A One – Stock Market?

After the main U.S. stock session on 05/22/24 Nvidia Corporation (NVDA) announced a great earnings report  and a ten for one stock split.  The news triggered a large rally in U.S. overnight stock futures.   When the main stock session opened on 05/23/24 the three main U.S. stock indices and the Russell 2000  were up from the prior session.  They all quickly began to decline.

The daily NVDA chart courtesy of Trading View illustrates its action.

NVDA is the king of all U.S. stocks, its capitalization is 6.5% of the Nasdaq 100.  Its massive gap up on 05/23/24 was solely responsible for the move up for many U.S. stock indices.

NVDA – RSI has a bearish divergence vs. its reading on 03/07/24.  However, MACD – Histogram and lines are bullish.  Its possible NVDA could rally for a few more trading days. 

The NVDA gap up also invalidated a “Rule of the Majority” signal made on 05/22//24.  Today the S&P 500 (SPX) and Nasdaq Composite (IXIC) both made new all-time highs.  The IXIC ended the session down only .39% – the least of the three main stock indices.  It’s possible IXIC could make a solo new high in the next few trading days, generating another “Rule of the Majority” signal.

The 30 – minute SPX chart updates its Elliott wave count from the 04/19/24 bottom.

On 05/16/24 the SPX had a bullseye hit of major Fibonacci resistance at 5,325.49 – please see the 05/16/24 blog.  The leeway on the Fibonacci resistance point is plus or minus 30 – SPX points.  The SPX high on 05/23/24 was 5,341.88 within the leeway zone.

The SPX appears to have completed an extended five wave pattern.  Minor wave “5” is a post Horizontal Triangle – thrust up.

If the count is correct the SPX could be at least  in the early part of a multi-week decline.   Longer term it could be the start of a multi-month bear market into at least early 2025.   

The NVDA opening surge created a great shorting opportunity.  The 05/22/24 blog recommended traders to initiate a 100% short position on non- leveraged Russell 2000 funds at the open of the RUT 05/23/24 main session.

The RUT high of the day was made in the first minute of the 05/23/24 main session.  RUT ended the 05/23/24 main session down 1.97% from the open.

Continue holding short.