Weekend Market Report

A shortened trading week for the holiday saw most indices rise and forecast models hit their targets

Weekend Market Report
Photo by Stephanie McCabe / Unsplash

Good morning and welcome to another edition of the Weekend Market Report! We're reorganizing the market report a bit and starting off with the general market commentary on gold, silver, and S&P500 historical volatility model results, then followed by some interesting links and a stock or ETF in the spotlight. Hint: this week it's about the Q's.

General market commentary

Last week was a shortened trading week due to the July 4th holiday. All the indices I track (Dow, Nasdaq, S&P500), except the Russell 2000, closed higher this week.

The gold price forecast model is currently 60% correct as last week's price forecast was for gold to close higher and it did. The silver price forecast model is currently 80% correct as last week's price forecast was for a higher close this past Friday, which ir did. The S&P500 historical volatility forecast was for higher volatility last week and initial data shows that it did, so the model is currently 100% correct.

Note: There are currently 5 "in the field" predictions for the gold and silver price forecast model and 1 "in the field" predictions for S&P500 historical volatility directional forecast. We expect the % accuracy to vary until we have at least 10 predictions or so. We'll evaluate the model then if it's bunk or not and anticipate the directional accuracy to be between 60 to 80% correct if the backtesting is valid.

Nvidia Gets Rare Downgrade

How's this news to throw some cold water on a hot dog? Nvidia got downgraded because of a health check.

New Street Research analyst Pierre Ferragu downgraded Nvidia shares NVDA, -1.91% to neutral from buy in an industry report that he dubbed a “health check” on artificial-intelligence stocks. Now eight of the 62 analysts tracked by FactSet have neutral-equivalent stances on Nvidia’s stock. - via Market Watch

You know what, they're probably right but a bit too early. The whole Generative AI thing feels like it's starting to peak (see below).

Goldman Sachs says the return on investment for AI might be disappointing

The market is in love with AI right now and spending big bucks on it, to the tune of $1 trillion dollars. If it's a Generative AI (GenAI) application then chances are that Nvidia chips are running the calculations for it. Yet Goldman Sachs is cautious.

As companies prepare to spend over $1 trillion on artificial intelligence, a Goldman Sachs report examined the big question at hand: "Will this large spend ever pay off?"

Yes, where is the massive payoff? We only hear about how AI will streamline your organization and make you rich - somehow - but where's the payoff? This is particularly the case with GenAI.

"AI technology is exceptionally expensive, and to justify those costs, the technology must be able to solve complex problems, which it isn't designed to do," Jim Covello, the head of Global Equity Research at Goldman Sachs, said in the report.
"The starting point for costs is also so high that even if costs decline, they would have to do so dramatically to make automating tasks with AI affordable," he added. "In our experience, even basic summarization tasks often yield illegible and nonsensical results." - via MSN

When the AI bubble breaks, it will take the Nasdaq down hard and fast. Keep your stops sharp and your nose to the markets.

Here's the Goldman Sachs report:

Nancy Pelosi disclosed stock market trades made by her husband. He loaded up on AI plays like Nvidia and sold Tesla

If this isn't a Bullish indicator on Nvidia and Broadcom then I don't know what is.

Paul Pelosi, who is an investment professional, increased his exposure to the AI boom by buying shares of Nvidia and call options on Broadcom, according to a disclosures filed by Nancy Pelosi on Tuesday. - via Business Insider

What I don't get is this, don't they have enough money? Don't they want to retire to some island and live out their remaining life being pampered? Why amass all this money and not use it? Once I hit my magic money number I'm out the door.

Below the fold are the silver and gold 1 week ahead directional forecasts AND the new S&P500 historical volatility directional forecasts. These are for coin collectors, bullion dealers, and option traders. You need to sign up for a Free Membership account to get access