To paraphrase Ice Cube, ‘Yesterday was a good day.’ Just as Wall Street has convinced retail investors to lighten up on Technology (XLK), especially the so-called Artificial Intelligence (AI) trade, Nvidia (NVDA) rallied to an all-time high. It brought the rest of the semis along for the ride.

Chipping Away

What I liked about yesterday's action in VanEck Semiconductor ETF (SMH) was that the industry's picks and shovel names set the pace.

It would have been nice to see more volume, but critical resistance was cleared, and now the work is to fill that enormous gap (red circle), where it could back up afterward but then clear the path to retest the all-time high.

How Green Was The Valley

There is a lot of green on the screen, and leadership from the most influential names is the stuff of solid markets.

Market breadth was very impressive, particularly from new highs to new lows.

Market Breadth	NYSE	NASDAQ
Advancers	1,642	2,396
Decliners	1,169	1,857
New Highs	233	309
New Lows	7	89
Up Volume	1.32 billion	2.96 billion
Down Volume	943.37 million	1.35 billion

Stocks changing hands above their 50-day moving average have jumped to 78%.

Too Confident?

The Put/Call Ratio indicates too much confidence in investors who aren’t even putting on hedges.

Earnings Pick Up

Bank earnings lifted the market on Friday; today, all eyes are on Bank of America (BAC). There is an increased speculation about the results after Warren Buffett dumped 90% of the position.

The earnings calendar for the rest of the week gets heavier and more consequential:

Today’s Session

Banks beat and shares are edging higher.

Goldman Sachs (GS)

• Net Revenue $12.70B, EST $11.77B
• FICC Sales & Trading Revenue $2.96B, EST $2.96B
• Global Banking & Markets net revenues $8.55B, +6.8% y/y, EST $7.65B
• Investment banking revenue $1.86B, +20% y/y, EST $1.68B

Citigroup (C)

• Markets revenue $4.82B, EST $4.6B
• FICC sales & trading revenue $3.58B, EST $3.54B
• Equities sales & trading revenue $1.24B, EST $1.03B
• Banking revenue $1.60B, EST $1.54B
• Investment banking revenue $934M, EST $874.5M

Bank of America (BAC)

• Net interest income FTE $14.11B, EST $14.07B
• Trading revenue excluding DVA $4.94B, EST $4.57B
• FICC trading revenue excluding DVA $2.94B, EST $2.77B
• Equities trading revenue excluding DVA $2.00B, EST $1.81B
• Wealth & investment management total

Themes

AI

Chips coming on some pressure from a story of possible export caps on AI chips. This shouldn’t be a consequential issue.

China Stocks

I’m not sure what’s doing it, but Chinese stocks are getting hammered. I just do not think there is a quick fix to their problems, especially the miscalculation with one-child and then zero-Covid.

There is a point, all that cash could help their equities market but it’s too volatile.

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