Nvidia posted earnings yesterday, and my thoughts proved true: this is a sell-on earnings quarter. NVDA was down over 8 dollars after posting stellar earnings, beating on both top line and bottom (revenue & earnings). The problem institutions had was that even though their profit margins were huge by industry standards, they have begun to get squeezed. And their forward projections indicated this. BE AWARE, institutions DO NOT SEE MARGINS GO DOWN!
The reason why, usually means the beginning of the Law of Diminishing returns. That, in my opinion, along with profit taking and portfolio adjustment, is the reason the following big institutions were sellers lately. And these are top players!
- Ken Griffin of Citadel Advisors (9,282,018 shares)
- David Tepper of Appaloosa (3,730,000 shares)
- Stanley Druckenmiller of Duquesne Family Office (1,545,370 shares)
- Cliff Asness of AQR Capital Management (1,360,215 shares)
- Israel Englander of Millennium Management (676,242 shares)
- Steven Cohen of Point72 Asset Management (409,042 shares)
- Philippe Laffont of Coatue Management (96,963 shares)
Even though their chips will remain in high demand, their profit margins will slowly diminish. NVDA most likely is good long term, but the days of mega appreciation are behind it as the institution focuses on where the next big move in stocks will come from, which I believe will be small-cap stocks.
REMEMBER THE RULE I STATED BEFORE? FOLLOW THE INSTITUTIONS! Do what they do. That’s why they always seem to make money.
The markets thus far this week.
The current market situation for the NASDAQ and the S&P 500 currently looks tired and frail. Real volume-based buying seems to be missing after 2 pm on both exchanges, which could be a precursor of the correction I’m looking for after Labor Day. MY BIG QUESTION I HAVE NOT FIGURED OUT IS HOW THE MARKET WILL REACT UP UNTIL SEPTEMBER 18TH THE DAY EVERYONE EXPECTS THE FEDERAL RESERVE TO CUT RATES… I’m keeping my powder (money) dry. And waiting for more certainty.
The small-cap Russell 2000
Yesterday was a great day for the small-cap index, posting a nice gain in an otherwise mundane big market action, which is showing me money is flowing into a small cap. But make no mistake. If these big markets (NASDAQ, and S&P) correct again after Labor Day, I expect this market (small cap) will also correct. Make your buy list. I plan on picking away at my buy, which I will post at a later date. When I make a buy list, often I will buy the stock like someone cost-averaging a mutual fund.
Upstart (UPST)
The stock was up on the day, but the last 2 days it closed lower than it opened, which I don’t like. The stock has nearly doubled from where I recommended it at the end of July. I expect it to be correct. But if the Federal Reserve lowers rates at the end of the year, this stock will fly again, in my opinion. The stars have to align, lower rates, and good market conditions.