The NVIDIA Make or Break Moment

Posted by Cam Hui - February 25, 2026

Mid-week market update: The major U.S. averages have been range bound for weeks. The only exception is the equal-weighted S&P 500, which has been in a steady uptrend but it has yet to break out through key resistance (dotted line). The market is coiling for a move.

As investors wait for the NVIDIA earnings report after the market close today, will that report be the make or break moment for market direction?

Volatility Ahead

Torsten Slok at Apollo observed today that the “Entire Market Structure Exposed to a Big Move”:

The share of S&P 500 names moving more than 10% in a single day has increased, and high dispersion and low implied correlation suggest stocks are increasingly trading on their own fundamentals, see charts below. At the same time, options activity remains extremely elevated, consistent with heavy retail speculation and leverage-like exposure. Larger idiosyncratic moves and outsized options participation leave the market structure more fragile and more vulnerable to an abrupt, outsized move.

We’re continuing to see another cluster of Hindenburg Omen signals, which is the fingerprint of a bifurcated market described by Slok, combined with failing momentum. Despite the ominous sounding name, Hindenburg warnings don’t always work. While they are often present at major tops, they can also signal minor pullbacks too.

NVIDIA Earnings

At the same time, market heavyweight NVIDIA is set to report earnings. The company’s stock prices has begun to disconnect from its earnings estimates in the past few months. This leads to a glass half-full and half-empty moment. Is the stock becoming a bargain, or is the market souring on AI plays?

From a technical analysis perspective, investors can also find a similar glass half-full and half-empty moment. The stock is tracing either a bullish inverse head and shoulders pattern (blue lines) or a potential bearish head and shoulders (red line). Remember, head and shoulders formations are incomplete until the neckline breaks, but the upside break in the inverse head and shoulders could be a fake-out ahead of the earnings news reaction.

Going into the earnings report, the option market is pricing for a $12 move in the stock afterwards. I have no idea whether the stock will rise or fall in reaction to the report, but the magnitude of any move is asymmetric and skewed to the downside. The accompanying chart shows that option positioning has very heavy put option hedging just below the current market price (annotations are mine). A significant break below $190 could spark a rapid market maker stampede to sell the stock to hedge their positions (h/t RenMac).

In addition, geopolitical risk is rising. Secretary of State Marco Rubio and CIA Director John Ratcliffe briefed the “Gang of Eight”, a select group of senior Senate and House leaders, about the Iran situation yesterday just before Trump’s State of the Union address. Senior Democrat Senator Chuck Schumer emerged from the meeting and told reporters, “This is serious, and the administration has to make its case to the American people” without elaborating further. I interpret Schumer’s remarks, which were made in the absence partisan political tones, as a signal that the Administration is shifting from private pressure to public authorization. It is serious, and an attack is imminent.

In conclusion, the stock market remains in a trading range, but internals are coiling for a volatility spike. The NVIDIA earnings report, along with the rising risk of U.S. military action, underlines the violent nature of any near-term price move.