Nicely, Nvidia did it! A stellar earnings report from NVDA introduced again optimism within the inventory market. When a inventory rises round 15% (for NVDA, that is a few $100 rise in its value), it is a sign that traders nonetheless have tons of optimism. Fairness futures have been up forward of the open on Thursday. The S&P 500 ($PX) gapped up, hitting a brand new all-time excessive. Wanting on the every day chart of the S&P 500, the index has bounced off its 21-day exponential shifting common (EMA) a number of occasions because the starting of its steep rally in November 2023.

CHART 1. DAILY CHART OF THE S&P 500 ($SPX) INDEX. From November 2023, the index has been holding on to the assist of its 21-day exponential shifting common because it retains hitting new highs.Chart supply: StockCharts.com. For instructional functions.

Contemplate the 21-day EMA as a primary assist stage. If the EMA assist holds, you possibly can think about the market in a bull rally. NVDA’s sturdy steering for the following two years shook off all investor worries. It virtually appears that rate of interest cuts are now not entrance and heart of traders’ minds. Even Thursday’s higher-than-estimated jobless claims quantity did not sway investor optimism. The troubles will doubtless floor if the S&P 500 breaks under the 21-day EMA, at which era you’d must search for that subsequent assist stage, which might be the 50-day easy shifting common.

The CBOE Volatility Index ($VIX) slowly rose and gapped decrease on Thursday. The VIX has proven some thrilling motion in the previous few months, with wide-ranging days and many up-and-down motion.

CHART 2. DAILY CHART OF THE CBOE VOLATILITY INDEX ($VIX). The VIX has had some wide-ranging days, with many up-and-down actions that seem like shifting inside an upward channel.Chart supply: StockCharts.com. For instructional functions.

The marginally upward trending transfer within the VIX is just not evident whenever you have a look at a longer-term chart of the VIX. While you view a month-to-month chart from 2000, earlier than the latest spikes—the Nice Recession in 2008 and the COVID Crash in 2020—the VIX was far more unstable than it’s now. Be aware that it rose earlier than spiking >80. There aren’t any related indicators of that proper now, however watching the VIX usually is at all times a good suggestion, as it may inform loads about investor sentiment and ship warning indicators earlier than a crash.

CHART 3. MONTHLY CHART OF VIX FROM 2000. Be aware the erratic actions within the VIX earlier than the spikes; it additionally begins rising earlier than the spike. These are two primary causes to control the VIX.Chart supply: StockCharts.com. For instructional functions.

In different information, current residence gross sales in January rose, one other signal the economic system remains to be wholesome. One month’s knowledge does not make a pattern and, on condition that mortgage charges have risen, there could also be a decline in February’s quantity. Or perhaps not. The chart under of the US 30-year Mounted Price Mortgage reveals a slight enhance in mortgage charges in February.

CHART 4. 30-YEAR FIXED-RTE MORTGAGE AVERAGE IN THE US. After a pointy decline, mortgage charges rose in February. Will this rise have an effect on residence gross sales?Chart supply: StockCharts.com. For instructional functions.

The Backside Line

Equities are the favourite amongst traders and can doubtless stay this fashion so long as AI continues to excite traders. And if NVDA continues to rise the best way it has this 12 months, the S&P 500 will experience together with it.

Disclaimer: This weblog is for instructional functions solely and shouldn’t be construed as monetary recommendation. The concepts and techniques ought to by no means be used with out first assessing your individual private and monetary scenario, or with out consulting a monetary skilled.