NVIDIA Weakness Persists While SPY Holds Firmer – A Possible Rotation?
Even after the much-anticipated NVIDIA earnings, the order flow picture is telling two very different stories between the stock itself and the broader S&P 500 index.
SPY (S&P 500 ETF) is showing resilience. Despite trading slightly lower in pre-market at 647.64 (-0.2%), sentiment remains bullish. Option order flow carries a positive tilt, with 1.6 million in positive delta volume, and institutional money flow is also aligned on the bullish side. Importantly, the option fear gauge is subdued, with the cost of hedging downside risk at just 1.1%, even below the normal 1.5%.
By contrast, NVIDIA (NVDA) continues to struggle in the wake of its latest report. Shares are trading -1.1% lower in pre-market at 178.25, with sentiment clearly bearish. Option delta flow is negative (-1.1 million), while there is no sign of big money inflows. The cost of hedging NVDA has eased to 3.6%, but that remains higher than broad market levels, showing lingering caution.
What This Means for Traders
This divergence could reflect a rotation of capital out of single-stock exposure in NVIDIA and into broader index coverage via SPY. While NVIDIA sellers are still present and buyers have not stepped back in, the index as a whole is not reflecting the same degree of downside pressure.
This tells us two things:
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NVIDIA’s high-expectation earnings have triggered incremental selling rather than panic, with investors trimming exposure.
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Broader equity flows are still leaning constructive, with traders hedging less aggressively against the S&P 500.
The discrepancy in sentiment between NVDA and SPY highlights that while one stock can drive headlines, the overall market remains more balanced. Traders should watch whether NVIDIA weakness begins to drag down the broader tech sector further, or if rotation into the index helps cushion downside for the S&P 500.
As always, this analysis is decision support, not financial advice. Trade at your own risk
