Nvidia No More
Momentum shifts from front side to back side
“It's not whether you're right or wrong, but how much money you make when you're right and how much you lose when you're wrong.”
―George Soros
Today I announced on Twitter that I shorted Nvidia… (no, I am not insane!)
Why now and what did we say about NVIDIA/AI last time?
Check out The AI Blowout from Breakout Issue #2 — where I said the AI move is getting tired and that I would look to short it.
Now let’s see what happened SINCE that, why the stock didn’t dump on the event, and why the stock is ripe to dump now…
Buy the Rumour — Sell the Fact
Here’s the NVIDIA chart, with annotations of the important events / market reactions and how I traded it.
We will see why the price action post-split coupled with today’s price action was the setup I needed to short this with both hands.
The Events
Stock faded after Breakout #2 where I signalled AI was overextended
Stock found support and started moving up into earnings
May 23rd, Earnings: Blowout earnings and a 10:1 stock split was announced
Stock Split becomes the Catalyst: Stock rallied another 47% since earnings, in 19 sessions
June 10th, Stock SPLITS: I was expecting weakness (i.e. the Sell the fact)
But stock rallied another 17%, annoying the heck out of everyone
The reason was that a 10:1 split meant NVDA shares were now 90% cheaper (LOL), and so people wanted IN…
June 20th (Today), stock gapped up and then faded…
That was the setup I needed to see.
The Game Plan 🦉
If the stock bounces, I will start covering (take my losses) — if the stock continues to fade I will leave my shorts on and potentially even add more on weakness. I could see this retesting $95 easy.
I also bought September 20th expiry Puts with a $97 strike.
If he dies, he dies.