Here's What I'm Watching as I Hope to Buy More Nvidia
This might be a time when traders are better off doing very little, but I'll add to this Magnificent Seven name if the conditions are right.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
Stocks gapped up on Thursday morning due to massive stimulus in China and good news in the semiconductor sector. So far, the open has been the high of the day as some traders are selling into the strength. We are already substantially below the opening prints, but breadth is more than three-to-one positive, and there is still plenty of green on the screens.
Technically, all eyeballs will be on whether this gap-up is filled, which means that closing will be key once again. The challenge of the market recently has been that, while the indices stay very sticky to the upside, there hasn’t been a lot of buyable momentum. Big money has been gravitating toward Nvidia NVDA and other Magnificent Seven names, but it has been quite narrow.
I’ve been relatively inactive recently as I look for better entry points. I continue to do very little and am trying not to let it bother me. It is a good time to contemplate the Pareto principle, which is more commonly known as the "80-20 Rule." Eighty percent of your returns are typically generated about 20% of the time. The other 80% of the time, you make little progress. Instead of fighting that tendency, it can be helpful to embrace it.
For me, this is the 80% period of unproductive activity, but I’m preparing for the 20% period when I will generate the majority of my profits. I don’t know when that will be, but I do know that the current market environment is not offering me much opportunity.
There are many folks who think this is a great market environment right now. The indices are at highs and refuse to pull back, but the big-cap favorites are doing well. If that is what works best for you, then you need to embrace it and make the most of it.
Very few traders are willing to admit that there are times when they are better off doing little. It feels like a deficiency if you aren’t always aggressively trading the shifting market conditions. But it comes down to understanding the odds and when it is best to press your bets. Good traders are very patient when looking for entry points. A good entry point makes it much easier to control risk.
One stock I am looking to add to in the next month or so is NVDA. I believe sentiment in the semiconductor sector has improved, and it should be a "go-to" name for institutional money that wants more exposure.
Currently, the chart is not favorable. It has already reversed down more than $2 from its early highs this morning, and there are gaps on the chart that need to be filled. I’ll be monitoring it and considering it in the context of market conditions. I’m not going to just buy it without regard to the chart setup because I think it is fundamentally OK.
The indices continue to sink as I write, and I’m doing nothing and not feeling so bad about it.
At the time of publication, DePorre was long NVDA.
