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Volatility and Nvidia Are About to Test the AI Narrative
Nvidia's Earnings Come as Elevated VIX Levels Are Holding Steady
👋Hello and Welcome to Monday! 🌅
Here’s what’s on deck this week:
Big earnings week: Nvidia and retail heavyweights step up to the mic.
Shutdown’s over: Key economic data should start flowing again (finally).
Some delays linger: A few reports may still lag as agencies reboot.
Volatility has support: The VIX is holding steady above rising near-term averages.
Let’s get going!🚦🚦
💵What’s the market pricing in for the week ahead?
This week’s market calendar is stacked, and active investors need to be prepared for some potentially wild swings.
Headlining the lineup: earnings from AI powerhouse Nvidia and retail royalty Walmart, Target, and Home Depot. And just to keep things interesting, markets are also digesting the fallout from the government’s grand reopening after a record-breaking 43-day shutdown.
With federal workers finally back at their desks, the long-paused stream of government economic data should start flowing again. Those reports—everything from jobs to inflation to housing—are the bedrock of how investors, policymakers, and your econ-obsessed uncle gauge the economy’s direction. The catch? It’s still unclear whether agencies will snap back to their normal release schedules this week, though only a handful of reports are expected to remain jammed up in shutdown limbo.
Housing, Sentiment, and What the Shutdown Paused
Even without full clarity on the government’s data-release schedule, investors won’t be starved for economic updates.
Housing takes center stage with existing-home sales for October landing Wednesday. The housing market has been stuck in cryo-freeze, with sales hovering near multi-decade lows for more than two years.
Housing starts—aka, new-home construction—is also on the docket, though it’s one of the reports most likely to still face delays as agencies reboot their workflows.
The benchmark S&P 500 has closed within its expected range in nine of the last ten weeks. With volatility (VIX) holding steady near elevated levels, this week certainly has what it takes to put that streak to the test.
ℹ️ WHY IS THIS IMPORTANT?
For both stock and options traders: Knowing what the implied weekly range is helps set expectations for what the likely trading limits will be. This can help prevent overreaction near quantified range extremes, while also informing the traders on whether there is still room for an intra-week rally or sell-off to run.
📝 Note: This same logic can also be applied to the “Where’s the Action At?” section below.
Click here 👈to learn more about our charts.
Nvidia and Large Retailers Take Center Stage
The market’s brightest spotlight is on Nvidia, which delivers earnings Wednesday. As the most valuable company on the planet and the undisputed face of the AI boom, Nvidia has been at the center of every market mood swing this year.
The chipmaker squeaked past expectations last quarter and reassured investors that the AI frenzy still has room to run—so Wednesday’s results may set the tone for tech sentiment heading into year-end.
Retail earnings also pack plenty of plot twists. Walmart kicks things off Thursday, fresh off the announcement that John Furner will replace Doug McMillon as CEO on Feb. 1. Shares hit all-time highs in October, so expectations are, like its Supercenters, massive.
Target—still navigating its own leadership shakeup—will also report, while Home Depot drops results Tuesday after recently raising its outlook on surging home-improvement demand.
Lowe’s follows Wednesday, and discount dynamos TJX and Ross Stores round out the retail roster.
🤔 Which companies are poised to possibly over- or underreact to earnings this week?
Over the past 12 quarters, this week’s largest reporting company (Nvidia) has shown a tendency to overshoot the expected trading range set by market makers during the trading session immediately following earnings (keep reading below the next table for more details on how this is calculated).
Of the 20 largest companies reporting earnings this week, Williams Sonoma shows the strongest likelihood of moving more than the market expects during the trading session immediately following earnings.
Conversely, of the top 20 companies reporting this week, Home Depot has a history of remaining within its post-earnings expected range (keep reading below the next table for more details).
👇 Below is a look at this week’s biggest earnings reports, sorted by market cap:
HOW CAN TRADERS USE THIS INFORMATION?
For active traders looking for actionable insights, the highlighted columns on the table above show the implied (expected) post-earnings move for each company, along with the Average 1-Day Realized Volatility Post-Earnings Ratio (1D RV).
