Nvidia Is Now the King of the Market
Here's why this Mag 7 name is gaining traction, even on a down day for the market.
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Profit-taking is picking up on Wednesday, as breadth is running nearly two to one negative, and the Russell 2000 IWM is giving back 0.8%. It is one of those days where narrow strength in the Magnificent Seven — and Nvidia NVDA in particular — is holding up the indexes while the majority of stocks under the surface are trading lower.
It has been a good run, and with the indexes pushing at major resistance at all-time highs, it isn’t too surprising that there is some stalling and increased profit-taking in place. We only have a couple of dozen names trading up more than 10% while the pockets of speculative action cool off.
Nvidia is gaining traction Wednesday in large part due to a report in the Wall Street Journal that it is moving into cloud computing and becoming a source of competition for Amazon AMZN, Microsoft MSFT, and others. It is still very early, but since Nvidia is the primary supplier of the chips needed for AI, it has a competitive advantage in offering cloud computing services.
Nvidia is on the brink of a new all-time high after jumping 3% on Wednesday morning. For years, it was Apple AAPL that was the most dominant stock in the market, but it has now been almost fully replaced by Nvidia. This is stock that every institutional investor has to own as it is in position to be a leader for years to come.
I have a long-term position in the stock and am looking to increase the size substantially once there is some consolidation near the highs. The chart has the potential for a cup-with-handle pattern, which is what will help to take it to the next level.
The indices are hitting intraday lows as I write, and I see nothing other than Nvidia that looks appealing right now.
At the time of publication, Rev Shark was long NVDA.
