The Number Told You Before the News Did.

The expected move was over $60.

That number was sitting there before the bell rang, before the news, before anyone knew whether the market was going to open down 20 handles or down 80. 

The number told you what the actual range was going to be, and so far today, it’s right.

The market did a semi-taco today (that one is mine, people). 

A partial version of what everyone expected, and then it stopped. Volatility came back two full points off its overnight highs before the cash session even started. 

You did not need the headlines to know this was coming. You needed the number.

Now here is the part everyone gets wrong.

You can look at Oracle up 10%, Palantir up 4%, software getting bid across the board, and decide the worst is over. Maybe it is. But there is one linchpin that matters more than all of it, and that is Nvidia.

Nvidia is a $4.5 trillion company. Apple is a $3.8 trillion company. But here is what people do not account for. Nvidia's volatility is roughly double Apple's.

So when Nvidia moves, it does not just move. It moves twice as hard. Every other tech stock can be lighting up, and if Nvidia is not participating, the magnitude math does not work for a real rally. 

Nvidia comes back to life, you have a marketplace. Without it, the ceiling is low.

The tech correlation argument is worth addressing too. 

I keep hearing that tech stocks all move together. Overlay Microsoft against Amazon against Tesla against Broadcom right now and tell me what correlation you see. You get noise.

The rotation is happening within tech itself. Broadcom is outperforming Nvidia. Tesla and Microsoft are both down 20% year to date. These stocks are not moving together. You cannot lean on correlation right now, which is exactly why the expected move matters more than it usually does.

Oil above $100 a barrel. Today the market shrugged. The S&P rallied. The day-to-day tape has a disconnect from economic reality and that is not new.

But here is what is actually playing out underneath. Oil at this level forces CEOs into defensive mode even if their business has nothing to do with energy. 

When oil is here, the first thing that gets cut is advertising.

Who runs on advertising? Meta. The biggest advertising platform on the planet is sitting there while every executive in America is quietly getting defensive.

It is not showing up in the tape today. It will show up in earnings. That is the trade to watch.

Tesla is the other interesting one. Google searches for electric cars went through the roof when oil spiked. Oil goes up, people think about EVs.

But Tesla is at year lows, down 20%, and the stock is not reacting to what should be a tailwind. We have a bullish position on right now for exactly that reason. Oil price and EV demand have to reconcile at some point.

The expected move gave you the framework today. It will give you the framework tomorrow too.

Join me in the TheoTrade live room tomorrow morning and we will go through exactly what the number is telling us before the open.

Join here

To your success,

Don Kaufman

P.S. The semi-taco was today's move. The full taco would have been much uglier. The expected move told you the difference before the session started. That is the whole lesson.