Staying nimble

Paid subscriber analysis.

Another week, another all time high. After the double inflation scare last week, the markets shrugged it all off after NVDA earnings on Wednesday. SPX shot up 2% the day after, NDX 3%. All major indices are at all time highs.

The NVDA earnings event was singled out as a potential catalyst for the start of the sell-off during a traditionally week period for markets - the February post-options expiry window. But why NVDA? The company is crushing it, demand for its high quality GPUs is unprecedented, and they keep breaking record after record in revenue growth and profitability. It’s hardly a bubble for a company performing so well. So why target NVDA as the weakness for markets?

Well, because the expectations themselves were set up very high. Hardly anyone thought NVDA was going to have a bad Q4. The question was only if it will manage to beat very high expectations. And it beat them by some margin (265% revenue growth, $22.1bn realized vs $20.5bn expected). Also, Nvidia is now the third largest component of S&P500, just behind Apple and Microsoft. Its swing from lows to highs on Wed after-hours trading was $250bn in just 15 minutes - the largest single stock swing ever! Who sold and who bought at $645 on Wed, huh? :)

So yes, if things went sour, we would have gotten the broad market sell-off. But they didn’t. NVDA crushed it, went up 9% in after-hours trading, and finished up 14% the next day, sending the entire market on a powerful rally the next two days.

The BASON was correct in calling for a buy signal on Wednesday, so for us it was also a record breaking week. Up 6% for the week, our best weekly performance since we started the fund. More on that on Tuesday.

The prevailing bias

Is terms of what lies ahead, once again, we have to draw from this conclusion from 10 days ago: