Positive Sentiment Drives Stock Market in Early Trade

The stock market is experiencing positive sentiment in early trade for a number of reasons. One example is NVIDIA Corp (NVDA), whose stock is up 8.47% due to aggressive investor buying ahead of its upcoming earnings release. Investors are also expecting a similar rise after the earnings report, based on previous performance.

The long-term target for NVIDIA has been raised, indicating confidence in the company’s future. It is worth noting that the demand for AI chips from NVIDIA is exceeding supply, which has contributed to the positive sentiment surrounding the stock. However, it is common for high-performing stocks to experience a fall after strong earnings, as they often do not meet high whisper numbers.

Investors are positioning themselves for another leg up in the artificial intelligence frenzy rally, as the market is anticipating continued growth in this area. The Chinese Plunge Protection Team (PPT) is believed to be buying stocks to prevent them from plunging, which has led to a 2% rise in Hong Kong stocks. Additionally, the Chinese government’s decision to sell dollars through banks has weakened the dollar, which is favorable for companies with overseas earnings.

Despite these positive factors, there are concerns from perma bears about rising yields, geopolitics, lower earnings, high national debt, inflation, the hawkish Fed, and Powell’s upcoming speech at Jackson Hole. However, perma bulls believe that these negatives are outweighed by the potential productivity boost from artificial intelligence.

BRICS (Brazil, Russia, India, China, South Africa) are meeting in South Africa to expand their bloc with 40 additional countries and discuss ways to reduce the power of the U.S. dollar. For long-term investors, it is recommended to allocate a portion of their portfolio to emerging markets.

In terms of specific stocks, money flows are positive in Apple Inc (AAPL), Amazon.com, Inc. (AMZN), Alphabet Inc Class C (GOOG), Meta Platforms Inc (META), Microsoft Corp (MSFT), NVIDIA Corp (NVDA), and Tesla Inc (TSLA). Money flows are mixed in SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust Series 1 (QQQ).

In terms of commodities, the momo crowd is buying gold and selling oil. Bitcoin (BTC/USD) is currently range-bound. The overall stock market indicator is currently positive but can quickly turn negative.

Sources: (The Arora Report)