Nvidia Earnings Will Determine Market Direction; Home Depot Shows Consumer Weakness; China-Japan Flare Up

Author: The Arora Report | November 18, 2025 11:59am

Key Earnings Data 

Please click here for an enlarged chart of NVIDIA Corp (NASDAQ:NVDA).

Note the following:

• This article is about the big picture, not an individual stock.  The chart of NVDA stock is being used to illustrate the point.
• The chart shows NVDA stock has given up recent gains.
• The chart shows NVDA stock is at the top band of zone 1 (support).
• RSI on the chart shows NVDA stock is not yet oversold.
• Nvidia earnings will be reported tomorrow in the after market.
• Here is a summary of AI related issues causing the current sell off in the stock market:
  • Overbuilding of AI data centers
  • Debt financing of AI data center build
  • Circular financing involving Nvidia
  • Chip depreciation issues
• If earnings from Nvidia can alleviate these concerns, expect a very sharp rally in the stock market. On the other hand, if Nvidia earnings heighten these concerns, expect a sharp drop in the stock market. 
• Start with our Second Law of Investing and Trading, which states, “Nobody knows with certainty what is going to happen next in the markets."
• Our Third Law of Investing and Trading, states, "Making investing and trading decisions based on probabilities is the only realistic and profitable approach."
• Home Depot Inc (NYSE:HD) earnings show the consumer is weakening.  Here are the details:
  • For FY26, Home Depot sees earnings per share down 5% year-over-year to $14.48 vs. $14.98 consensus.
  • Q3 earnings came at $3.74 per share vs. $3.84 consensus.
  • FY25 sales growth came at 3% vs. 2.8% prior.
  • Revenue came at $41.35B vs. $41.15B consensus.
  • Customer transactions decreased 1.4%.
  • Shopper spend on an average receipt increased to $90.39 year-over-year vs. $88.65 prior.
• Additional data on the consumer will come from Lowe’s Companies Inc (NYSE:LOW) and Target Corp (NYSE:TGT) earnings in the premarket tomorrow and Walmart Inc (NYSE:WMT) earnings in the premarket on Thursday.
• Initial jobless claims for the week ending on Oct. 18 came at 232K vs. 219K prior.
• The data from ADP for the four weeks ending November 1, 2025 shows job loss of 2500 jobs per week.
• Concerns about private credit are heightened after Blue Owl Capital Inc (NYSE:OWL) made a restrictive move.  Blue Owl is financing AI data centers.

China And Japan

China is sending ships to disputed islands with Japan.  China is also warning its citizens against traveling to Japan.  Prudent investors should keep a close eye – a flare up between China and Japan can drag the stock market significantly lower.

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks.  For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis. 

In the early trade, money flows are positive in Apple Inc (NASDAQ:AAPL) and Alphabet Inc Class C (NASDAQ:GOOG).

In the early trade, money flows are negative in Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms Inc (NASDAQ:META), Nvidia (NVDA), Microsoft Corp (NASDAQ:MSFT), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are negative in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ.  Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil.  The most popular ETF for gold is SPDR Gold Trust (GLD).  The most popular ETF for silver is iShares Silver Trust (SLV).  The most popular ETF for oil is United States Oil ETF (USO).

Bitcoin

Bitcoin (CRYPTO: BTC) continues to see selling.

What To Do Now

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

A protection band of 0% would be very bullish and would indicate full investment with 0% in cash.  A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less.  Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.

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