Earnings season has coincided with a vicious change in sentiment; that combination has created an extremely volatile market in which leading stocks are running scared, and goodwill (bullish sentiment) evaporates.
Amongst all of the turmoil of the last few weeks, data centre stock Nebius NBIS US rallied +28.64%, making it the best performing NASDAQ 100 stock. And the stock that outperformed the broader market (S&P 500) by the highest margin, but as far as I am aware, it got little publicity as it did this.
Source: Barchart.com
There was some comment and news flow, but it was pretty low-key (see below) when we consider what was going on here and elsewhere.
Source: TradingView
The real kicker for the Nebius stock price was that Nvidia disclosed a 9.30% stake in the data centre overspill business.
Just the sort of catalyst traders look for, and one that helped to drive significant outperformance.
In the lower window of the chart below, we see a plot of the relative performance of NBIS versus the S&P 500 SPX, and the Nasdaq 100 IUXX indices, which both “flatlined” as the stock roared.
Source: Barchart.com
But as we will see, the market is a fickle beast right now............................
Trying to time and judge the market at the moment is becoming very tricky
Here is an example of what I am talking about: Neste is a Finnish oil company, perhaps best known for its biodiesel. The stock has been in recovery (and on my hot list) for the last year at leЛast, and it has outperformed the majority of its sector peers as it's rallied.
The only problem with a premium-rated stock is that the mood music needs to keep playing for the market to maintain that premium. The mood music, of course, is sentiment, and over the last couple of weeks, traders have been increasingly critical of earnings reports:
Source: Barchart.com
Despite the headlines, Neste's earnings were really only in line, and that's good enough in the market's eyes right now, and Neste shares fell 10.0% immediately after the release.
Source: TradingView
In fact, even a beat and solid forward guidance is not a guarantee of a bounce in this market
Fibre Optics specialist Corning GLW US have taken a beating over recent weeks as the market
Turned against the data centre and AI trades.
Corning stock had already lost $100.00 since the end of June.
Source: TheFly.com
You might have thought that a pull back of that size would price in any disappointment with its earnings release (which you had to look very hard to find). But no Corning stock fell another -16.00% on 28/07/26, trading down to $120.00 intraday, more than a -$150.00 below the high posted on 30/06/26.
That said, the June 30th candle was a clear sell signal and rejection of a move higher, but I am not sure many people would have expected to see the stock fall this far this fast.
Source: Barchart.com
Fly too close to the sun, and your wings may melt.
That's the fate that befell Icarus in Greek mythology, and Nebius seems to have followed suit.
Icarus fell into the sea and drowned. I doubt that will be the case for NBIS, but buyers for data centre stocks are rarer than unicorns at the moment.
Fear has chased greed out of the stocks that were leading the markets in the second quarter of the year.
The move may have started as sector/factor rotation by money managers and hedge funds who were happy to book profits and look to value stocks for the next opportunity, but it's now escalated into a full-blown purge.
Source: Barchart.com
The tide will turn again, but better to let the price action tell us that it has than to second-guess
Looking at this table, we can see that on an RSI14 basis, at least some of the data centre stocks are closing in oversold territory.
Select data centre and datacentre adjacent stocks' performance.
Source: Barchart.com
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication.
All information has been prepared by ActivTrades (“AT”). The information does not contain a record of AT’s prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acting on the information provided does so at their own risk.