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You might expect the final week of August to be one of the slowest on Wall Street, with traders enjoying the last days of summer before Labor Day. However, a major event is about to capture the market’s attention: Nvidia’s upcoming earnings report. In fact, one money manager suggested that Nvidia’s results could even steal the spotlight from Federal Reserve Chair Jerome Powell’s much-anticipated speech on inflation, the economy, and interest rates at Jackson Hole on Friday. “Forget the Fed—it’s all about Nvidia’s earnings on August 28th. The wait is the hardest part,” joked Gina Bolvin, president of Bolvin Wealth Management Group, in a nod to the late Tom Petty. For Nvidia to maintain its soaring valuation, the company will need to deliver another impressive quarter and provide strong guidance. The Roundhill Magnificent Seven ETF, which consists solely of Nvidia, Apple, Microsoft, Amazon, Alphabet, Meta, and Tesla, is currently trading at about 36 times estimated 2024 earnings, up from a P/E ratio of 32 following the market’s drop on August 5. This is significantly higher than both the broader market and the rest of the tech sector. The S&P 500 trades at around 23 times this year’s earnings forecasts, while the Invesco QQQ Trust, which tracks the Nasdaq 100, has a P/E of 30. The Magnificent Seven have a considerable impact on these indexes, skewing the multiples upward due to their massive market caps. The pressure is on Nvidia to prove that the AI buzz is justified and to support Big Tech’s elevated valuations. Nvidia is currently valued at around 47 times forward earnings estimates, with only Tesla among the Magnificent Seven having a higher P/E ratio, approaching 100. But Nvidia might be up to the task. Earnings and revenue are expected to more than double compared to a year ago. It’s worth remembering that Nvidia faced high expectations last May, and the company didn’t just meet them—it exceeded them, beating analysts’ forecasts by 7% and sparking another rally in tech stocks. With other major tech companies already reporting positive outlooks for AI-driven products and services, this is promising news for Nvidia, whose largest customers include Microsoft, Amazon, Alphabet, and Meta. “Each of these companies highlighted strong demand and investment in AI-related products that should support tech earnings moving forward,” said Larry Adam, chief investment officer at Raymond James, in a report. “This earnings strength is why we favor megacap tech and would view any weakness as a buying opportunity,” Adam added. Nvidia’s chips are also in high demand beyond the tech sector, particularly in the automotive industry. “Nvidia continues to experience strong demand from key customers across all its processors and is struggling to keep up,” said Ivan Feinseth, chief market strategist at Tigress Financial Intelligence. Feinseth also emphasized that “significant upside exists from current levels” for Nvidia. Wall Street is in agreement. Nearly all analysts covering the stock have given it a Buy rating, with the consensus price target nearly 10% above current levels. Nvidia shares were up 1.3% to $125.40 in premarket trading on Friday. While Nvidia is certainly a crowded trade, with nearly everyone betting on its continued rise, the company has consistently rewarded its investors and helped lift other Big Tech giants along the way. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Analysts are cautioning investors to expect heightened stock market volatility as the 2024 presidential election approaches on November 5. Although recent economic data suggests that the Federal Reserve might begin cutting interest rates, providing some relief to U.S. financial markets, the upcoming election season is likely to bring increased uncertainty. Historically, election years have seen the S&P 500 underperform, with September often being the weakest month. According to CFRA Research, the S&P 500 has averaged a 0.8% decline in September during election years dating back to 1944. Sam Stovall, chief investment strategist at CFRA Research, highlights that August and September have consistently been among the worst months for the stock market during election years, with September showing the largest declines. October, while typically producing gains of over 1%, has been the most volatile month during election years, with a standard deviation 35% higher than other months, reflecting significant market fluctuations. The outcome of the election could also heavily influence market behavior. Historically, volatility has increased when the incumbent party loses the White House, as markets brace for potential policy changes. This year, the switch from President Joe Biden to Vice President Kamala Harris as the Democratic nominee has added another layer of uncertainty, particularly with Harris leading in polls against Republican nominee Donald Trump. Sector-specific impacts are also in focus. The healthcare industry, which has seen strong performance, could face challenges if Harris wins, especially regarding potential drug pricing reforms. This sector rotation could contribute to further market volatility as Election Day nears, potentially driving up the Cboe Volatility Index (VIX). Given the uncertain political landscape, investors should prepare for potential market turbulence in the weeks leading up to the election. