The Market Is Breaking Down: S&P: Failed Breakout, NVDA: Exhaustion Bar, CRM: Beneath The Surface Another One Bites The Dust

On Thursday, the S&P closed below 5,250 – the breakout level from March 28. This is what is called a “failed breakout” in classical technical anaylsis. “From failed moves come fast moves”. In other words, we are looking at a potential double top a ala 2007 as I previously alluded to.

The main culprit was a selloff into the close by the most important stock in the market, Nvidia (NVDA). NVDA printed an “exhaustion bar” on Thursday in which it made new all time highs early in the day only to selloff into the close and close below the previous two days’ close. A break below $1100 would put in a top for NVDA akin to the one on March 8.

This is extremely important from a technical perspective because while NVDA is +20% since its earnings report last Wednesday afternoon, the QQQ is actually down over the same period. That’s because NVDA’s strength and size is masking significant breakdowns beneath the surface of the market.

The most recent was Salesforce (CRM) whch guided 2Q24 revenue to only +7%. As a result, CRM stock lost 20% of its value on Thursday – giving up all of its YTD gains and more. CRM lost more than $53 million in market cap on Thursday. But it’s far from the only one: AirBnB (ABNB), Palantir (PLTR), Disney (DIS), Shopify (SHOP), Uber (UBER) and Starbucks (SBUX) have all been hit hard on earnings this month.

DELL closed the after hours down 18% Thursday after reporting earnings.

As always, the market can do anything but current dynamics make it hard to escape the suspicion that the market is breaking down. Friday should mark an interesting close to the week….