Markets shrugged off Monday’s selloff, but volatility is back with a vengeance on Tuesday. The Daily Breakdown dives into the action.
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What’s Happening?
Yesterday’s early losses got absorbed, and by the afternoon US indices managed to grind out a modest gain on Monday. Today, the setup is tougher: the S&P 500 is down about 1.3% and the Nasdaq 100 is off roughly 1.7%. Silver and gold are under pressure too, while oil is climbing again.
Energy Rips
After rallying more than 6% yesterday, oil futures are up another 7% this morning. That’s putting a strong bid under the USO ETF, which notched a multi-year high Monday and is now trading at its highest level since January 2020 in pre-market action. Energy led all sectors yesterday, with Exxon Mobil and Chevron pushing to fresh record highs along the way.
Crypto Climbs (Then Cools)
Crypto had a surprisingly quiet weekend, then caught a bid on Monday. Bitcoin and Ethereum each gained around 4.5%, while Solana and XRP moved higher too, as the group showed more momentum than you’d expect in this tape. This morning, though, crypto is giving back part of those gains.
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The Setup — Nvidia
Nvidia reported strong quarterly results last week and delivered a solid outlook, yet the stock did not respond the way bulls had hoped. Instead, Monday’s pullback sent the stock into a key support area:
The $170 to $175 zone has been key support going back to the summer. Now, the 200-day moving average is also within this range and on Monday, NVDA tested this measure for the first time since May. If support holds, bulls will look for a larger bounce. If it breaks, it could usher in a larger selloff.
Options
As of March 2nd, the options with the highest open interest for NVDA stock — meaning the contracts with the largest open positions in the options market — were still the March $200 calls.
Investors who are bullish could consider calls or call spreads as one way to speculate on further upside, while bearish investors could consider puts or put spreads to speculate on a further move to the downside. For options traders, it may be advantageous to have adequate time until the option’s expiration.
To learn more about options, consider visiting the eToro Academy.
What Wall Street’s Watching
TGT
There’s a lot of red on screens this morning, but Target is up about 4% after beating fourth-quarter earnings expectations. It’s the retailer’s first report since CEO Michael Fiddelke took over last month. Management guided for roughly 2% net sales growth year over year and expects sales to increase in every quarter this year, giving bulls confidence that Target’s turnaround efforts are taking hold. Dig into the fundamentals for TGT.
AAOI
Shares of Applied Optoelectronics surged yesterday, jumping more than 20% as optical materials and semiconductor names continue to rip higher. The move also got a boost from Nvidia’s reported $2 billion investments in both Lumentum and Coherent. Check out the chart for AAOI.
BBY
Best Buy stock is jumping this morning, climbing roughly 10% in pre-market trading after the firm reported its fourth-quarter results. Revenue of $13.81 billion missed estimates of $13.88 billion, but earnings of $2.61 per share topped expectations of $2.47 per share.
Disclaimer:
Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.