The NVDA Wildcard: Defense Mode Activated

Fresh news and strategies for traders. SPY Trader episode #1431. The market is attempting a cautious rebound after four days of selling, with the S&P 500 below its 50day moving average. The primary catalyst today is the highly anticipated Nvidia (NVDA) earnings report after the close, which will determine the immediate direction of the AI trade. Amid mixed retail results suggesting cooling consumer spending, institutional money is rotating out of highvaluation growth sectors (Tech, Consumer Discretionary) and into defensive areas like Healthcare (XLV) and Energy (XLE). Traders are advised to prioritize patience, overweight defensive ETFs, utilize fixed income (BND) for stability, and hold existing core AI positions while awaiting the postNVDA signal.

Episode Transcript

(00:00):
Good morning , traders , and welcome back to Spy Trader .
I’m your host , Rick " The Rip Tide " Roller , here to guide you through the choppy waters of the premarket .
It's 5 am on Wednesday , November 19th , 2025 , Pacific time , and after four painful days of selling , we are seeing a cautious rebound attempt this morning .

(00:20):
Stock futures are pointing slightly higher , but the air is thick with uncertainty , mostly thanks to a little AI chip company reporting after the close today .
The market is trying to find a floor after the S&P 500 recently closed below its 50day moving average , a level we hadn't touched since late April .

(00:40):
While strong corporate earnings have provided support , elevated valuations in the highflying tech names and indecision from the Federal Reserve are keeping the volatility high .
Let's dive into the specifics .

All eyes today are locked onto one megacap tech name (00:53):
Nvidia , or NVDA .
The AI darling reports quarterly earnings after the closing bell , and the result will determine the immediate direction of the AI trade and the entire techheavy Nasdaq .
NVDA is already down nearly 5% this week on fears of an " AI bubble , " making the outcome a massive catalyst for instruments like the Invesco QQQ Trust .

(01:21):
Outside of semiconductors , we’ve seen incredibly mixed results in the retail sector , which is hitting Consumer Discretionary names hard .
On the positive side , Lowe's ( LOW ) jumped over 5% in premarket trading after crushing its earnings beat and raising its fullyear sales projection .
That’s great news .

(01:41):
However , Lowe’s shine is dulled by competitors like Home Depot ( HD ) , which saw its stock fall 6% the previous day due to disappointing profits , and Target ( TGT ) , which missed sales estimates and lowered its fullyear profit forecast .
This suggests consumer spending might be cooling off , which leads us to the broader analysis .

(02:04):
While tech is getting hit , the underlying corporate health is actually quite solid .
Q3 earnings are practically wrapped up , with 82% of S&P 500 companies beating expectations .
That strength should limit the depth of any correction .
What we are seeing is a clear rotation .
Money is fleeing growth and high valuation areas , specifically Information Technology and Consumer Discretionary , which recently saw sharp daily declines of 1.68% and 1.86% respectively .

(02:38):
Investors are moving toward defense .
The Health Care Select Sector SPDR Fund ( XLV ) is outperforming , up 0.56% , and Energy ( XLE ) is also showing strength , supported by rising oil prices .
Adding to the tension is the highly divided Federal Reserve .

(02:58):
The Fed cut rates last month to 4% , but market expectations for another 25 basis point cut in December are split , hovering right around 49% .
The fact that the FOMC is so divided — hawks versus doves — is keeping the fixedincome market nervous .

(03:19):
However , bonds are generally performing well this year , with the 10year Treasury yield sitting around 4.12% as core inflation eases to 3.0% .
So , what do we do today ?
It's a day for defense and patience .
First , we need to overweight defensive sectors .
Since XLV , the Health Care ETF , is currently showing relative strength , use that as a core defensive play .

(03:43):
Second , don't abandon the market entirely .
Q3 earnings were strong , so for broad exposure , keep holding diversified ETFs like the iShares CORE S&P 500 ETF , or IVV , to capture the overall corporate health while insulating yourself from the tech concentration risk .
Third , utilize fixed income to stabilize the portfolio .

(04:07):
Bonds are performing well as inflation moderates .
Look to the Vanguard Total Bond Market ETF , or BND , to add diversified stability .
Given the major division within the Fed , however , avoid aggressive bets on longduration bonds like the TLT .

Finally , for the AI trade itself (04:24):
hold your core position in the QQQ , but do not aggressively add new capital right now .
The NVDA report is the wildcard .
For existing investors in core AI players like Microsoft or Amazon , just hold and wait for a clear postearnings signal before making new moves .

(04:45):
Patience is key today , folks .
Until the closing bell , I’m Rick " The Rip Tide " Roller , and happy trading .