Blame whatever you want: exhausted buyers, seasonal weakness, bad vibes…

Stocks are taking a beating to kick off the new trading week as speculators continue to ditch some of the market’s biggest winners.

Former high-flying runners from Palantir Technologies Inc. (PLTR) to Hims & Hers Health Inc. (HIMS) are reacquainting themselves with the laws of gravity as shares tumble back to earth following multi-week parabolic rallies.

Whatever the reason, investors are spooked.

The market mood has soured despite the averages logging new all-time highs a little less than a week ago. Investors are selling first and asking questions later.

The big question for traders is whether this sudden drop will linger like the flu or pass like a springtime allergy.

Are we looking at a quick reset? Or is a bigger corrective move afoot?

The season’s most anticipated earnings announcement could give us our answers…

An Earnings Call to Remember

Nvidia Corp. (NVDA) was on an unstoppable run during the first half of 2024.

But after topping out during the summer, this former market leader has remained trapped in a broad consolidation range for over eight months.

NVDA attempted to extend a breakout move in November, ultimately failing as the stock sank into its sideways range. Then, last month’s DeepSeek scare smacked shares back down to test their long-term average (highlighted in green).

Now, we await what could be the most important earnings announcement of the quarter.

That’s right — NVDA reports fourth-quarter earnings on Wednesday afternoon.

It’s fitting that NVDA is the last of the mega-caps to reveal its quarterly results. This earnings announcement also carries a little extra baggage right now due to the state of the market. With so many leading stocks getting punched in the mouth right now, NVDA has a chance to play hero and save the bulls from impending doom.

To be clear, we expect NVDA to produce impressive numbers. There’s no indication that the artificial intelligence boom has subsided. The major players have yet to pull back on their spending. Frankly, I’d be shocked if NVDA came up short…

But the numbers aren’t the issue. Assuming NVDA doesn’t reveal some sort of negative surprise, it’s all about the herd’s reaction.

For the broader stock market, if the earnings report excites the Street and buyers step in and push NVDA back toward $150 and new highs, there’s a solid chance the move re-energizes the bulls and drags some of these flailing tech stocks out of the mud.

A broad semiconductor breakout would soothe the bulls and give them a reason to rotate into these former market leaders.

Can NVDA Stop the Bleeding?

Of course, even great numbers might not incentivize buyers to step in and scoop up shares of NVDA early Thursday morning. We’ll have to wait and see just how enthusiastic the bulls are feeling later this week…

Regardless of what happens, I still think this earnings reaction is the most important event of the quarter.

NVDA could play the role of market savior if everything turns out just right. Keep an eye on those also-ran semiconductor names such as ASML Holdings (ASML), Applied Materials (AMAT), and Lam Research Corp. (LCRX).

A rotation back into the semiconductor space will send these stocks soaring.

On the flip side, if investors sell the news (even good news!) we could be staring at more market weakness heading into March. In this event, your best bet will likely be staples, utilities, or, heaven forbid, energy stocks.

Don’t worry. We’re not there yet!

We’ll have a good idea of what lies ahead by Friday afternoon. Stay tuned.