This article was originally posted on Linkedin by Quantmatix CEO Liam Boggan on Nov 24th.
In the high-stakes theater of Wall Street, few acts rival the drama of an earnings season that begins with euphoria and ends in a sobering reassessment. This past week, U.S. stocks delivered just that: a Nvidia-fueled surge on Thursday that briefly ignited hopes of an AI renaissance, only to deflate into sharp declines as investors grappled with the sobering math of ballooning capital expenditures and elusive returns. The S&P 500 shed 1.6% for the week, while the Nasdaq Composite tumbled 2.16%, capping a turbulent stretch marked by Thursday's 2% plunge in the broader index. Yet, in a classic market plot twist, Friday's session brought partial redemption—courtesy of Federal Reserve officials' dovish whispers about potential rate cuts—lifting the S&P 500 0.98% and the Dow Jones Industrial Average 1.1% to close the week down a more palatable 2% and 1.9%, respectively.
The volatility wasn't born in a vacuum. Nvidia's third-quarter results, released after the bell on Thursday, showcased the chip giant's unyielding dominance: revenue soared 62% year-over-year to $57 billion, handily topping estimates and underscoring the AI boom's voracious appetite for GPUs. Shares spiked 5% intraday on the news, dragging tech higher in a fleeting rally. But the afterglow faded fast. Skeptics zeroed in on the sustainability of the AI capex frenzy—$65 billion projected for the fourth quarter alone—and whether these investments would ever pencil out into meaningful profits. Nvidia closed the day down 3.15%, contributing to a 5.9% weekly slide that rippled through the Magnificent Seven, with Microsoft off 7.5%, Amazon down 6%, and Tesla slipping 3.3%. Even Meta and Apple, typically resilient, couldn't fully escape the downdraft.
Amid this tech hangover, one outlier shone: Alphabet. The search behemoth climbed 3.3% Friday, extending its weekly gain to 8.2% on the heels of unveiling Gemini 3, its latest AI powerhouse, on November 18. Billed as a "new era of intelligence," the model boasts enhanced reasoning and multimodal capabilities, now seamlessly embedded in Google Search to challenge rivals like OpenAI head-on. Analysts hailed it as "state-of-the-art," and Alphabet's custom Tensor Processing Units—poised as Nvidia GPU alternatives—added fuel to the fire, pushing shares up roughly 7% for the week. In a sector rotation favoring substance over hype, Alphabet's pivot underscores a broader truth: AI winners will be those who monetize, not just spend.
This bifurcation is etching itself across the market landscape, and at Quantmatix, our proprietary TEVO framework—powered by machine-learning-driven Q-Scores—has been our North Star through the fog. The Q-Score, a composite gauge of momentum, volatility, and reversal probability, sifts through terabytes of historical patterns to flag high-conviction setups. This week, it lit up a clear tactical shift: overweight defensives and consumer staples, where crisp acceleration (up over 60% in key metrics) offers ballast against the deceleration plaguing 90% of sectors. Energy and banks, meanwhile, merit neutral weightings for their reversal buffers, while cyclicals like transportation and autos warrant underweight calls amid fading momentum. High-beta traps—utilities, pharma, and semis/tech—scream "avoid," their fragile uptrends clashing with steep slowdowns, as evidenced by the SPDR Technology Select Sector ETF's 5.19% weekly skid.
Quantmatix's TEVO Ideas, honed for 1-4 week horizons, embody this precision. We select only those with positive expected value and combine that with our multi faceted analysis which looks across time frames and market trading levels as well as target prices and stop losses. Friday's TEVO ideas delivered a quintet of moderately bullish reversals: in Diversified financials and Selected Materials. Nasdaq Inc. (NDAQ), Broadridge Financial (BR), CNA Financial (CNA), LyondellBasell (LYB) and Sherwin-Williams (SHW). On the flip side, Coherent Corp. (COHR) flashed a bearish signal. Full details of the analysis and rationale and market levels are available to members.
The Cboe Volatility Index tells its own tale: down 11.3% Friday but up 18.2% for the week, a harbinger of regime fragility. Fed Chair Jerome Powell's team remains divided—New York Fed President John Williams boosted cut odds with talk of "near-term" easing, yet Boston's Susan Collins leaned against a December move amid sticky inflation—leaving markets to price in a 3.75%-4% funds rate post the Fed's second 2025 trim.
As we close the book on this whipsaw week, the message is unequivocal: In an era where AI promises outpace proofs, quant rigor isn't a luxury—it's survival. At Quantmatix, our TEVO engine doesn't chase headlines; it anticipates inflection points, blending decades of data to deliver edges that matter. For investors eyeing the next leg, consider this: While the Magnificent Seven recalibrate, the quiet strength in defensives could define December's winners. Curious how our Q-Scores spot them first? Drop a note or go to Quantmatix.com and join our community. Let's decode the signals together.
(Liam Boggan is founder and Chief Executive Officer of Dublin-based Quantmatix, a software platform that uses AI and machine learning to provide data-driven insights for investment decisions. This article is provided for educational and informational purposes only. It does not constitute financial advice, investment recommendations, or an offer or solicitation to buy or sell any securities.)