Jay Woods on NVDA, Mag 7 Making "K-Shaped Market," SPX Key Levels

SPEAKER_1 (0:00)

And to join us now to talk about some of that is Jay Woods, Chief of Global Strategies over at Freedom Capital Markets. Good morning, Jay.

Jay Woods (0:07)

Good morning.

SPEAKER_1 (0:08)

It's just a great... Live TV is so great. Don't you love it? Flying blind.

What's your outlook this week? A little bit of a quiet one.

Jay Woods (0:16)

My outlook, this is one of those weeks that can kind of break us out of this zone we've been in, this chop zone.

And I'm watching Nvidia in particular as it breaks out to all time new highs.

This is the biggest stock in the world. This has been a technology led rally, and now all of a sudden the biggest stock in the tech sector is taking to new highs. Will the market get on its back? Or will the troops fall farther away from the generals? But right now, if you're looking for one stock that's going to keep this market, at least within distance of new highs, it's Nvidia, it's doing it. Now watch Broadcom, let's see if that can get back on its horse. It has not. But that stock right now has just been, it's been impressed with the watch. Micron, we thought that would join the party. It's been flat since earnings. So technology is what we have to watch because it leads. But there are concerns. I mean, we're in October, most volatile month of the year. After September, which was down, September was to reform. Remember, I came on your network and I'm like, yeah, September, the worst month of the month. 10 of 11 sectors finished lower in September.

It was a stealth bear market. We just didn't see it in major averages. But underneath the surface, the average S&P 500 stock is 14 percent off its all-time high. The market breadth has been horrible. So here's my conundrum. You asked me how we came into the week. Do the beaten down names in the staples, like a Pepsi and a Constellation brands which report, give us a little lift and all of a sudden now, we're getting a relief rally and beaten down names on the heels of tech? Or does tech stumble and come back to the pack with everyone else? So it's an intriguing drama setting up for us as we head into earnings season. So that's what I'm watching this week, because there's not a lot of economic data, unless you count the Fed minutes, which I don't.

SPEAKER_1 (2:11)

We've kind of got the memo with what the Fed is doing. I think that's the conundrum and why the markets have been so sensitive to all the data, because we don't have forward guidance and so the markets have essentially been left guessing. But I do want to talk about some of these levels. I'm looking at Nvidia right now, knocking on the door of 237 once again. Obviously hit that all-time high last week, helped out the NASDAQ. KG just brought up Amazon as well. I was listening to some other folks this morning, Jim Cramer talking about Microsoft. I mean, it's really emerging as the parent in the room when it comes to some of the AI slowdown talks, perhaps. That's the interpretation that I'm hearing.

What have you made of these companies re-establishing leadership in this market? You talk about the deterioration of breadth under the surface. I mean, equal weight, seventh week of losses, three times in history, we've seen that.

Jay Woods (2:56)

Yeah, but the semiconductors are up five weeks in a row.

SPEAKER_1 (2:59)

So what have you made of some of that rotation and that bad breadth going into earnings season?

Jay Woods (3:04)

Oh my gosh. Yeah, we talk about a K-shaped economy. It's a K-shaped market.

And at the top of the K are those magnificent seven minus Tesla names that are now on the cusp of Microsoft, breaking out of a range, making a run back to all-time highs. Meta, that came back thanks to Muse, which I will not use by the way.

SPEAKER_1 (3:22)

Okay, we can talk about that later.

Jay Woods (3:23)

Yeah, it's a little too personal. But Amazon and Google, you look at two other of these names, they've been treading water. Where are they treading water? Technically, we look at that 200-day moving average, they're just starting to get back to life.

Fundamentally, Google has been the one stock of them all that I think should be that slow, steady uptrend. So those magnificent seven, the highest weighted stocks in the world, are doing all the work. And then on the lower part of the K, you have nine to ten other sectors that are just treading water. So the key to me is going to be this sector in particular, financials.