The market has reached an extreme overbought level following the recent CPI reading, a peak not observed since November and December of last year. This does not automatically indicate an impending sell-off. Historically, such overbought conditions have led to a consolidation phase lasting about three trading sessions. Currently, we are experiencing a similar consolidation period.

In May 2023, the market consolidated for a week prior to NVIDIA’s earnings. Remember, the longer the market remains within a range (consolidation), the more significant the subsequent move will be.

This pattern is likely to repeat this year. NVIDIA, widely regarded as a leader in AI technology, has the potential to influence the broader market significantly. The outcome of NVIDIA’s earnings could either bolster or break market sentiment.