Good morning,
All the headlines this morning will be focusing on Nvidia. And at an 8% weight in the S&P 500 and the forefront of the investment theme that has driven a large amount of equities’ return in 2025, I’m not going to say it shouldn’t be.
But, I think the most important story this week is the absolute SURGE we are seeing in the financials sector.
From late April through early August, financials lagged the S&P 500 by more than 9%. But, led by the big banks, XLF is bouncing back in a huge way since Powell’s Jackson Hole speech.
As we’ll review today, the charts of many of these stocks suggest the outperformance is likely to continue, especially with Nvidia and technology stocks potentially set to take a breather.
This week, we’ll review:
The key levels to watch on Nvidia and other AI stocks today
Some of the best charts in the financials sector
Hot List updates
and more!
Nvidia and the AI trade
Pre-market action suggests these bearish momentum divergences might matter
Nvidia is down slightly pre-market, and while the move isn’t huge, the fact that we’re not higher means another potential failure at $184. To the downside, all eyes should turn toward $168.80. A break of that level would mark the stock’s first one-month low since the April bottom, break the 50-DMA, and target a retest of the breakout point near $154.
If you look over to the S&P 500, you can see the potential impact (note the comparable bearish momentum divergences). Like our reader on Tuesday noted, the index is more vulnerable to what happens with Nvidia, even if the rest of the market is rocking and rolling.
*Nvidia is down 1.2%, to around $179.40 as of approximately 8:20 am ET
Cadence Design Systems continues to set up
CDNS is one of my favorite charts in the AI/semiconductor-adjacent space right now. The stock has continued its orderly pullback, and we just need one strong hollow candle to break this thing out and target another run at all-time highs.
$158.25 remains key with AMD
AMD is slightly lower in sympathy with Nvidia pre-market, but the implied open isn’t enough to test key support. Remember, it’s not a double-top unless it breaks support.
I like Arista Networks long against the top of this base
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