Last week, various indexes in Western stock markets set new records, driven by good corporate results and the prospects for artificial intelligence.
However, price news in the United States is not so positive: inflation and producer prices in January were too high to support hopes of a quick rate cut.
As a result, investors are having to test their optimism as the end of the quarterly earnings season approaches, with Nvidia's (NASDAQ:NVDA) results expected on February 21.
Currently, there is little concern that interest rates may not be lowered this year. Apart from China, markets are showing no signs of declining, mainly due to the use of artificial intelligence.
The Nikkei index has been driven in particular by this sector.
The price of Bitcoin (BTC) continues to rise, registering an 8 percent increase since last week and reaching $52,200 at the time of this writing.
A major factor contributing to this growth is the increase in investments in Bitcoin Spot ETFs in the United States, with record net inflows of $631.3 million in a single day on Tuesday.
Currently, about 90 percent of Bitcoin holders are in an unrealized profit position at this price level.
Ether also followed the same trend this week, even surpassing Bitcoin as the most profitable cryptocurrency and rising 12 percent to reach the $2,800 mark.
Records of $73,000 are not far away, and we may already reach them this year.
Looking at the indexes, I notice that investment banks are recording several positive updates.
According to Goldman Sachs, the benchmark S&P 500 index could reach a high of 5,200 by the end of the year, representing a 4 percent increase from current levels.
This forecast is based on the rising earnings outlook of companies listed in the index.
Previously, the broker had estimated that the index would reach 5,100 by the end of 2024, but recently increased this forecast to 4,700 in December, considering slowing inflation and the U.S. central bank's expectations for a rate cut later this year.
As I always say, these updates are not very useful, as they always come later and not earlier.
Artificial intelligence is currently one of the most promising and growing sectors, but it could also be the cause of a possible market slowdown.
The financial results of a major company in the industry, NVIDIA, are expected this week. The earnings report will have a strong impact on the NASDAQ index, as the company's performance greatly affects the index's movements.
The market is demanding outstanding results from Nvidia stock this quarter, the pivotal time for the company. Even a good performance in the quarter could disappoint investors and have a negative impact on the market.
A technical analysis of the Nasdaq can be useful to guide our trading. If Nvidia stock performs poorly and Nasdaq Futures violate the 100-day exponential moving average at 16700 points, we might consider a bearish position.
Currently, I am avoiding investing in these indexes that are too expensive. Instead, I am focusing on the Chinese index and individual stocks, which, in my opinion, offer an excellent balance between risk and return.
I look forward to sharing with you the most interesting stocks of the moment in the next article!