DayTradeToWin Financial Market News – Page 81 of 203

Nvidia Stock Soars: Why Wall Street Predicts Growth

John Paul / October 9, 2024

Analysts are confident that Nvidia’s new Blackwell chip lineup is positioning the company for a strong financial performance next year. While Nvidia’s most recent earnings report didn’t exceed forecasts as significantly as in prior quarters, many on Wall Street believe the company is set to outperform moving forward. Cantor Fitzgerald analyst C.J. Muse sees Nvidia as having the highest potential for upside among the companies they track, largely due to the anticipated success of the Blackwell chip. Nvidia expects to generate “several billion” dollars in revenue from the product in the January quarter, with Wall Street estimates hovering around $4 billion. Muse projects Nvidia’s January-quarter revenue could reach $37 billion, and the April-quarter could hit $41 billion, both approximately $1 billion above current forecasts. Nvidia CEO Jensen Huang has described demand for the Blackwell chip as “insane,” and Muse believes this demand, combined with Nvidia’s track record of execution, could lead to a significant boost in revenue. He called this upcoming product cycle Nvidia’s most impactful yet, reaffirming the company as their “TOP PICK.” Nvidia’s stock continued its upward momentum on Tuesday, gaining 4% and marking five straight days of growth. The stock is now just 2% below its all-time high. Mizuho analyst Jordan Klein noted that both long-term and hedge fund investors are becoming more optimistic about Nvidia’s prospects in 2025, expecting Blackwell’s demand to far exceed supply. Additional excitement was fueled by comments from Hon Hai Precision Industry Co. Ltd., a manufacturer of AI servers, which also pointed to robust Blackwell demand in a Bloomberg interview.

Market News

S&P 500 Financials Hit Summer Highs Before Earnings

John Paul / October 8, 2024

DataTrek’s Nicholas Colas points out that the financial sector is “much more than just banks,” as investors await JPMorgan’s third-quarter earnings report, expected Friday. Last week, all three major U.S. stock indexes posted gains for the fourth straight week, driven by a stronger-than-expected jobs report. The financial sector of the S&P 500 rose about 1%, while energy stocks jumped 7% as concerns grew over oil supply risks due to the conflict in the Middle East. As earnings season begins, investors are closely watching JPMorgan Chase and Wells Fargo, set to release third-quarter results on October 11. According to a DataTrek Research note, the financial sector’s earnings outlook isn’t particularly strong, with analysts forecasting a slight 0.4% decline from last year, primarily due to an expected 12% drop in bank earnings. However, Colas stresses that the financial sector includes much more than just banks. Non-bank industries, which make up 76% of the sector, are more influential on overall performance. These subsectors include financial services, capital markets, insurance, and consumer finance. The breakdown of weights is as follows: DataTrek sees large-cap financials as a diverse way to play continued U.S. economic growth. While early bank earnings can offer some insight, Colas notes that they represent just a small part of the financial sector’s overall story, with non-bank subsectors expected to show year-over-year earnings growth. So far in 2024, the U.S. stock market has performed well, with the S&P 500 up 19.4% through Monday, while the financial sector has outpaced it slightly with a 19.8% gain. However, the financial sector has fallen 0.5% in October, while energy has surged 6.5%, reflecting concerns over rising tensions in the Middle East. On Monday, U.S. markets closed lower, with energy being the only S&P 500 sector to end the session in the green.

