The Santa Claus rally we typically can rely on? It didn’t show up this year, largely due to rebalancing plus 10-year yields that challenged last year’s highs.
Quantative strategists question stretched valuations, while growth managers question earnings projections in the midst of the Trump administration’s posturing on tariffs.
These worries have led to increased market volatility and dramatic swings in the prices of two widely followed AI companies: Nvidia and Palantir.
Nvidia (NVDA) has shown an orderly retreat so far. It recently matched the high print of $152 but yesterday, Jensen Huang seemed to throw water on the stock’s flame, saying that quantum computing dominance is 15 years away.
Today’s action, however, shows the decline has been orderly, so far, and what we expected: consolidation around the midpoint of its trading band at $140.
That said, our blog post following NVDA’s November 21st earnings release highlighted key support and resistance points — and the stock showed no awareness of either! On the chart below, you can see a series of lower lows and lower highs as profit takers ruled the roost in recent weeks until the January surge turned that tide.
Keep your eye on the $132 – 134 area of next support. Given the past disobedience of support levels, we would remain invested unless the relative strength trend changed (another discussion too long for this blog post).
Palantir (PLTR), on the other hand, warrants much more caution. It has violated numerous support levels on its way toward the middle of its trading band. The series of higher lows was initially broken at $72, then $70, then $68. This is not bullish stock action.
We would like to see a bounce up to the $75 area and further backing and filling before an all-clear alert signal is issued.
We might see the rockiness in these stocks come to an end when earnings season arrives, as we have written numerous times how investors are focused on macrotrends while awaiting corporate reports.
