What Happens Next for the Market Is in Nvidia’s Hands

I know many people expect the market to rally after the election, and it may, given that we’ll likely see an IV crush as the event risk passes—something we see regularly, however, where the market heads between now and year-end will likely rest again in Nvidia’s (NASDAQ:) hands. The stock now holds an overwhelming influence across all major indexes due to its recent inclusion in the .

Nvidia alone accounts for 26% of the gains this year in the Bloomberg 500, a proxy for the S&P 500. Following Nvidia, Meta (NASDAQ:) contributes nearly 6%, Amazon (NASDAQ:) and Apple (NASDAQ:) around 5% each, and Broadcom (NASDAQ:) and Microsoft (NASDAQ:) about 3% each.

All of these stocks are performing well due to the AI trade, so let’s face the facts: these six stocks make up just under 50% of the index’s gains this year. Take away Nvidia, and you take away the AI trade—and with it, nearly half of the index’s gains.

(Bloomberg)

It’s even more extreme for the Bloomberg 100, which serves as a proxy for the , with Nvidia accounting for 38% of the gains and the top 5 stocks making up almost 78% of the gains.

(Bloomberg)

At this point, Nvidia has gone basically nowhere since July, which is why the NASDAQ and the S&P 500 have largely stalled as well. The results and guidance it provides on November 20 may have much more to say about where the market goes from here than anything else.

S&P 500 Consolidating Ahead of Election

Stocks finished the day lower, one day ahead of the 2024 Presidential election. The move wasn’t much to get excited about, with the down just 25 bps. The chart suggests we’re merely consolidating over the past 2 days, with another leg less likely to come.

The break of the rising wedge looks quite impressive, and the put wall at 5,700 seemed to be enough to hold things together. However, given the current look of the technical charts, a drop to 5,600 doesn’t seem out of the question.

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