Market News

Why Goldman Sachs Raised Its S&P 500 Target Again

John Paul / October 7, 2024

As third-quarter earnings season begins, Goldman Sachs has once again raised its target for the S&P 500. Led by David Kostin, the Goldman Sachs team has now increased its forecast for the S&P 500 to 6,000 in the next three months, up from the previous estimate of 5,600. Looking further ahead, they expect the index to reach 6,300 in 12 months, an upgrade from their prior projection of 6,000. The driving force behind this upgrade is their optimism about earnings growth in 2025 and 2026. Goldman expects S&P 500 companies to earn $268 per share in 2025 and $288 in 2026, outpacing Wall Street’s consensus estimates of $265 and $281. Although these numbers are below aggregated estimates of $275 for 2025 and $307 for 2026, Goldman remains more positive than many of its peers. “From a top-down view, our U.S. GDP growth forecast is above consensus. However, bottom-up earnings estimates are often too optimistic and tend to be revised down over time,” said the team. Goldman Sachs attributes much of this confidence to expected improvements in profit margins. They now predict margins will increase to 12.3% in 2025, up from 11.5% in 2024, and will continue to rise to 12.6% by 2026. This marks a significant shift from their earlier projection of a 24-basis-point margin expansion in 2025, now revised to 78 basis points. “The economic backdrop continues to support moderate margin growth, with prices rising faster than input costs,” they explained. A portion of this margin improvement is also expected to come from industry-specific factors. Goldman anticipates that elevated research-and-development costs in healthcare, particularly for companies like Bristol-Myers Squibb, will stabilize. They also expect that one-time charges taken this year by Warner Bros. Discovery and Uber Technologies will not recur. Additionally, a recovery in the semiconductor industry and strong performance from large tech companies are anticipated to fuel growth. While Goldman acknowledges that earnings surprises may moderate, they believe the continued strong demand for AI, as highlighted in their recent GS Communacopia Conference, will benefit key technology stocks.

Market News

A Foreigner’s Take on U.S. Stock Market Revival

John Paul / October 4, 2024

U.S. Equities Could Reclaim Market Leadership, Analyst Predicts As inflation cools and the nonfarm payroll report regains its prominence, some normalcy has returned for traders. However, the U.S. stock market has experienced unusual underperformance lately. Hubert de Barochez, senior markets economist at Capital Economics, notes that since mid-June, the MSCI USA index has returned less than 5%, only half of what global markets outside the U.S. have achieved. De Barochez highlights four main factors behind this lag. First, U.S. tech stocks, which represent a large part of the market, have been struggling. While there’s been a recent bounce, the U.S. tech sector has seen sharper declines than elsewhere, and communication services have fallen in the U.S. but gained globally. Fears of an economic slowdown have raised doubts about tech earnings growth, with many companies previously “priced for perfection.” Second, the U.S. market has a smaller share of financial stocks, which have benefited from a steepening yield curve. Financials make up just 13% of the U.S. index, compared to 22% of global markets outside the U.S., limiting their positive impact on U.S. returns. Third, the U.S. dollar’s depreciation has boosted foreign equity returns in dollar terms. For instance, Japanese stocks saw significant gains, driven in part by the yen’s 8% rise against the dollar since mid-June. Finally, a 30% surge in Chinese stocks, fueled by Beijing’s economic stimulus, has added to the pressure on U.S. equities. Despite these challenges, de Barochez believes the U.S. market will eventually retake the lead, consistent with historical trends during past Fed easing cycles, which have typically led to stronger returns for U.S. stocks. He also expects a renewed surge in investor enthusiasm for AI, potentially creating a stock market bubble. If AI is recognized as a transformative “general purpose technology” like the internet or the steam engine, equity valuations could soar even higher. However, de Barochez warns that a possible AI bubble burst around 2026 could hit U.S. stocks the hardest.

