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I’ve got to be honest with you — I’m genuinely shaken right now. Nvidia (NVDA) dropped 5% on Thursday.
No news. No catalyst. Just a straight rejection right at the highs for the second time. Technically, this was a textbook rejection at the highs — a setup I fully expected to break out — so seeing it reverse this hard really caught me off guard.
What makes it even stranger is that while NVDA was getting hammered, Western Digital (WDC), Micron Technology (MU), and Advanced Micro Devices (AMD) kept pushing higher. I thought we were setting up for a classic catch-up move where the laggard finally wakes up. That looked like the cleanest read of the whole semiconductor space.
That’s not what happened. Instead, we got a full flush, and now the entire setup looks compromised.
The Catch-Up Trade That Isn’t Catching Up
Timing is everything with catch-up trades. They only work when the laggard starts moving while its peers still have momentum. When laggards start to move, it only works if their peers haven’t stalled. If NVDA drops into catch-up territory after the others have already flattened out, the window for the catch-up trade shuts quickly.
And that’s exactly the risk here. If NVDA keeps correcting, I’m giving up on this idea altogether. Not because I’m bearish — I just can’t see myself getting bearish on a company putting up these numbers — but because the setup itself would no longer exist.
NVDA does have earnings in three weeks and maybe that becomes the catalyst. But they haven’t had a true earnings catapult since last summer, and even that move fizzled after the initial reaction. I’m not betting on a miracle.
What this really highlights is something bigger happening under the surface. NVDA’s failed catch-up is the latest example of a major shift — markets are bullish, but for the first time since COVID, the mega-cap leaders aren’t doing the heavy lifting. The real action is happening in second-tier tech.
What I’m Watching Instead
Even though I don’t think NVDA is tradable right now, it’s still telling us a lot about the broader market. A few years ago, buying the Magnificent Seven (MAG7) was the default move whenever tech showed strength. But that playbook just isn’t reliable anymore — adaptive thinking is needed.
After seeing this price action, I’ve shifted my risk-on watchlist. Technology (XLK) looks like the top choice. Global X Artificial Intelligence & Technology (AIQ) is next in line. And if you’re willing to take a flyer, S&P Software & Services (XSW) has a lot of potential. Meanwhile, the mega-cap baskets that used to be automatic buys are now at the bottom of the list.
As for NVDA, this is one of those moments where stepping back is the disciplined move. Even with strong setups, markets can defy your expectations. That’s why sometimes the smartest move is not forcing a trade — disciplined patience beats frustration-chasing every time.
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Nate Tucci
Tucci Trades
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P.S. A Market Moving Decision Is on the Horizon Next Week — Are You Prepared?
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