[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] The headwinds are blowing stronger and stronger, but most stocks are still defying gravity and, in a lot of cases, common sense. All three big indexes were looking strong in late trading today. And this is all despite the fact that we got a hotter-than-expected CPI report this morning. But Bitcoin, which, along with gold, has been beyond hot lately, racked up a 1.2% loss by 2 PM. Ether was off more than 2.6%. At this point, a pullback in cryptocurrency could mean the market is pivoting to a risk-off stance. So let’s get while the getting’s good. There are a few Magnificent Seven stocks with favorable risk/reward ratios right now, along with some other names in AI. A lot depends on how interest rates finish this week. So let’s have a look…

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] Maybe you were camping on a mountaintop or lost in the woods this past Friday, but Nvidia, one of the market’s most important, high-volume stocks right now, took a wild ride to close out the week. Options volatility exploded higher as the seemingly unstoppable bullish fever on the stock broke. Shares slid around 10% from their intraday high. Today, though, options activity was at a low – activity was just 70% of NVDA’s five-day average. So what gives? Well, we’re going to look at exactly what’s happening. We’re likely seeing the beginning of a wind-down in Nvidia, and the next chapter could be mostly bearish.

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] The indexes took a hit today. The S&P, which had been up nicely to new all time highs surrendered to the red at the end of the day. But saying “stocks are down” is like calling the Pacific Ocean a “puddle.” It doesn’t do anywhere near enough justice to the insane price action we saw today. Like the headline says, the sell-side activity is different this time. Meta, the “Sideshow Bob” of the stock market, was off better than 1.5%, but Nvidia (the Krusty the Clown of the market, I guess) got crushed today, to put it politely. The intraday volatility – which we’ll look at – tells a pretty ugly story. The Nvdia story probably isn’t over yet. We’re going to look at what the hell just happened, but we’re also going to look at the advance/decline and sector

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] It’s understandable investors would assume that Amazon is a great representation of consumer discretionary spending – and the overall economy, for that matter. But I think I can go one better… It might suprise you, but I think Costco is actually the better yardstick, and I’ll show you exactly why. See, when Costco beats, equities and consumer spending appear to continue to rise. When they miss, Costco usually falls anywhere from 5% to 20%, and the economy gets wheezy. We’re going to look at all that in the context of inflation and jobs data – before those numbers hit tomorrow.

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] The S&P 500 was enjoying a bit of a bounceback today after yesterday’s selloff. Good news, right? Well, not so much. What I was looking at toward the close – and in fact over the past few days – is actually not great news for the market. We just keep seeing more and more weakness in the tech stocks that have been leading the markets lately. What’s more, when you look “deeper” into the ongoing rally, you see that volatility isn’t moving much at all. After heavy selling like we saw yesterday, we’d expect volatility to rocket higher. Didn’t really happen. And after a bounceback like we got today, you’d think the VIX would tank sharply. That didn’t happen. And that’s really weird. It’s not a great sign. The answer has a lot to do with the (soon-to-be former) Magnificent

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] There have been a few times over the past couple of weeks where we’ve seen warning signals flash and stocks start to waver. It goes a little something like this: The mood turns risk-off, the mega-bulls calling the shots in chipmakers and tech start to falter, and defensive plays like gold and bonds start to rise. Now, I watch for these situations like a hawk, so we’ve been ready when these scenarios play out. And we’re ready to resume running with the bulls when they’re back from their profit-taking – as they’ve always done. I’m starting to see the same warning signs creep up right now, particularly selling in the usual market leaders I mentioned. Not only that, I’m seeing convincing signals that metals are getting ready to run higher – another classic “risk-off” event. The wind’s starting to blow

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] You probably understand correlation in the markets – assets moving together in some kind of relationship, even if that happens to be inverse. It usually makes intuitive sense. If stocks drop, safe-haven assets like gold or bonds move higher as the crowd looks for safety. That makes sense, right? The dispersion trade, on the other hand, doesn’t quite jump out at you the same way, even though it’s really what’s running the show right now. This trade is when folks try and take advantage of the expected volatility in index options versus the expected volatility in components of that index. In this case, the index is the NASDAQ-100… and the stock in question is, you guessed it, Nvidia. Right now traders are crazy for it. They can’t get enough. Now that Google and Apple have lost their luster and are

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] The markets can be the ultimate bandwagon sometimes, and that’s got a tendency to be dangerous. It doesn’t take long for one big, definitive sell order… to be followed by tens of millions of others. At the moment, it’s working the other way; the crowd is into just one or two stocks (which we’ve talked about extensively) and those are the glue holding the markets together. And this puppy needs a lot of glue. The S&P 500 has a market cap of around $43 trillion-with-a-T. Just five companies make up around 25% of that market cap. Let that sink in. That glue starts to get worn out and… We’ll talk about that, but there’s a lot more. Not to pile on great news, but I’m watching the oil and energy sectors – they’re catching a bid right now, and that

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] So, it seems “bad news is good news” again – we’ve seen this cycle a few times in recent years… Investors have had the chance to digest not-exactly-great economic data several times this week – including today, when the PCE numbers hit the street. None of that data was positive; we haven’t had a single piece of good economic news all week. So why aren’t investors headed for the hills? Why aren’t they hunkering down. This is a sign the economy is fading, right? Well, that is the good news – for stocks at least. Investors are weighing the odds a weakening economy will prompt the Fed to cut rates sooner, rather than later, in 2024, and that’s usually rocket fuel for equities. Sure, the American consumer and the broader economy will get the short end of the stick, but

[video_player type=”embed” style=”1″ dimensions=”640×360″ width=”640″ height=”360″ align=”center” margin_top=”0″ margin_bottom=”20″ ipad_color=”black”][/video_player] These stocks have been leading the markets higher and lower for months now, to the exclusion of practically everything else – including hard economic data! (Including PCE, which drops tomorrow.) FOMO-stricken investors and traders are bidding them up to (literally) insane levels. There’s really not much else left to buy… and if there was it’d be too expensive anyway. Bargains have gone the way of the dodo. These stocks, particularly Nvidia, are all that matter right now. I hate it, and if you’ve been with me for a while, you know I hate it. But that’s the reality we have to deal with. And it looks like very soon we’ll be dealing with a whole lot of ugly. That’s because a few of the Magnificent 7 stocks are hitting critical, make-or-break technical levels right now. And if the “break” possibility