Coach Mark here.

What do you do when conditions are extremely overbought but you are still bullish? That is a question on many traders minds this morning (including mine). RSI readings in some areas of the market are in the 90s. For those not familiar with RSI that is extremely high and usually a point where traders take profits as it is extremely hard to make any significant moves up in the short-term when readings are that high historically.

Traders in these conditions often wait for a cooling off period or a classic pullback to get aggressive again. This does not mean that they do not take trades in the short-term but certainly cool down on the aggressiveness until they get what they are looking for.

Traders are also always looking for a catalyst to emerge. After the OpenAI board fired Sam Altman over the weekend, who promptly took his AI big brain to Microsoft, speculation is rampant on what this means for big-cap tech companies and AI. More specifically, do you see a mass purge of the talent at OpenAI after the board’s disastrous decision. Does the AI theme reemerge and become the center of markets conversations? Does AI euphoria set the stage for the next leg up in the coming months? Nvidia has earnings tonight and could set the stage one way or another for such a conversation to become dominant in the short-term.

Never a dull moment in the markets! Have a fantastic Tuesday!

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Chart of the Day: Nvidia (NVDA)

Investors and traders will be watching NVDA closely tonight…both on the results and the market’s reaction in the coming days.

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