Why I'm Looking to Buy Nvidia as a Rotational Play

Market action is mixed, but there are early signs of some rotation out of the Magnificent Seven MAGS and into the DJIA and the Russell 2000 IWM. Overall, market breadth is just slightly positive, but S&P500 SPY breadth is still negative.

The big question is whether the Fed interest rate decision and the Powell press conference today will shake things. Conditions are very good for rotation to kick off a Santa Claus rally, but it is likely to occur in a choppy and chaotic manner.

The market is expecting a hawkish bias from Powell after announcing a quarter-point cut. It won’t be a big surprise if he hints at a pause in rate cuts, but the likely knee-jerk response is selling. If the market is hit with selling on the Fed, I believe that will be the catalyst for rotation out of Magnificent Seven names and into the rest of the market. I anticipate dip buyers will be looking to buy the many stocks that are already hit hard and are likely under pressure due to tax selling.

I have a fondness for medical and biotechnology names, and if there are some signs of rotational action, I’ll look at those groups. A few names that I’ll be quick to buy are Xeris XERS, Sensus Healthcare SRTS, ADMA Biologics ADMA, Delcath Systems DCTH, Lantheus Holdings LNTH, Mereo BioPharma MREO and uniQure NV QURE.

I’m also interested in Nvidia NVDA as a rotational play. It has been lagging behind the Magnificent Seven and has been more correlated with the Dow recently, and I think it will attract flow if the Magnificent Seven is hit.

Also, several readers asked me about Humacyte HUMA. The stock is languishing because the FDA still has not acted. Holders are growing impatient, and with the fast-approaching holidays, it is likely that the FDA will not act until next year.

At the time of publication, DePorre was long XERS, SRTS, ADMA, DCTH, LNTH, MREO, QURE, NVDA and HUMA.