Loading ...NVDA (follow up)
Last week I posted that NVDA was experiencing a massive parabolic blowoff top and was looking to identify a place to short. As I stated in my response to Plunger’s comment about not shorting yet, which I agreed with, I said I was looking for a pullback followed by a bounce, to do so. If today, NVDA rallies back up to around 410, without taking out it’s high of 419.38 and if I can find a put strike and expiration that isn’t too expensive I might bite.(might be hard to do but hopefully premiums are not as crazy as just after the earnings release.) If the high gets breached there probably needs to be more backing and filling before trying to go short. (This is not investment advice just my opinion.) 
OK some thoughts about shorting NVDA. In a word I would say don’t even try. I would classify this effort as the ultimate “Vanity” trade. One should examine oneself and his motivations to short this particular issue when there are numerous other shorts out there. Anyone with any sense has to know this stock’s blowoff is the most ridiculous offense to anyone with a sense of value. Pure and simple it’s a momentum object of speculation. It’s market cap has allowed big players to run it up (Drukenmiller).
In past bear markets NVDA has been down 90%. I suspect it could do it again as well. But this has become a wild beast. Regarding shorting it at this time off the highs I would suggest it fits the description of Charlie Munger as “too hard”.
As for me I will watch it from the sidelines and wait for the first major sell off followed by a failed attempt to exceed resistance. Not going to try and short a squiggle off the high. This market could keep going for the rest of the summer. NVDA could keep punishing shorts during that interval.
It has nothing to do with a “vanity” trade whatever nonsense that means. I identified an opportunity based on the chart, the gap, and the extremeness of the move, just as I did recently with the bottom in AI. That resulted in almost approx 2.5x in weeks. It was because of the gap, the chart and the momemtum. I also didn’t say short where one can face unlimited loss, I said try to find a put option (with controlled limited risk) to go short. Why are there two or three people who insist on judging my motivations when I provide numerous excellent calls on various types of trades. It is about technical analysis and trading, nothing more. Does anyone ever see me challenge anyone else’s motivations on their posts, NO! Could we please stick to challenging my trade setups on just ones opinion based on either T/A and or fundamentals but leave the personal reflections to ones own mirror where they belong.
Seems to me one of the miracles of modern man is the ability to look at something I either disagree with or don’t like and simply go on to the next thing of interest that I like. But it seems a rare talent or skill these days…
I wasn’t directing any criticism towards any individual person. Just the concept of trying to short these crazy momentum stocks is unnecessary and prone to failure. As far as vanity, that description was coined by Raoul Paul and I agree with it. To pick out the #1 momentum stock and try and sharp shoot it off its top does indeed strike me as some form of vanity.
I guess on the one hand, if one looks to do that with every top momemtum stock, maybe. However, if you do the technicals correct, as I outlined, wait for a break and a failed rally, especially when there are huge gaps and extreme valuations then if done with a put to control ones risk, that is where you often find good opportunities. I still believe that NVDA is a great company and likely to grow earnings over time. It is just an opportunistic set up that may or may not work out for a short term bearish play.
Interestingly, I read this on C3.AI (symbol AI) today … https://twitter.com/sharu199428/status/1663763230362304513
It seems the author tried a similar bet on AI, just like Sir CM you’re suggesting on shorting NVDA.
This timing aspect is what keeps me away from options.
If options are a vehicle to make a few hundred dollars every week, why not just buy stocks low and sell them high?
If VIX has any meaning left at all, we should see volatility go up next week.
AAPL, GOOG being at 52-week highs, might call for more profit taking.
I read somewhere that Warren Buffett’s biggest holding is AAPL.
Will we be surprised if Buffett reveals after the fact that they sold AAPL above the 175s, just as retail was piling on into it?
An interesting week lies ahead.
GL
I didn’t see what or when he tried but the time to short AI was Tues. or Wed. If you saw my comment on FGC’s post yesterday with the chart of AI, I said my target to get back long would be if it reaches the small gap at 20.