S&P, NVIDIA, ALIBABA: near-term observation

S&P

Despite all the gloomy projections, the stock market left the sideways uncertainties of July and entered August on a bullish note. Currently at 3 400, the S&P is exactly where it was cut by the virus crisis. Hence, we can now state that recovery is complete. So the future is bright once again. What next? Earnings reports.

Nvidia

This Wednesday, Nvidia reports its financial results (Midnight of August 19/00:00 MT time on August 20).

Technically, this stock has been following a stable linear upward trajectory since the beginning of the recovery in March. Hence, it would be natural to expect the same in the coming mid-term future. However, also technically, its recent leap up to the epic level of $500 puts the price considerably above the normal rising trajectory. That’s why, while being confident about the fundamentals, be careful with a possible correction back down to the uptrend’s baseline.

Fundamentally, Nvidia expects strong results in Q2. These are mostly due to the virus-caused boom in demand for gaming industry products where Nvidia is a primary player. The EPS is forecast to be $1.97, up from $1.24 in the prior-year period by observers. Nevertheless, the price for this stock has gone far beyond the most optimistic projections for a semiconductor company – which it basically is – as well as far above the dot-come bubble red-zone levels of price-to-earnings ratio…

Alibaba

Alibaba reports its Q2 results this Thursday, at 14:30 MT time.

This stock is notably volatile. Since the beginning of July, it has been stuck in a sideways channel between $268 and $242. While it is at its all-time highs, it is still seen as undervalued by many. At the same time, as an e-commerce company with a wide range of services, it is enjoying high consumer demand. Hence, with this positive fundamental background, beating financial expectations for Q2 would be a very timely boost for this stock to get in an upward trajectory again.

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Gaspar Markosyan

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