Date: March 11, 2024

Emotional Reversal on Friday in Tech, Semis and Nvidia

Friday saw one of those emotional reversals where the day began all bulled up with lots of celebrations from those who came late to the party. It ended with the bears overwhelming the bulls heading into the weekend. While those kinds of days look ugly on a chart, we need to see follow through selling early this week to have any significance.

Below is the NASDAQ 100 which is dominated by all those popular tech names. Epic run since October. Great rally since the new year. Big reversal on the upper, far right.

Nvidia is next because it is now the most important stock in the stock market. Look at how wild that last line was. From almost $1000, it ended the day below $900. Two questions. First, was that a peak of significance for the stock? Second, if so, can the stock market continue to rally without its leader like it did when Apple lost its way?

For a clue, take a look at the volume lines on the bottom of the chart. On Friday, Nvidia traded 114 million shares. That’s the most since the stock’s previous tradable peak in August when it went from roughly $500 to $400. Time to pay close attention.


And as has been my theme lately, we did some more pruning into the reversal of positions that have had unsustainable rallies in our work. As you know, we have been owners of semiconductor ETFs and stocks in large size for several years. And we used this incredible rally to outright sell positions in Broadcom, Marvel and Taiwan Semi. We also reduced exposure in Advanced Micro, Micron, Nvidia and a leveraged ETF. If the group continues to head higher, so be it. We still have some exposure. If it reverses lower, I will look hard at the group again during the decline, but I am more comfortable with the newer positions in drugs, staples and cyclicals.

On Friday we bought SSO. We sold PMPIX, TYL, some ITB, some MU, some AMD, some QQQ, some SOXL and some levered NDX.


Paul Schatz, President, Heritage Capital