Nvidia’s Blockbuster – Warsh Up Next

One big catalyst for the week down in Nvidia. As I wrote twice heading into the number, I loved that the stock was weak into earnings and that sentiment had turned sour. My plan was to add to the position on a big gap down which did not happen. Rather, the earnings report was such a blockbuster against a negative backdrop that I just held the position we had in Unloved Gems.The stock gapped up and tacked on more gains yesterday on very heavy volume.

All-time highs should be up next for the stock where I would normally pare some back. However, our semiconductor allocation is very low, only holding Nvidia and Intel so I won’t be in a hurry just yet. Like we did with software after the AI-driven collapse, I will spend time on semis and look for the differentiation during the next pullback.

The next catalyst happens shortly when Fed Chair, Kevin Warsh, gives his first speech at the KC Fed’s symposium in Jackson Hole, WY, one of my favorite ski resorts for what it’s worth. It would be hard to believe if he doesn’t reinforce his strong commitment to price stability. I would imagine he also updates the public on the task forces he’s formed, their mission and make up. Finally, I would like to hear his thoughts and a plan of the reduction of the Fed’s almost $7 trillion balance sheet. History suggests that Jackson Hole days favor the bulls without any downside fireworks.

Thursday’s decent rally was mixed beneath the surface. With the S&P 500 up 0.75% there were more stocks down than up on the NYSE. It was the anti-broadening day although the big indices did well. Nothing changed from my thesis. The next five weeks should have the highest risk for the next four months. If the NASDAQ 100 gets above 30,500 without a decline first then I will reassess my position for a pullback by October.

For those who think there has been little to do in the markets this month, I would argue the contrary. It has been a great market for active strategies. Lots of opps to prune and plant.

On Wednesday we bought XOP and more BUG. We sold some XLU.