Nvidia Soars & Plunges As Bonds Outperform Bitcoin With A New Set Up

On Wednesday I wrote about my total lack of conviction on how Nvidia’s stock would react to earnings, even if I knew exactly what they would report. Well, they reported an absolute homerun, blowout quarter with everything clicking on all cylinders. The stock and the stock market soared at the open. Lots of chirping and giddiness on social media.

However, a funny thing happened on the way to the celebration; sellers flooded the markets. Nvidia is below. While the media was scrambling to explain, sellers reversed a huge gain the major indices and the stock.

Our aggressive models, as designed and expected, have taken varied action. Some have gone to all cash over the last week or so. Others raised some cash. A few have forged ahead with full exposure. Our non-aggressive models took action several weeks ago and are looking for further weakness to turn neutral or positive. More selling this morning could begin to open that window of opportunity to buy.

The S&P 500 and NASDAQ 100 are below. On the far right of the charts you can see the tall red candle and the nasty reversal from top to bottom yesterday. While I will likely turn more positive on further weakness, one sign of confirmation will be when the indices close above the highs from yesterday. Yes. That will be late, but will signal a move back to the old highs at a minimum.

For a few weeks I have been mentioning a trade set up in Bitcoin. You have to be patient with these super volatile instruments or keep a very tight leash which is tough. Bitcoin is now down over 30% just since the October peak. Lots of ignorant traders levered up just before the coin collapsed. Someone reminded me that over the past year, the boring and stodgy bond market has outperformed the super sexy Bitcoin. Think about that for a minute. And this morning, Jim Cramer seemingly  and finally turned bearish on Bitcoin. Anyway, the set up is close at hand with definable risk.

I know folks love to hear about the cold, dark winter coming. And yes, I am kidding. But ski season is here in the east with Killington, Jay Peak and a few others already open. Mount Snow opens tomorrow. Sadly, I will be heading in the other direction and weather. I cannot believe that Utah, home of the best snow on earth, doesn’t have a drop of snow yet.

On Wednesday we bought XOP, VNM, more CF, more GWRE and more AMZN. We sold SSO and some EPU. On Thursday we bought more COIN. We sold PINK and some XBI.