Market activity has decreased ahead of NVDA earnings, with total notional dropping from $13.4B to $2.7B and premarket volume decreasing by 58 percent. The number of movers also declined by 54 percent, showing a wait-and-see attitude amongst traders.<\/p>\n
There has been a gradual reduction in expensive stocks, with down movers at $9.1B compared to $4.3B for up movers, despite up movers comprising 67 percent of traded shares. Currently, dollar flows are nearly balanced between down and up movers, but trimming of higher-priced names continues, with buy-side activity favouring lower-priced stocks.<\/p>\n
Market breadth shifted from +359 to -212, reaching -6 today, indicating positioning paralysis rather than increased risk-taking. Up-volume prevails daily, comprising 82 percent on Friday, 67 percent on Monday, and 72 percent today, suggesting active buyers are targeting lower-priced stocks.<\/p>\n
For traders, indices with large-cap weightings are slightly vulnerable due to dollar flow moving away from higher-priced stocks. Persistent up-volume leadership indicates that risk appetite persists in cheaper names. Traders should monitor dollar flow and breadth for indications of shifts, with potential sharp reactions if NVDA surprises positively.<\/p>\n
We are seeing participation collapse as everyone waits for Nvidia’s numbers. The pre-market action shows a quiet exit from more expensive, large-cap stocks, even while buying continues in cheaper names. For derivative traders, this means implied volatility is elevated, making options pricier ahead of this binary event.<\/p>\n
This tension is reflected in the CBOE Volatility Index (VIX), which has climbed to 17.5 in recent days, up from a low of 14 just last month. Adding to the caution, the latest CPI report for July 2025 came in slightly hotter than expected at 3.4%, keeping the Federal Reserve’s next move uncertain. This backdrop explains the hesitancy to take on significant risk in mega-caps before the NVDA catalyst.<\/p>\n
We saw a similar setup leading into the August 2024 earnings report, where quiet de-risking also preceded the announcement. Following that report’s strong upside surprise, the Nasdaq 100 rallied over 2% in a single session as capital flooded back into tech. This historical precedent suggests that any positive guidance from Nvidia could trigger a very sharp reversal of the recent dollar flows.<\/p>\n
Given the expected sharp move, traders might consider strategies like long straddles or strangles on NVDA itself to play the volatility, though the high premiums are a risk. A more cautious approach could be using credit spreads to bet that the post-earnings move won’t exceed a certain range. The key is to define risk, as a miss on guidance could easily erase recent gains.<\/p>\n
Looking at the broader indices, the divergence between the tech-heavy QQQ and the small-cap IWM is critical. A positive NVDA report would be a signal to favor call options on the QQQ, expecting a catch-up rally in mega-caps. Conversely, a disappointing report could make put options on the QQQ attractive, while also potentially reversing the recent strength in the IWM.<\/p>\n
In the days following the report, we must watch the dollar flow metric closely. If we see heavy dollar volume return to the upside in high-priced names, it confirms the bull case. However, if dollar flow remains skewed to the downside even on a “green” day, it is a warning sign that distribution is still happening under the surface, making it prudent to hedge long positions.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Traders await NVDA earnings; dollar flow shifts to cheaper stocks amid decreased volume and market breadth.<\/p>\n","protected":false},"author":62,"featured_media":16984,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-29639","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/29639","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=29639"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/29639\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16984"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=29639"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=29639"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=29639"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}