It’s All About Nvidia Today – BE CAREFUL

Nvidia reports reports earnings late this afternoon. I will be happy to get this done since all anyone is focused on is this report. I mean, it’s important, but it is certainly not the end all, be all. While we have plenty of positions in the NASDAQ 100, which will be directly impacted, we also own large cap value, small caps, financials, biotech, staples, REITs and plenty of other things that have absolutely no correlation to Nvidia or AI or even technology.

Nvidia is below. Even if I had inside information about its earnings which I obviously do not, it would be difficult to gauge market reaction. Would a great report lead to a surge in the stock or would it be a selling opportunity? I can say this; if they warn or offer bad news, the stock should get hit hard.

The way the stock is positioned now it is highly likely that it will break from its short-term trading range of $131 and $123. The move should not be small. We still own our core holding in the stock plus the position we added on August 5th when it spiked down to $90 and closed at $100. A move to new highs would have me seriously consider selling what we recently bought. It is unlikely I would consider buying more on weakness.

Like the multiple warnings I gave in Nvidia when it made runs in June and July, I was fairly strong in my words regarding Super Micro below when it ran above $1000. I warned that late comers would be punished and those smart enough to have bought the stock before the big run should consider harvesting some acorns on the way up. Most of the reaction was disdain and ridicule.

Now with the stock down more than 50%, I have random people asking me what they should do now. Frankly, I have no idea. If folks were too greedy to ring the register above $1000, it’s their own fault and they get what they deserve. At $500 I don’t have an opinion.

Finally, after we cleaned house in the semiconductor space on the sector level for the first time since 2018, we did buy some exposure on August 5th as I wrote here. We sold some on the way up and if Nvidia wasn’t reporting today, I would have taken a stab to buy some yesterday morning with a very tight leash. If semis and the NASDAQ 100 peaked last week, those two are set up for a hard fall sooner than later.

On Monday we bought more levered NDX. We sold levered inverse NDX.  On Tuesday we sold ALB and levered S&P 500.