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Two days after Nvidia’s blowout earnings, the market still can’t decide whether we’re in an AI supercycle or a mood swing.
Nvidia’s earnings were supposed to be the spark that brought the bulls back. The numbers were strong, the guidance was stronger, and Jensen Huang spent the entire call dismantling every bearish argument that had built up over the last month.
The last 48 hours reminded traders of an important rule: strong fundamentals don’t always translate into strong price action.
Yesterday: A Rally That Reversed
Wall Street opened Thursday with peak optimism. After Nvidia delivered monster numbers, the S&P 500 jumped more than 1.5% out of the gate.
Five hours later, it was one of the sharpest intraday reversals in the index’s 32-year history:
→ Opened +1.5%
→ Closed -1.5%
A pattern last seen during tariff chaos in April and the financial crisis in October 2008.
Tech led the collapse. Every Magnificent 7 stock fell. High-flying winners — the names up 70%+ YTD — were down 5% on average. The VIX closed at its highest level since April.
Bitcoin crashed below $90K, triggering liquidations across speculative assets.
AI-adjacent momentum names sold off sharply.
High-beta tech unwound faster than it rallied.
Traders questioned whether AI spending is peaking or simply normalizing.
The jobs report muddied the macro picture, raising recession worries even as Fed cut odds rose.
Nvidia finished the day red.
Semiconductors logged their weakest session in weeks.
Traders didn’t just lose confidence — they abandoned risk entirely.
And the strangest part? Nvidia’s earnings were great.
Management dismantled every bear case.
Data Center revenue surged.
Guidance blew past estimates.
Jensen Huang practically delivered a TED Talk on why AI spend is just getting started.
Yet none of it mattered. Investors weren’t fighting Nvidia — they were fighting sentiment.
The Outlook (Q4)
Management guided to $65B in revenue ±2%, well ahead of Wall Street’s ~$62B estimate.
Investors liked it. A lot.
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Now fast-forward to today.
Another volatile morning. Another round of selling.
Bitcoin plunged as low as $80k, putting it on track for its worst month since the 2022 crypto winter.
Liquidations blew past $2B in 24 hours.
Bitcoin ETFs saw $900M in a single day of outflows.
Then one sentence flipped the entire tone:
NY Fed President John Williams: the Fed sees “room for a cut in the near term.”
That was all traders needed.
→ Rate-cut odds for December spiked to 75% (from 40%)
→ Dow jumped nearly 700 points
→ S&P 500 +1.2%
→ Nasdaq +1%
All after both indexes started the morning in the red.
Not conviction — relief.
But zoom in and nothing truly stabilized:
• Bitcoin is still in a full-blown meltdown, down 25% this month.
• Crypto Fear & Greed: 11 (deep “Extreme Fear,” lowest since FTX).
• AI-adjacent names — miners, cloud startups, alt-energy — are still getting hit.
• Consumer confidence slid to 51, signaling real anxiety about inflation + jobs.
• The S&P 500 is still pacing for the worst November since 2008.
Even Nvidia popped again midday on reports that the Trump administration may allow H200 sales to China — but that bounce didn’t spread. The speculative side of the AI trade is still bleeding out.
If yesterday was confusion…
Today was stabilization, not strength.
The market is still trying to digest three competing signals:
The Fed: “Maybe we’ll cut.”
Crypto: “Risk is off.”
AI: “Demand is still insane.”
And equities?
They’re caught right in the middle.
What the Chart Shows
This chart highlights rare moments when SPY opened more than +1.5% higher, only to finish the day down at least –1.5%.
It’s a dramatic flip — from strong optimism at the open to aggressive selling by the close.
Historically, this pattern only appears during high-stress markets, including two key dates from October 2008 at the peak of the financial crisis.
It signals a market that’s fragile, headline-driven, and quick to fade strength.
In short:
Big green opens turning into big red closes aren’t normal — they’re signs of a market still on edge.
So what do we call this?
Not a rally. Not a crash.
More like a market trying to price a supercycle… with recession psychology.
The last two days show:
A strong company can’t always pull a shaky market higher.
Speculative pockets still dictate the risk-on/risk-off tone.
Crypto remains the “early warning system” for equity volatility.
Macro uncertainty is overpowering individual earnings strength.
This isn’t a trend change yet — it’s a recalibration after a year of aggressive moves.
Lesson of the Day:
Volatility Explained
Two volatility tools matter when markets swing the way they did this week:
1) The Volatility Ratio — “Is a breakout coming?”
It compares today’s range to the last 10–14 days.
• When it jumps above 0.5, today’s range is twice the recent average → volatility is expanding → a breakout is likely.
• Add volume to confirm the move.
It’s basically an early-warning alert that the market is waking up.
2) The VIX — “How scared is the market?”
The VIX tracks expected volatility for the next 30 days.
• Below 20 → calm.
• Above 30 → fear.
It rises when traders pay up for protection and falls when stress fades.
Why they matter:
Volatility Ratio tells you what just shifted.
VIX tells you what traders think comes next.
When both rise together, the market isn’t just moving — it’s gearing up for impact.
Volatility won’t tell you when to buy or sell. It will tell you when to pay attention —
and sometimes, that’s the difference between catching a move and getting caught in one.
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