Futures are mixed overnight, with NQ1!25572 lagging. Pre-market, Mag 7 are mostly lower. AVGO380.58 dropped 6% post-earnings, despite beating expectations across the board. It wasn't surprising to see a call that started with such strong numbers and a positive story end in frustration, similar to NVDA182.49's earnings—though NVDA managed to stay in the green until market open. Commodities are mostly higher, led by copper and gold/silver. We reiterate our target of GC1!4369.3 at 5k by the end of 2026.
Remaining catalysts for this year include: NFP, CPI, MU257.01 / FDX288.89 / NKE67.8765 earnings, and 3Q GDP. It's worth noting that Powell has commented on the potential poor data quality for November's NFP and CPI, due to issues in the data collection process, which could offset any large surprises.
Despite SPX6901 being just 0.3% away from its ATH and RUT2590.61 making new ATH in the past two days, NDX25686.69 and NVDA have lagged significantly. This divergence doesn't bode well for a continued bull market thesis. ORCL197.365 and AVGO earnings are also a red flag. It's important to recognize that by the end of each bull market, bellwether stocks often stall while the broader market grinds higher, and eventually, this leads to the downside. The same happened to Cisco and Intel in early 2000, Lehman and Bear Stearns before the GFC. The same is happening to NVDA and NDX now. I could be too early to call the top, but I advise caution going forward. With P/E at such elevated levels, suggesting roughly 0% return in the next decade, it's just not a good time to add to the crowded tech longs.