitting the FX markets as major global currencies fall against King Dollar amid a growing list of failed breakouts.
The euro has fallen below its breakout level. The USD/JPY pair has reached its highest level since November last year. And now the British pound has undercut a critical shelf of former highs.
Here’s the British Pound Sterling Trust ETF (FXB):
With the path of least resistance pointing lower for the top components of the dollar index, few obstacles stand in the way of a USD uptrend.
Bulls must step in and support major global currencies like the pound to stave off a stronger USD. If they fail, stiff headwinds will likely impede global risk assets in the near term.
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Originally posted 25th May 2023
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