Happy Tuesday, tradersโฆ
Jeff here.
Last week, we got a big post-election curveball in the marketsโฆ
Crypto miners, which had been on a tear, suddenly got hit with a wave of profit-taking.
Small caps, the stars of recent weeks, started to fade after outperforming everything else.
And tech, after surging for several days after the election, suddenly took a big hit on Friday.
There are a lot of confounding moves happening right now. This is the kind of market that throws conflicting indicators in every direction.
But you must figure out how to sort the signal from the noiseโฆ
Instead of getting caught in the weeds of tiny individual moves, focus on the big money flows. Listen to what the inside of the market is telling you.
Those initial moves in small caps? Theyโre not over. I think the recent pullback is just a fake-out (but more on that later)…
The wildcard this week is Nvidia Corporation (NASDAQ: NVDA). With earnings on Wednesday, itโs setting up to either confirm the tech rally โ or put a serious dent in it.
Moreover, another major semiconductor name is about to get de-listed, adding to a long list of headwinds for tech stocks.
Saying thereโs plenty to unpack would be an understatement, so letโs get to my Tuesday Market Outlook for this weekโฆ
Small Caps: My Favorite Setup for 2025
Last weekโs pullback in the iShares Russell 2000 ETF (NYSEARCA: IWM) doesnโt mean the run is over โ itโs just taking a breather.
Capital doesnโt flow in a straight line, but when it starts piling into one area, it usually keeps going.
Considering how much IWM has lagged behind the other major indexes, I think thereโs plenty of room for small caps to continue catching up.
Additionally, President-Elect Trump has promised to cut taxes for small businessesโฆ
And then thereโs the tariff angle. If Trump does put wide-ranging tariffs on foreign goods, the small caps could benefit most.
Why? Unlike big multinational corporations, many small-cap businesses manufacture their products onshore. Tariffs would make imported goods more expensive, giving these companies a built-in pricing advantage.
Meanwhile, the NASDAQ looks tired. Big tech has carried the market on its back for over two years now, and leadership doesnโt stay in one place forever.
With small caps still drawing inflows and policy potentially tilting in their favor, theyโve got a real shot at outperforming tech in 2025 and beyond.
How to Trade Nvidia Earnings
Earnings season always brings fireworks, and NVIDIAโs report on Wednesday is the most important print of the season.
With so much attention on this stock, the stakes couldnโt be higherโฆ
This company has posted seven straight quarters of triple-digit earnings growth. Unsurprisingly, expectations are through-the-roof for this report.
Thatโs a dangerous setup because it leaves no margin for error. If NVIDIA misses โ or even just delivers โgood but not greatโ guidance โ we could see a significant pullback.
Thatโs why Iโm cautious here. Instead of playing NVIDIA outright, I like hedging exposure with other semiconductor stocks. This way, youโre not tied to just one name in an industry thatโs been red-hot all year.
Meanwhile, Thanksgiving week has historically given the market a boost, particularly in years where stocks have been trending higher.
That leans bullish for the broader market, even if individual names like NVIDIA falter.
And speaking of tech names that are falteringโฆ
SMCI: A Semiconductor Crisis in the Making
If youโre not watching Super Micro Computer Inc. (NASDAQ: SMCI) โฆ itโs time to start now.
This company is unraveling in real-time, telling us a crucial story about the under-the-hood health of the semiconductor spaceโฆ
After losing 80% of its value ($55 billion in market cap) in eight months โ not a typo โ SMCI has stopped reporting earnings entirely, and is now set to get delisted from the NASDAQ.
If we were talking about a penny stock, this wouldnโt be notable. But weโre not talking about some random penny stockโฆ
SMCI is a major player in semiconductors, with deep ties across the sector:
Thatโs what makes this story so alarming. Nearly every big name in the chip business does business with SMCI.
At the very least, itโs a concern for companies like NVIDIA. At worst, it could be the first sign of something much larger lurking in the sector.
For me, this is another reason to be cautious about semiconductors. Even without SMCIโs implosion, valuations in this space have been stretched thin.
Add this disaster into the equation, and the sector looks vulnerable heading into next yearโฆ
My broader outlook? Bearish on semis for 2024, with the QQQ likely to underperform the IWM. This SMCI situation could be the first domino to fall.
My #1 Strategy to Crush This Market
With overall volatility at elevated levels, you need a strategy that keeps you ahead of the marketโs moves.
Thatโs where my overnight setup โ the Burn Notice โ comes in.
If I had to start my entire trading journey again with a small account, I would exclusively trade this strategy.
Donโt believe me? Take a look at my October track record for my Burn Notice trades:
78% on DELL*
33% on DAL*
84% on DAL*
7% on DUK*
-12% on UBER*
25% on CCL*
11% on NRG*
27% on NRG*
89% on ARM*
7% on FSLR*
35% on UHS*
-4.7% on HMY*
76% on FSLR*
85% on MSFT*
-3.5% on MMM*
19% on TMUS*
6% on AU*
52% on ARM*
84% on AFRM*
19 trades. 16 wins with just 3 losses. All of these moves happened in 24 hours or less.*
If you want to start positioning yourself for wins like this, hereโs how this strategy works:
- Identify setups likely to gap overnightโฆ
- Position before the closeโฆ
- Exit before the market gives the move backโฆ
This week, NVDAโs earnings report is setting up some great Burn Notice opportunities โ not in NVDA options themselves โ but in related โearnings sympathy plays.โ
Iโll break down my Nvidia earnings strategy step-by-step, including exactly what contracts Iโm tradingโฆ
TODAY, November 19 at 12:00 p.m. EST during my LIVE BURN NOTICE WORKSHOP โ Click here to reserve your seat!
See you there,
Jeff Zananiri
P.S. The election just triggered the most epic 90-day trading window of the decadeโฆ
By identifying 1,500 stocks over the last 20 years that delivered average gains of 3,700% within 90 days of election day* โ our $3 million AI has already selected its โTop 5 Playsโ…
Get all the details from Tim Bohen on Wednesday, November 20th at 8 p.m. EST โ Save your seat now!
*Past performance does not indicate future results
