Nvidia earnings loom as semis trade lower on Samsung selloff
Semiconductor stocks are under pressure in U.S. early trade after Samsung Electronics fell 8.7% in South Korea, while Nvidia earnings are due Wednesday after the close.
Wild Stock Moves Ahead Please click here for an enlarged chart of Direxion Daily Semiconductor Bull 3X ETF (NYSE: SOXL ).
Note the following: Semiconductors are the leading sector that drove the stock market higher.
SOXL is the momo crowd’s favorite semiconductor ETF.
The chart shows SOXL rallied to the bottom band of zone 2 (resistance) but was not able to sustain the rally to get to the top band of zone 2.
This is a negative.
The chart shows that SOXL has pulled back to the top band of zone 3 (support).
RSI on the chart shows that SOXL is approaching an oversold level and thus could bounce.
The chart shows that this morning there is selling in semiconductors.
Semiconductors are being sold this morning in the U.S. in sympathy with S Samsung Electronics Co Ltd (OTCPK:SSNLF) crash in South Korea.
Samsung stock in South Korea fell 8.7% overnight for the following reasons: The selloff was a classic ‘sell the news’ reaction.
We previously shared with you that Samsung stock had rallied in anticipation of a shareholder return plan.
There was disappointment in the structure of the Samsung plan.
Samsung’s plan has an unprecedented 90T — 100T won for shareholder payout that investors like, but investors did not like that there was not an immediate, aggressive share buyback or a timeline for Treasury stock cancellations.
Prudent investors should note that when foreigners sold Samsung stock in South Korea overnight, South Korean retail traders took advantage of the dip and bought Samsung stock.
Stock market investors should keep in mind that more important than Samsung price action is Nvidia (NVDA) earnings that will be released Wednesday after the close.
Not as important as Nvidia, but still fairly important to the stock market are Marvell (MRVL) earnings that will be released Thursday after the close.
In our analysis, Marvell earnings will be an important data point for the next phase of AI.
Trade talks between the U.S. and Canada are breaking down.
Canada is suspending negotiations, and beginning at midnight tonight, the U.S. will impose a 50% tariff on $28B in goods.
The Canadian government is planning to match the tariffs to insulate its businesses and people from the effects of U.S. tariffs.
Prudent investors should pay attention that Anthropic’s Fable 5 has weaker demand than anticipated.
In our analysis, if this continues, this is a big risk for the AI trade even though the crowd is oblivious at this time.
NYSE and Nasdaq are planning 23 hours a day stock trading starting December 6.
This will be very lucrative for the exchanges and Wall Street as they will be able to attract foreign investors, especially from Asia.
In our analysis, for most investors, 23 hour trading will increase the risk.
The reason is that there will be low liquidity.
Due to low liquidity, stocks can have wild moves, especially in response to news.
The following regular trading session will likely be significantly impacted by overnight violent moves.
We are already witnessing wild moves in U.S. stocks in the early trade based on what happens in South Korea overnight.
On the positive side for the markets today, yields are pulling back.
The reason is the Treasury could use its $1T general account, Treasury’s rainy day fund equivalent, for bond buybacks.
We previously shared with you that after the initial euphoria on the Treasury’s buyback announcement, the move was faded by smart money.
The reason was that the amount of the buybacks was not significant and there was concern that Treasury Secretary Bessent did not have enough fire power.
In our analysis, if the Treasury is willing to use the general account fund for bond buybacks, the Treasury has enormous firepower to direct the markets.
In our analysis, the harder the Treasury tries to deal with the adverse effect of the $40T national debt without reducing the deficit, the more investors are convinced that the Treasury is trying to debase the dollar and are rushing into gold and bitcoin.
In the long run, this is a big risk for the U.S. stock market that is generally not appreciated by the crowd at this time.