Nvidia’s earnings report tomorrow could juice this market… the breakout in small-cap stocks accelerates… how to determine if it’s real… Jonathan Rose’s latest triple-digit winner… it could be a long-term anchor position
All eyes turn to Nvidia tomorrow when the market’s bellwether for the AI boom reports earnings after the closing bell.
Expectations are sky-high – analysts expect another blockbuster quarter with revenue more than tripling from last year, powered by relentless demand for AI chips.
Investors will be thrilled if Nvidia not only beats those lofty numbers but also guides higher. The market wants the reassurance that hyperscalers and enterprise customers are still racing to buy GPUs.
On the flip side, any hint of slowing demand, margin compression, or supply bottlenecks could spark disappointment in a stock that has already priced in perfection.
So, tomorrow isn’t just about Q2 performance – it’s about whether Nvidia can keep proving that the AI wave has much further to run.
Our technology expert Luke Lango believes the numbers will come in strong, validating the AI thesis and jumpstarting the next leg higher in the market.
From his Innovation Investor Daily Notes:
If history is any guide, Nvidia’s results will blow minds, re-anchor Wall Street on the AI growth story, and spark a rebound in tech.
Powell’s pivot last Friday stacked the kindling; blowout earnings from Nvidia could spark the flames.
That sets the stage for a September cut, a strong third-quarter earnings season, and a year-end holiday bump…
Yes, every boom turns to bust. But not today. Right now, the green lights are flashing.
Now, while the entire market popped last Friday, one corner of the market could be flashing the greenest…
All eyes on small-cap stocks
Stocks surged in the wake of Federal Reserve Chairman Jerome Powell’s dovish speech in Jackson Hole last Friday. But small caps led the way – the S&P Small-Cap 600 Index jumped 3.8%.
This outsized move wasn’t random. Smaller companies tend to carry heavier debt loads and rely more on borrowing to fund growth. Falling interest rates hit their balance sheets faster and harder than they do for cash-rich mega caps.
Cheaper credit also can unlock fresh demand for capital-intensive sectors like regional banks, industrials, and real estate – areas that dominate the small-cap universe.
Plus, small caps have lagged for much of this cycle, so the prospect of rate relief suddenly makes them look like the place to be.
History suggests that small caps are setting up for a major rally
Yesterday, we got data on this from Lucas Downey, the quant specialist and editor of Alpha Signals at our corporate partner TradeSmith. He’s also a key contributor to the TradeSmith Daily.
Lucas crunched the numbers and found that the S&P Small-Cap 600 Index has jumped 3.8% or more in a single session 51 times since March 2009. And the subsequent performance has been resoundingly bullish.
I’ll let you browse the data below, but I’ll point out one detail…
Twenty-four months after this 3.8% trigger, the index has been higher 100% of the time with an average return of 61.80%.
Here’s Lucas’s data:
While you can’t argue with the long-term bullish data, there’s still the risk that, in the near term, this rally could be a head fake
Yesterday, MarketWatch profiled this budding small-cap rally. Its article quoted the head of U.S. equity strategy at RBC Capital Markets, who said:
It wouldn’t surprise us if Friday’s move turns out to be a brief short-covering event that fizzles out.
Is there a way to avoid buying into this type of fake breakout?
While no one has a crystal ball, one of the best proxies we have is volume, which is a critical variable in the way that Luke Lango trades in Breakout Trader.
As we profiled in yesterday’s Digest, Luke’s market approach in this trading service centers on an analytical framework called “stage analysis” that categorizes a stock’s price movement into four stages:
- Introduction (sideways at a bottom)
- Growth (a bullish breakout)
- Maturity (sideways at a top)
- Decline (a bearish drawdown)
This puts the focus on what matters the most to your wealth – price action.
To help sniff out whether Friday’s small-cap breakout was a “brief short-covering event that fizzles out,” the first step is to analyze the scope of the buying pressure.
As Luke writes, a genuine breakout is going to feature outsized volume. If it’s not there, watch out:
Heavy volume is a critical part of a genuine breakout – and also a sustained, healthy Stage-2 climb.
It indicates strong investor interest and can confirm the authenticity of a price move higher.
Meanwhile, the absence of heavy volume suggests a flimsy move that lacks conviction. Be very careful about making trading decisions based on light volume.
