The market awaits a gift from #NVDA.
I can’t imagine the volatility will be muted. Fireworks is the verb everyone is using. The early 2023 rally ignited because of AI and Nvidia is now considered the big dog on the playground.
In one corner we have a hot new tech, in the other, Michael Burry made another bet on another big short. The 2022 bear market decline was about growth fears, and the lack of liquidity from the FED. That’s not what Burry is betting on.
He’s betting on valuations that are too high and yields.
Which in a sense is good news.
The AI story has not changed. I can personally tell you it is changing small business. And it’s just getting started. But the white hot story simply needed to cool down and catch up with reality.
#NVDA is up 212.49% year to date.
#SMCI 214.36% and that’s AFTER the stock price declined $120!
Stocks don’t go up without profit taking. The faster and hotter they go up, the more people will panic. Panic they missed out so they keep buying. And panic when it slows down and they sell causing an avalanche.
That’s the stock market part of the story. What about the economy? You know you and I and the high prices we pay for gas and food.
The economic data might “sell” us on things cooling off but that’s BS. Prices for everyday goods went up and have stayed there. It’s expensive to walk out of the house.
Combine that with pent up demand for travel, and more than just technology rallied to begin the year.
Consumer cyclical is the second strongest sector of the year behind tech. It’s also known as consumer discretionary. As in buying things you don’t really need.
As long as the consumer continues to pay up, the bears will have a hard time pushing things down. As we say in the office, “there’s a bid under the market.”
So far it looks like the market is correcting. As of now, I don’t see a bear market lurking.
The market internals are bearish but so far it’s very controlled selling.
So far. Let’s see what #NVDA has for us after the market closes today.