To gain an edge, this is what you need to know today.
Nvidia Positioning
Please click here for an enlarged version of the 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.
- Nvidia is at the center of the artificial intelligence revolution. It is the best performing stock in the S&P 500 this year.
- The chart shows a pullback yesterday.
- The chart shows the volume yesterday was high when the stock dropped. This is a negative.
- RSI on the chart shows that NVDA is no longer overbought after the pullback. RSI shows that the stock can go either way after earnings.
- The chart shows extreme positive positioning in NVDA prior to the drop. The best way to understand extreme positive positioning is to think of a boat where everyone is on the same side. It does not cause any problems as long as the waters are calm. However, if a storm comes and everyone is on the same side, the boat sinks.
- The chart shows that yesterday, extreme positive positioning took a hit, resulting in a large drop in the stock. The positioning took a hit, not because a storm came, but because investors started jumping off the boat in anticipation of a storm from the earnings that are ahead.
- The options market is predicting an 11% move in NVDA stock in either direction after earnings. Pause for a second and think about it – this is the gain or loss of $200B in market value.
- We previously shared with you:
Less informed investors do not understand that stocks do not move based on published consensus earnings and revenue estimates. Stocks move based on whisper numbers. Whisper numbers are the numbers that analysts share privately, only with their best clients. The whisper numbers for ...