Market News

Market Turbulence in 2025: The Presidential Factor

John Paul / October 3, 2024

Stock market often experience a downturn in the three months following a presidential inauguration. No matter who wins the U.S. presidential election, the stock market tends to face challenges after Inauguration Day in January. Since the creation of the Dow Jones Industrial Average (DJIA) in 1896, one of its weakest quarters has been the first of a new president’s term, averaging a mere 0.2% return. By comparison, the market usually gains an average of 1.9% in other quarters, regardless of whether the incumbent party remains in power. A study by Ned Davis Research sheds light on this trend, revealing an inverse relationship between a president’s approval rating and the stock market. After Inauguration Day, a president’s approval rating is typically at its peak, which seems to create a drag on market performance. However, when a president’s approval rating dips below 35%, the market tends to fare worse. This has happened only 6.8% of the time since 1959, with notable examples including Richard Nixon’s resignation and the end of George W. Bush’s term during the financial crisis. Currently, President Biden’s approval rating is 39%. It’s puzzling why investors wait until Inauguration Day to recalibrate their expectations, especially since campaign promises often don’t align with economic realities. Even with a cooperative Congress, the math doesn’t support increasing government benefits while simultaneously cutting taxes and reducing the deficit. Yet, political rhetoric frequently leads to unrealistic optimism. Warren Buffett likens this to a joke about an oil prospector who convinces others that oil has been found in hell, prompting them to rush off in pursuit. Similarly, the lofty promises made by politicians are often equivalent to that rumor. Investors should remain cautious, even when the stock market is soaring. It’s important to remember that post-inauguration market weakness is an average trend, not a guarantee. In fact, other market indicators, such as the gold-platinum ratio, are currently signaling a bullish outlook, suggesting that stock prices could rise over the next year—even if the first quarter of 2025 is challenging.

Uncategorized

Master Day Trading with the Sonic System

John Paul / October 2, 2024

Hello, traders! Today, we’ll dive into using the Sonic Trading System from Day Trade to Win. This system provides the key elements you need for day trading success: entries, targets, and stops. However, managing trades based on the system’s rules is just as important. Let’s break down some critical lessons from today’s session and explore how you can improve your trading game. Handling Missed Trades Missed trades are a part of day trading, especially when the market moves fast. In today’s example, I attempted to enter at 5788 quarter, but I wasn’t filled before the market hit my target. In this situation, holding on or chasing the trade isn’t a good idea. If you miss your entry and the target is hit, cancel the order and move on. The market offers numerous opportunities, especially when using a system like Sonic. Don’t let one missed trade derail your focus. Adjusting Targets and Stops Properly After successfully entering at 5790, I adjusted my target and stop as per the system’s rules. Sonic makes it easy by providing clear targets and stops on the chart. However, it’s essential to manage these parameters yourself. If your target or stop is hit, avoid taking the same trade again. Many traders fall into the trap of trying to re-enter after missing out, which can lead to unnecessary losses. Stick to the system and wait for the next signal. Navigating Market Delays When I entered the trade at 5790, my target was 5791—just a few ticks away. But in fast-moving markets like the mini S&P, NASDAQ, or Dow, even small targets can take time to hit. While it’s tempting to hold on, the goal is to avoid staying in a trade for too long, especially during the first few hours of the session. Patience is crucial, but knowing when to cut your losses or take a small profit is equally important. The Importance of ATR and Quick Profits The Average True Range (ATR) is a critical tool in the Sonic system. It helps define your target and stop levels based on market volatility. In today’s trades, I aimed for a target that was less than one times the ATR. This approach allows you to take quick profits without holding onto trades for extended periods, which can be risky. If you prefer bigger profit targets, you can set your target to two times the ATR and trail your stop, but the safest approach is often to go for quicker exits based on the market’s immediate movement. Avoiding Common Mistakes: Don’t Take the Same Trade Twice A common question in our live trading room is whether you should take the same trade again if you missed it the first time. My advice? No. Once a trade hits its target or stop, that opportunity is done. Re-entering increases your risk and can lead to poor decisions. Additionally, if you didn’t adjust your target correctly and missed your profit, it’s better to close the trade at break-even or a small profit/loss. The goal is always to protect your account, not to chase the market. Learn More with a Free Member Account If you’re new to day trading or looking to enhance your skills, sign up for a free member account at Day Trade to Win. You’ll get access to our live trading room, the ABC Method, and software for NinjaTrader or TradingView. It’s an excellent way to start learning how to trade using price action, without relying on outdated indicators. Conclusion Day trading requires not only a solid strategy but also disciplined trade management. The Sonic Trading System gives you a clear framework, but it’s up to you to follow the rules—adjusting stops, managing targets, and knowing when to walk away from a trade. Stick to these principles, and you’ll set yourself up for consistent success. Happy trading, and don’t forget to sign up for your free member account to learn more!