Down Days for the Nasdaq Belong on the Oldies Station

NVIDIA, the high growth chip play, in front of earnings later this week (Wednesday after the bell), and Tesla, in front of effecting its stock split by the end of this month, are surging this morning and dragging the Nasdaq higher yet as I write this. 

Typically, a stock split is one of the more neutral developments you will see on Wall Street--A relatively high-priced stock will adjust shares accordingly for shareholders after obviously a prior, strong rally, as AAPL and TSLA are doing. The reverse stock split can often be a sign of desperation, as a stock seemingly going to zero fights to stay afloat (e.g. Citi and Fannie/Freddie back in 2008/2009). 

At times, reverse stock splits can be indicative of a washout/capitulatory bottom, whereas the stranded large-to-small stock splits of AAPL TSLA can indicate a top for those winners. 

As Labor Day approaches, it will be interesting to see if AAPL and TSLA continue to ignore any warning signs and keep pressing higher after their splits take hold, especially with a new batch of market players in this cycle who seem to view their splits as a bullish development. 

What we can say with more certainty, though, is that the likes of NVDA screaming into earnings is pricing in an awful lot of good news, up nearly 6% as I write this (and TSLA up nearly 8%, to boot). It may very well seem and feel like down days for the Nasdaq have been outlawed, and maybe they have by The Fed, for all we know.

But markets have an extensive history for lulling you into a new sense of normalcy, a new era of one-way action, only to abruptly pull the rug and remind all of us that the more things change, the more they stay the same. 

Elsewhere, with lumber prices skyrocketing, keep an eye on WY as it bull flags nicely as one of the purest lumber plays you will find.