Tech and Nvidia Are Surging Again Today
Yesterday, I wrote to you about the slump in the market we saw as investors pulled their funds out of high-growth tech (especially Nvidia) and poured it into Safety stocks in the energy, utilities, and real estate sectors…
Many traders (myself included) thought we could be seeing another sector rotation as we saw back in April when investors pulled funds from high-growth areas and moved funds into safety stocks.
Now, we still could be seeing a flight to safety happening… But the markets have been quite odd today:
Every sector other than tech and communications is down today…
It’s a near-complete reversal of the market action we witnessed yesterday. And it continues the trend of buyers stepping in each time there’s been any weakness in high flying stocks.
Now, of course, this is just one day… And we’re gonna need a few weeks to know if a larger sector rotation is occurring, or if the 10% drop in Nvidia was just some fear and profit-taking over a short period.
But it’s definitely worth noting that the market as a whole is more red than green even if Nvidia is up.
So let’s take a quick look at Nvidia:
Nvidia is up nearly 5% today after falling around 5.5% yesterday and 4% Friday.
Am I surprised? No.
It’s not a secret that I am bullish on Nvidia. It’s a proven, momentum stock (with legitimate revenue) and that’s what I like to trade. Plus, Nvidia has grown to the point where they have a cult following of investors much like Apple and Tesla. People who are perpetually bullish on the stock.
So, when they see the price drop 10%+ over the span of two trading days, they want to pump it back up.
This is purely speculative, but I think one of the things that is going on here is that investors are having a hard time rotating sectors even when it’s overdue.
Meaning that I think investors are having a tough time accepting the idea of lower potential in the energy or utility sector when we’ve seen such dramatic growth over the last 8 months in tech and communications. So even if it “makes sense” for a sector rotation, investors are desperate to keep the high flying gains rolling and a 10% drop in Nvidia screams “buy the dip”…
At some point, there will be a catalyst (whether positive or negative) that pushes investors into other areas of the market.
This week, we get the Personal Consumption Expenditures (PCE) index released on Friday and that’s exactly what I am watching for:
- Will we see a continued surge in tech with NVDA leading the charge? or
- Will we see more signs of a sector rotation and a flight to safety with investors putting funds into energy, utilities, and real estate… Potentially financials as well?
No matter the case, we have plenty of opportunities to help you take advantage of the markets.
— Nate Tucci
P.S. One thing I love about this market is the movement… We’re not guaranteed consistency, but we are getting big surges on a regular basis.
A lot of folks don’t realize that’s why Automated Options have performed so remarkably well with a perfect track record since I opened it up to the public. If you watch the presentation here you’ll hear me talk about how all I need is a certain level of movement within the trade to cash out…
We’ve certainly been getting that in these markets and I expect that to continue. So if you want to arm yourself with a phenomenal strategy for tapping into it, definitely check out Automated Options.
