How to Buy Back Nvidia as it Sits on the Scrap Pile

The market was overheated to start the week, which caused some selling into the opening strength. There is still very strong speculative action in the Russell 2000 IWM, but the names that are leading are shifting. 

This morning, the space stocks RKLB, RDW; quantum computing RGTI, QMCO; and select biotechnology BBIO, TGTX are leading while there is some profit taking in bitcoin-related names IBIT, MSTR and WULF.

The bears will have you believe that the entire market is about to collapse when there is speculative action this hot, but what is more likely is that there is lots of rotational action as aggressive traders try to find the next hot stock.

Breadth is still running very strong, with 7,400 gainers and 1,900 decliners, but what is really impressive is that the new 12-month highs exceed 1,600 names. Markets this strong attract contrary bears, but they don’t suddenly collapse and go straight down.

One name I’m starting to buy back this morning is Nvidia NVDA. It is being thrown in the scrap pile as traders focus on hot small caps, but Nvidia is a name that they will eventually come back to when looking for safety. I made a small partial buy and will be looking for additional entries if it tests the 50-day simple moving average at around $134.41.

I’m also looking to add to my position in BBIO, which received an FDA approval this morning. There was concern that the decision might be delayed for a few months, and buyers were poorly positioned. I expect that it will hold on to today’s gains and continue to trend higher.

I am also looking to buy a pullback in bitcoin, but it is too early to do so today. I don’t expect a deep pullback, but I’m not going to rush into adding it today. I believe there is a good chance it will continue to rally the rest of the year, although some of the more speculative stuff, like MicroStrategy, is going to be very volatile. 

At the time of publication, DePorre was long RKLB, RD, RTGI, BBIO, IBIT, WULF and NVDA.