Two Nvidia Shockers
Please click here for an enlarged chart of NVIDIA Corp (NASDAQ:NVDA).
Note the following:
- This article is about the big picture, not an individual stock. The chart of NVDA stock is being used to illustrate the point.
- The chart shows a big move up yesterday on a revenue shocker and flurry of deals from Nvidia.
- The chart shows another up move in NVDA stock driven by President Trump.
- Yesterday, revenue projections from Nvidia were a shocker. Here are the key points:
- Nvidia has visibility into more than $0.5T in cumulative Blackwell and Rubin revenue through CY2026.
- The foregoing revenue visibility is more than five times Hopper's lifetime revenue.
- These projections are significantly higher than not only the current consensus but also higher than the most optimistic estimates prior to yesterday.
- Nvidia CEO Jensen Huang spoke at the GTC DC conference yesterday, stunning the market with a flurry of partnership announcements including with:
- Nvidia also announced a $1B investment in Nokia. This is not good news for networking equipment providers Ciena Corp (CIEN) and Arista Networks Inc (ANET).
- Nvidia announced NVQLINK – this is Nvidia's system to connect quantum computers with Nvidia based AI super computers. The technology is designed for hybrid quantum-classical computing. Quantum computing stocks such as Rigetti Computing Inc (NASDAQ:RGTI), IONQ Inc (NYSE:IONQ), D-Wave Quantum Inc (NYSE:QBTS), and Quantum Computing Inc (NASDAQ:QUBT) staged a vicious technical reversal on the announcement even though some of these companies are part of Nvidia's initiative. The drop was triggered by fears of more competition.
- We are long on Nvidia from $12.55.
- In our analysis, if the trend continues, Nvidia's market cap could reach $5T.
- As full disclosure, a signal for a new trade around position in NVDA stock was given earlier today by us. A trade around position is a technique used by hedge funds and billionaires that can dramatically increase returns and reduce risks.
- Previously, the U.S. administration has not allowed Nvidia to export even chips with lesser capability than Blackwell to China on national security grounds. China wants to replace the U.S. as the world's superpower. To a large degree, if China will succeed depends upon which country wins the artificial intelligence race. Blackwell is the most powerful Nvidia chip, and it will help China compete with the U.S. on AI. In a shocker, President Trump said he will talk to China's President Xi about Blackwell chips.
- As we have been sharing with you all along, the momo crowd's pattern is to buy ahead of the Fed decision. True to its pattern, the momo crowd aggressively bought stocks yesterday and is buying stocks in the early trade today.
- The FOMC will announce its interest rate decision today at 2pm ET and will be followed by Fed Chair Powell's press conference at 2:30pm ET.
- Today is the busiest day for earnings. Companies with a total market cap of $11T are reporting earnings today. Most notable are earnings from Microsoft Corp (NASDAQ:MSFT), Meta Platforms Inc (NASDAQ:META), Alphabet Inc Class A (NASDAQ:GOOGL) and Alphabet Inc Class C (NASDAQ:GOOG), which will be reported after the regular session close.
- There is a lot of optimism about the meeting between President Trump and President Xi tomorrow. President Trump is floating the idea of cutting China tariffs. China purchased the first shipments of U.S. soybeans.
Magnificent Seven Money Flows
Most portfolios are now heavily concentrated in the Mag 7 stocks. For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis.
In the early trade, money flows are positive in Amazon.com, Inc. (NASDAQ:AMZN), Nvidia (NVDA), Microsoft (MSFT), and Tesla Inc (NASDAQ:TSLA).
In the early trade, money flows are neutral in Apple Inc (NASDAQ:AAPL), Alphabet (GOOG), and Meta (META).
In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).
Momo Crowd And Smart Money In Stocks
Investors can gain an edge by knowing money flows in SPY and QQQ. Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil. The most popular ETF for gold is SPDR Gold Trust (GLD). The most popular ETF for silver is iShares Silver Trust (SLV). The most popular ETF for oil is United States Oil ETF (USO).
Bitcoin
Bitcoin (CRYPTO: BTC) is range bound.
What To Do Now
Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.
You can determine your protection bands by adding cash to hedges. The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive. If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.
A protection band of 0% would be very bullish and would indicate full investment with 0% in cash. A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.
It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.
Traditional 60/40 Portfolio
Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.
Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.
The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
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