📈Implied Move: The market’s best guess at how much a stock will swing after earnings.
📊1D RV: A powerful tool that represents the post-earnings price move divided by the expected price move over the past 12 quarters. In other words, it measures how good (or bad) the market is at pricing each company’s earnings.
💵When you see a ratio >1.0, it indicates that, historically, the earnings are mispriced and the stock moves MORE than the market anticipates, favoring straddle buyers.
🪝A ratio <1.0 tells the opposite story, meaning the stock historically moves LESS than the market anticipates, which favors straddle sellers.
Happy hunting.
🏭 Samsung and other South Korean firms pledge larger domestic investments after US tariff deal: After hashing out a tariff deal with the U.S., major South Korean companies are throwing trillions of won into domestic investments, as if buying economic peace with the world’s most expensive fruit basket. Read more
🏡 Zillow raises red flag on homeownership costs, mortgage rates: Zillow says owning a home now costs nearly $16K a year just to keep the lights on, turning the American Dream into the American “Did I just sign up for a second job?” Read more
🛍️ Why Black Friday discounts could be stingier this year: With tariffs squeezing retailers harder than a too-small holiday sweater, stores warn that this year’s Black Friday deals may look more like a “mild shrug” than a “midnight stampede.” Read more
Gif by youtube on Giphy
🐱 Beloved SF cat’s death fuels Waymo criticism: After a Waymo robotaxi fatally struck KitKat, a beloved bodega cat, San Franciscans are questioning whether self-driving cars are ready for prime time—or even ready for pets. Read more
🚲 Rivian spinoff reveals a $3500 starting price for its first e-bike: Rivian’s new e-bike division dropped its sleek TM-B starting at $3,500, proving that even “budget-friendly” EV gear still costs more than your first actual bike and possibly your second. Read more
While technology (XLK) is expected to be the most volatile sector once again, basic materials (XLB) has replaced consumer discretionary (XLY) for the 2nd highest volatility outlook, as energy (XLE) maintains the 3rd position.
At the opposite end of the spectrum, the communications (XLC) sector has replaced real estate (XLRE) as one of the three sectors expected to witness the lowest volatility, along with utilities (XLU) and healthcare (XLV).
ℹ️ WHY IS THIS IMPORTANT?
For options traders in particular: Implied volatility sets the tone for option prices. Understanding where large or small implied moves are priced in helps traders decide whether options are over- or under-valued before placing trades.
Monday
Empire State manufacturing survey
Fed Speakers: New York Fed President John Williams
Top Earnings: XPeng, Aramark
Tuesday
Homebuilder confidence index, Industrial production/capacity utilization
Data Release Potentially Impacted by Shutdown: Import price index
Top Earnings: Home Depot, Medtronic, Baidu, PDD Holdings, Klarna Group
Wednesday
Existing home sales
Data Release Potentially Impacted by Shutdown: Housing starts
Minutes of October FOMC meeting
Fed Speakers: New York Fed President John Williams
Top Earnings: Nvidia, TJX Companies, Palo Alto Networks, Lowe’s Companies, Target, Viking Holdings, Williams-Sonoma
Thursday
Philadelphia Fed manufacturing survey, U.S. leading economic indicators
Data Release Potentially Impacted by Shutdown: Initial jobless claims
Fed Speakers: Chicago Fed President Austan Goolsbee
Top Earnings: Walmart, Intuit, Ross Stores, Gap
Friday
Consumer sentiment - final, S&P Flash Purchasing Managers Index
Top Earnings: BJ’s Wholesale
With the S&P 500 locked in a trendless near-term environment, and the VIX supported by its higher sloping 50-day moving average, the potential existed for the benchmark index to witness some outsized moves last week.
Sure enough, the S&P witnessed two gap-and-run sessions that caused it to move well beyond the daily norms on Monday and Thursday.
The potential for outsized daily swings still exists this week, with the VIX still positioned firmly above its key near-term moving average.
📝 EDITOR’S NOTE
Each day the market is open, we update our comprehensive performance charts on our website for you to view. In addition, be sure to follow us on X for timely intra-week updates.
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