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Dennis DeBusschere, chief market strategist at 22V Research in New York, believes that the recent mini-crash has left markets needing “more consistent optimism” to regain momentum. He noted that although recent economic data has eased recession fears triggered by the last jobs report, it hasn’t been enough to spark a rally. DeBusschere highlighted the latest U.S. jobless claims, ISM Services data, and the New York Fed’s August business leaders survey as signs of a strong economy. “The short-term recession scare appears to be over,” he said. Despite the S&P 500 closing just 1% below its July peak on Monday, DeBusschere identified the upcoming payrolls report on September 6 as the “next big hurdle” for the markets. He suggested that this report could have more impact than Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole Economic Symposium. Given the subdued market response to recent data, DeBusschere believes that even more positive news will be necessary to trigger another rally, especially after the recent unwinding of the Japanese yen carry trade. He also pointed out that expectations for small-cap fundamentals remain weak through the second half of 2024, though there’s potential for improvement if economic conditions strengthen. The Russell 2000 index is currently 6% below its July highs. In the tech sector, valuations continue to be driven by long-term narratives, which, according to DeBusschere, suggests there’s still room for gains even as the AI frenzy cools down. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Strategist Warns of Fragile Market Ahead of Powell’s Jackson Hole Speech As Federal Reserve Chair Jerome Powell prepares for his highly anticipated speech at the Jackson Hole Economic Symposium on Friday, market watchers are expecting him to signal a potential rate cut in September. However, if Powell’s message deviates from these expectations, it could put the stock market’s recent rebound at risk. Powell is set to discuss the economic outlook at 10 a.m. Eastern time during the annual gathering, which traditionally draws top U.S. and global central bankers. Although Jackson Hole is not usually a platform for immediate policy signals, this year’s speech will be closely analyzed due to recent market volatility and shifting expectations for the Fed’s rate path. The stock market has seen mixed reactions to past Jackson Hole speeches. Over the last 20 years, the S&P 500 has averaged a 0.4% gain during the conference, with modest positive returns in the following months. However, last year’s event saw the S&P 500 drop 3.4% after Powell indicated that the Fed’s rate-hiking cycle would continue longer than expected. This year, analysts widely believe Powell will emphasize that inflation is easing, which could justify a rate cut in September. However, Steve Sosnick, chief strategist at Interactive Brokers, cautions that investors may be overly optimistic. He suggests Powell might indicate a more measured approach, signaling that while rate cuts are possible, they will be gradual unless the economic data worsens. “I’m preaching a bit of caution ahead of Jackson Hole,” Sosnick said. “The more the market rallies in advance, the more fragile it might become.” U.S. stocks closed the week higher, with the Dow Jones, S&P 500, and Nasdaq all posting their best weekly gains since early November. In addition to Powell’s speech, investors will also focus on the Fed’s July meeting minutes and key labor market data next week. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com

Stocks Rally as Economic Data Eases Recession Fears The S&P 500 erased its August losses on Thursday, marking a sharp reversal after the index experienced its worst start to a month in eight years. By the close, the S&P 500 was up 0.4% for August, while the Nasdaq Composite was only slightly down. Analysts attribute the recovery to encouraging economic data and strong earnings reports. Retail sales saw their largest increase in 18 months, and jobless claims came in lower than expected. These positive signals helped to counteract fears of a looming recession and increased the likelihood of a 25-basis-point rate cut by the Federal Reserve next month. Walmart’s impressive earnings also contributed to a broad market rally, with consumer-focused stocks leading the way. The S&P 500’s consumer-discretionary sector had its best day of the year, and a “broad-based buying wave,” as described by Mike O’Rourke of Jones Trading, lifted both tech stocks and cyclical sectors. Jay Hatfield of Infrastructure Capital Advisors noted that the market’s rebound was a response to the “irrational recession fears” that emerged earlier in the month. Despite a rocky start to August, including a spike in the VIX to levels not seen since the pandemic, the market quickly recovered. The VIX has since dropped 60%, its fastest decline on record. Over the past six days, the S&P 500 has climbed 6.6%, and the Nasdaq has gained 8.6%, marking their best performance since November 2022. Technology stocks have led the charge, with the S&P 500’s tech sector up 11.5% in the same period. Small-cap stocks have also rebounded, with the Russell 2000 index rising 2.5% on Thursday. Looking ahead, analysts expect continued support for stocks from strong economic data. However, as O’Rourke warned, if the data remains too strong, it might reduce the need for further rate cuts. John PaulJohn Paul is the founder of DayTradeToWin, a trading education and software company established in 2008, supporting traders worldwide. His expertise focuses on price action-based futures trading strategies and structured market analysis. DayTradeToWin delivers trading education, indicators, and software tools designed to help traders apply disciplined, rule-based decision-making across global futures markets. He is the creator of multiple trading methodologies, including the Sonic System, Atlas Line, and Trade Scalper, which help traders identify structured opportunities in markets such as the E-mini S&P 500 (ES), Nasdaq (NQ), crude oil (CL), and gold (GC). Official website: https://daytradetowin.com daytradetowin.com