Retail investors give it in the morning and institutional investors, take it away in the afternoon.
After Wednesday’s announcement of Nvidia‘s earnings, aftermarket trading pushed in Nvidia towards $520 a share. On Thursdays market open you would have thought that would have continued yet the Nvidia closed for the day only up $.47 above Tuesday’s close. I have to believe many investors are scratching their heads. But the reality is, Nvidia was and is heavily leveraged by institutional investors as well, as small and large speculators.
When earnings came out on Wednesday, you saw a lot of those institutional, large and small speculators begin to sell off their positions. Then Thursday’s market open brought in the retail investor who had high hopes that the stock would continue its three month run since May. For those who bought in Thursday morning where sadly disappointed at the close on Thursday afternoon.
FOMO is what happened. It gets the best of all of us at some point. Yet we should have become more aware that this run up we have seen in the last three months since Nvidia reported in May would eventually turn south. A couple of days ago I projected $300 a share for Nvidia was in its near future. More and more I believe that is possible.
Chairman Powell will give his annual speech from Jackson Hole. We should expect similar to what he has said in the past. If anything different, this could be a catalyst for the market to go lower, even if his speech is about pausing on rate hikes.
Markets are a weird beast. At times I believe you have to take a contrarian approach to trading. Yet I do believe buying good company’s for the long term will ultimately create the wealth most are looking for. It’s buying them at the right time. Jim Cramer on CNBC‘s Mad Money show says you by Nvidia for the long term. But do you buy it at $510 a share yesterday morning? I don’t believe so, because if it retraces towards its May earnings report around $300 from its high of $520 a share Wednesday evening in aftermarket trading and you use a 30% or 60% retracement guideline, the best possible opportunity to buy may be in that $388 to $454 range.
Presently Nvidia premarket is at $472 a share give or take a couple pennies. If I’m correct, i’d start getting interested in accumulating shares about $18 from here on the downside. Yet I believe I’d get really excited about accumulating shares down around $400 or below.
If you truly are a long-term investor, I do believe you have to change up your game a bit in today’s world of investing. Dollar cost averaging in to stocks is still a solid concept. Yet just riding it out doesn’t make a whole lot of sense to me anymore. If you would’ve taken profits at some level on Tuesday, you would have cash to start buying in once we get down into a range that makes more sense than it does to buy on Thursdays market open. I’m not suggesting you sell everything, but rather you take profits leave some on the table, but have cash on the side to buy when the dip, the real dip comes. The greatest investors in the world apply these concepts. Yet most financial advisors and retail investors don’t.
Like I’ve said to people in the past, I’d rather pay taxes on money I made then take tax losses on money I lost.
Have great weekend.
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