Stocks can get more expensive, says strategist. Don’t get in front of FOMO for now.

Down the road, will this day mark the top? For now, says our call of the day from Evercore ISI strategist Julian Emanuel, who advises against fighting the FOMO (fear of missing out) mentality out there right now.

“There are few surer signs of FOMO than in options markets — historically flat skew, upside calls expensive versus downside puts,” Emanuel tells clients in a note.

In layman’s terms, skew refers to the difference in price between options and if it’s flat, implied volatility will be the same for all. With call options investors have the right to buy an asset, while a put option gives them the right to sell.

He says calls recently got more expensive against puts for Nvidia, which was the precursor to a big 2021-22 growth-stock selloff. “In addition, the rise in S&P 500 since the 12/13 FOMC, accompanied by a rise in volatility has only happened twice in the past decade,” said the strategist.

Read: Wall Street keeps likening Nvidia to dot-com-era Cisco. Is the comparison justified?

And rapid 10% pullbacks for the markets came as a result of those two events — the Nasdaq Whale Unmasking event of 2020 and the “Volmageddon” event of 2018. Concern has been rising about a repeat of the latter.

“NVDA’s and the broad market’s resilience in the face of both stronger inflation data and Wednesday’s FOMC minutes which flagged the risks of cutting rates too quickly was impressive,” said the strategist.

“It illustrates that despite valuations in the S&P 500 moving to 22 times [trailing twelve months], a level where average 1 year forward returns are 0%, FOMO operates on its own timetable, stocks can get more expensive, and the Momentum ends when it ends, which is often without warning. FOMO, for now, Stays Bid.”

That said, Evercore has its preferences — defensive sectors, such as communications services, consumer staples and healthcare sectors that they say often outperform between the Fed’s last rate hike and first-rate cut. They are steering clear of economic sensitive sectors such as consumer discretionary, industrials and materials, which are all underperforming year to date.

Also read: Stock-market investors should still brace for ’70s-style ‘stagflation,’ warn strategists

The markets

Hold on to your hats. The Nasdaq Composite
COMP
is up nearly 2% points and the S&P 500
SPX
is pointing to a fresh record post Nvidia results. Treasury yields
BX:TMUBMUSD10Y

BX:TMUBMUSD02Y
are flat, and the dollar
DXY
is dropping.

Japan’s Nikkei 225 index
JP:NIK
closed at its highest since 1989, and Europe
XX:SXXP
is also headed for the highest finish in two years.

Key asset performance	Last	5d	1m	YTD	1y
S&P 500	4,981.80	-0.95%	1.79%	4.44%	24.16%
Nasdaq Composite	15,580.87	-2.05%	0.45%	3.79%	34.43%
10 year Treasury	4.304	7.68	18.26	42.30	42.12
Gold	2,038.40	1.11%	0.86%	-1.61%	11.41%
Oil	78.17	0.13%	1.39%	9.59%	3.33%
Data: MarketWatch. Treasury yields change expressed in basis points

The buzz

Nvidia
NVDA,
+12.94%
is up by double digits after beating top-line forecasts by $2 billion and talk of an AI “tipping point,” with a similar gain for Super Micro
SMCI,
+16.89%.
Shares of Arm Holdings
ARM,
+11.55%,
Advanced Micro Devices
AMD,
+6.83%
and Marvell Technology
MRVL,
+5.28%
are also climbing.

Opinion: Nvidia’s sheer dominance can be summed up by this one underrated number

Disappointment from EV makers Rivian
RIVN,
-23.01%
and Lucid
LCID,
-9.32%
are hitting shares hard. Solar equipment group SunRun
RUN,
-6.93%
is also sinking after results fell short.

BuzzFeed
BZFD,
+76.12%
is up 80% after the once-hot media company said it sold pop-culture site Complex and announced more layoffs.

Moderna
MRNA,
+5.00%
is climbing on a surprise quarterly profit. Planet Fitness
PLNT,

reported an earnings beat and a mixed outlook.

Alphabet-owned Google
GOOGL,
+0.46%
has halted its AI image generation tool amid criticism over how it portrayed racial minorities.

Weekly jobless claims dipped 12,000 to 201,000 in the week of Feb. 17. Still to come are S&P flash U.S. services and manufacturing purchasing managers indexes at 9:45 a.m., then existing home sales at 10 a.m. We’ll also hear from a batch of Fed officials: Vice Chair Philip Jefferson at 10 a.m., Philly Pres. Patrick Harker at 3:15 p.m., Fed Gov. Lisa Cook and Minneapolis Pres. Neel Kashkari both at 3 p.m., then Fed Gov. Christopher Waller at 7:35 p.m.

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The chart

More proof investors do not want to fight the trend right now can be found in this chart from Otavio (Tavi) Costa, global macro analyst at Crescat Capital:

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Ticker	Security name
NVDA, +12.94%	Nvidia
TSLA, -1.16%	Tesla
SMCI, +16.89%	Super Micro Computer
AMD, +6.83%	Advanced Micro Devices
AAPL, +0.24%	Apple
AMZN, +2.53%	Amazon
ARM, +11.55%	ARM
PLTR, +2.15%	Palantir
MSFT, +2.06%	Microsoft
NIO, -0.86%	Nio

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