Tech sentiment flipped overnight as NVDA195.73 delivered a full-scale earnings beat, as we expected. Management was as bullish as ever on the demand backdrop and addressed AI-bubble concerns by emphasizing that the industry is undergoing three major platform shifts simultaneously: CPU-to-GPU migration, hyperscalers retooling existing infrastructure, and new Agentic AI workloads. Meanwhile, odds of a Fed cut dropped on a hawkish October FOMC minutes (those in favor of a hold outnumbered those in favor of a cut) and news from BLS after the close yesterday that it will not complete the October employment report. The October and November reports, with the latter originally scheduled for December 5 (the week before the next FOMC), will now both be released on December 16, the week after the FOMC (December 10). Given Powell's comments about no action before more econ data is released, this revised schedule probably narrows the path to a rate cut at the next meeting. The futures market has already reacted, with December cut odds reduced from ~46% on Tuesday to ~30% today pre-market.
US: Futures are higher following the biggest wall of worry into year-end. NVDA (+5%) is leading all stocks higher, with Mag7, Semis, and AI themes. The market followed our playbook in the past few days by finding support around NQ1!25081.5=24.4k on Tuesday and rallying into NVDA earnings; we also predicted NVDA earnings beat, and the market reaction was positive. Now, note that despite the positive reaction, NQ stayed in the 25–25.3k range all night (the two major resistance levels I mentioned yesterday). Market sentiment seems to be picking up, with the majority of news headlines reassuring that AI is not a bubble.
Our plan hasn't changed from last Friday: a break below NQ=24.4k signals the popping of this bubble, while a reclaim of 25.3k by this Friday could extend this bubble into 2026. For bulls, don't get too optimistic as NQ hasn't posted a close above 25.3k and we have seen many instances of sell the news RTH action on positive Q3 earnings beats by the major AI players. For bears, 25.3k remains a good resistance.