You are not going to be able to gain any traction on anything when you have the bond market vigilantes striking. Those are the people who say we don't care what the Fed Chief says, we have a booming economy, or one sure to boom, and interest rates have to go higher and everything else? Lower.
I talked about this the other day, this is the inflation scare reflation trade where people take risk off. Or, in English, when rates shoot higher quickly, they left a vast swath of destruction in their wake.
When I see days like this I say to myself, where are rates in absolute terms - a heck of a lot higher than they were a few weeks ago, and where are they relative to where they have been all my trading life: incredibly low, that's where.
So what does that mean for stocks? Let's take Nvidia (NVDA) . This company reported one of the finest quarters of the year and it is doing so with proprietary chips for everything from gaming to artificial intelligence, machine learning and the data center.
On a day like today that means absolutely nothing. It means sell. Why? Because it is a stock.
But what happens when rates stop going higher?
It becomes a different stock - one that is measured against how it has done and what it has done versus others both in the market and in its cohort.
The answer? It has crushed them all.
So try to project what Nvidia's numbers look like on a day when rates aren't skyrocketing and that's what you should be thinking about because that, and not today, is true north, that's how special this company is.