The stock market finished higher on Wednesday, recovering losses from Monday and Tuesday, while swung significantly throughout the session. What is very clear is that oil remains highly susceptible to headline risk. While I do not have hard data to support it, it feels as though the magnitude of those headline-driven swings may be narrowing, perhaps reflected in the symmetrical triangle pattern that continues to develop.
The only issue I have with the triangle is determining which oil price version to use, because contract rolls and the volatility around them make it difficult to maintain a clean, consistent pattern.
The only notable thing, though, is that while the front-month contracts and CFDs are showing one picture, the December 2026 contracts are clearly in an uptrend.
Anyway, reported , and there were really no surprises when it came to the typical beat-and-raise numbers. There was not much of a surprise in the muted post-earnings move either.
The road higher for Nvidia may become more challenging over the next few days. There were a significant number of calls priced above $230 that are likely to see a substantial amount of premium burned off today, which could release dealer flows.
I guess the bottom line is that if Nvidia cannot clear those resistance levels at $230 and beyond, I would not be surprised to see the stock drift back into the $195 to $200 range.
With Nvidia now behind us, we should be reaching the point in the cycle where dispersion really starts to unwind. I just do not see why it should not. Index-level volatility has hardly moved over the past few weeks, while single-stock volatility remains incredibly high. That has left market dispersion very stretched and, at this point, likely a crowded trade.
The spread between the VIXEQ, which measures constituent volatility, and the , which measures index volatility, is around 25, which is historically near the widest end of its range. It would be surprising to see that spread widen much further from here. That is not to say it cannot get wider, but I would be very surprised if it did.
At this point, realized dispersion by sector remains extremely lopsided, with outperforming the by 15.4 percentage points, while every other sector continues to underperform the index. On a five-year lookback, we are still essentially in fantasy land — around the 1st percentile.
At some point, something will have to give, and Nvidia’s results seem to me to be a good resetting point.