Volume in the Russell 2000 (a broader proxy for small caps) jumped last Friday. Total trading volume came in at roughly 5.05 billion shares – about 25% higher than Thursday’s 4.01 billion shares.
While that’s a good sign, follow-through is critical. So, this week, we’re looking for outsized buying volume on “up” days and muted volume on drawdowns.
Overall, with Lucas’s bullish data on small-cap performance, we’ll be using volume and additional entry triggers from Luke’s stage analysis system to help time potential trade entry.
While we’re waiting for the overall greenlight on small-caps, Luke is already pulling the trigger on various AI positions in Breakout Trader.
As we noted in yesterday’s Digest, Luke is confident that he can help traders turn a $5,000 starting portfolio into $30,000 over the next six months. This reflects his confidence in the stage analysis framework and the bullish conditions for tech/AI as we push into 2026.
For more details, click here to check out Luke’s special free broadcast.
It looks like Barron’s is following veteran trader Jonathan Rose
A few days ago, the magazine ran a bullish piece on building-products supplier QXO, with a headline that included: “Why It’s Time to Buy.”
They’re a little late.
Back in June, Jonathan and his Advanced Notice subscribers made 183.78% on their QXO call option in just two weeks.
But that could just be just the warm-up trade…
Jonathan remains very bullish on QXO with more live positions open right now. So, let’s profile the set-up that this trading veteran recently called “one of our top trades for 2025.”
The man behind this move
Brad Jacobs has made a career out of finding sleepy, fragmented industries and turning them into billion-dollar juggernauts.
He did it with United Rentals, now the world’s largest equipment rental firm. He did it again with XPO Logistics, which he grew from a small trucking outfit into a global logistics leader. His newest project, QXO, is targeting the $800 billion building products distribution business – a huge industry practically begging for disruption.
QXO’s first move was an $11 billion acquisition of Beacon Roofing Supply. That single deal vaulted the company into the spotlight and confirmed Jacobs is running the same aggressive roll-up playbook he’s perfected over four decades.
To fund this, he’s also brought in heavyweight investors. Jared Kushner’s Affinity Partners, Sequoia, Orbis, and even the Walton family have all written big checks.
While the financial media are just now starting to catch on, this opportunity was on Jonathan’s radar back in May. He recognized Jacobs’ track record, the size of the market, and the fresh firepower from institutional backers. All of it pointed toward building momentum that Wall Street hadn’t fully priced in.
So, in June, Jonathan and his Advanced Notice subscribers pulled the trigger on bullish call options – and just two weeks later, walked away with almost 185% gains.
Jonathan is confident that there’s still money in this trade
The bigger story is still unfolding, so you’re not too late.
With an $800 billion market to consolidate, a war chest of capital, and a proven blueprint, QXO could be in the early innings of becoming the next United Rentals or XPO Logistics.
That’s why Jonathan remains bullish – and why this trade was more than just a quick winner. It’s possible that we’re getting an early glimpse at one of the market’s great compounders of the next decade.
But this is also opening the door for more institutional buying in other small companies – which means additional trades with triple-digit potential.
From Jonathan:
The real story wasn’t about one deal. It was about Jacobs’ massive consolidation play.
With Affinity’s backing and a proven acquisition strategy, they’re just getting started as they roll up the entire building industry.
And once again, institutional traders are lining up for round two. But now it’s not just QXO in their crosshairs…
A whole slew of potential acquisition targets are on the table for early investors. And even the major players disrupted by QXO’s consolidation spree could represent golden opportunities from here.
For a deeper dive, here’s Jonathan’s recent episode of Masters in Trading Live where he breaks down why QXO is among his favorite trades of the year. I
And here’s yesterday’s Masters in Trading Live where he highlights the Barron’s article.
Bottom line: This has the potential to be not only a bullish trade, but a powerful long-term anchor position. If you’re looking to put money to work, give this one a look.
From Jonathan:
If you’re serious about finding story-driven trades before Wall Street catches on, this QXO deep dive is essential.
And if you’d like to learn how to spot these trade opportunities yourself, Jonathan is happy to show you:
I want to give you the tools to spot massive winners like these before the markets even have a clue.
We’ll keep you updated on all these stories here in the Digest.
Have a good evening,
Jeff Remsburg
