Weekly Playbook: August 24

1. Market Overview

2. Research Unpacked: BIDU, MRNA, MRK, EL and WMT

3. Earnings to Watch This Week: PDD, INTU, CRM, CRWD, NVDA, SNPS, ADSK, MRVL and WDAY

All eyez on NVDA.

While the whole world will be watching NVIDIA’s guidance, capex and every other number capable of moving the AI trade, we will look at the report from a slightly different angle: price action around the key areas.

The other tape worth watching sits in credit. Forget about dollar bills for a second. The more interesting Big Short callback is credit default swaps.

Michael J. Kramer of Mott Capital Management has been highlighting widening CDS across NVIDIA, Broadcom, AMD, Oracle, and other AI-related names, even as their equities have not always been telling the same story.

Broadcom adds a rather large number to the mix. The company is reportedly involved in an AI financing structure that could reach $100 billion, including a $60 billion to $70 billion senior tranche and roughly $30 billion in junior debt, with Broadcom potentially guaranteeing part of the senior financing.

Credit has its own tape and its own tail.

Then Trump opened his mouth, shorts ran for cover, and Bitcoin and Ethereum provided the next tail. Does the rise of crypto mean the fall of AI? Ask FinTwit. They have a confident answer for everything.

Imagine a world in which you have a limited amount of money to allocate. Where would you put the marginal dollar? AI infrastructure or crypto?

Imagined it? Very nice!

Now let’s return to our unlimited reality (still not QE). 😁 We are still running in infinite money glitch mode... right?

Anyway, Bitcoin and Ethereum still have to deal with these areas:

The right tail also appeared in healthcare. Moderna and Merck announced positive Phase 3 results for their individualized mRNA-based cancer therapy in combination with Keytruda. In terms of fighting cancer, it is difficult to imagine much better news.

Price action will be covered further below. Given the magnitude of the move, this was another tail event. If somebody tells you it was expected or could have been calculated, they are simply turning bullishness into bullshitness.

And then there are semiconductors.

Forget the animal farm for a second. Semis are in a trader’s market. For the buy-and-hold crowd, this could be Heaven or this could be Hell. For active participants, it has already been Heaven for quite a while.

Just do not stuff all that low-hanging fruit into one bag. Bagholders get expelled from Heaven sooner or later.

And watch your tail!

Below is this week’s Price Action Playbook: Research dump

Let’s look at the logic behind some of those areas:

Baidu’s business mix is shifting rapidly toward AI, but the new engine is not yet large enough to offset continued pressure across advertising and other legacy operations. AI cloud infrastructure revenue grew 50% in Q2, led by a 283% increase in higher-margin GPU cloud revenue, with internally developed Kunlunxin chips and better utilization also improving cloud economics. Advertising is likely to remain weak as Baidu prioritizes engagement within its AI search experience before pushing monetization, despite strong growth in ERNIE Assistant usage. That leaves the transformation dependent on continued cloud expansion and the eventual conversion of rising AI engagement into meaningful commercial revenue.

94.5 is 35 IPOx and, what’s more important, it has proved to be super reactive multiple times over the years, while 89.75 is one of the most important POCs across its entire trading history.

Initially, bulls stepped in trying to defend the area, sparking a vicious rip right after the open, though their enthusiasm quickly turned into a selloff, leading to the brief undercut of the lower area. Price played technical ping-pong thereafter, with another clear rejection of 94.5 on Friday. Let’s see who wins here.