Nvidia’s Dog-Day Disaster

Don’t anticipate… react! [Morning Reckoning] August 29, 2023 [WEBSITE]( | [UNSUBSCRIBE]( Nvidia’s Dog-Day Disaster - NVIDIA earnings gave investors something to talk about late last week - Semiconductors not named NVDA began to break down, dragging the rest of the tech space lower - Don’t anticipate… react! [There is MASSIVE change happening within our company]( And I want you to [hear about this – from me]( – otherwise this new policy could blindside you. This has gone into effect immeditaly, so I want you to understand exactly what it will mean for you. [So please, watch this video for my full announcement.]( [LEARN MORE]( Baltimore, Maryland August 29, 2023 [Greg Guenthner] GREG GUENTHNER Good morning Reader, Happy Tuesday! Summer trading is sometimes a slow, tedious affair — especially toward the end of August. Luckily, NVIDIA Corp. (NVDA) earnings gave investors something to talk about late last week. The semiconductor superstar was one of the only interesting mega-cap earnings announcements left on the Q2 docket. And since most of the chip stocks lost their first-half momentum weeks ago, the buy-and-hold crowd was hoping strong results would help encourage a decent bounce heading into fall trading. Valuation concerns also thrust this particular earnings announcement into the spotlight. It’s clear that NVDA shares are expensive by just about every imaginable metric. Shares have soared more than 220% year-to-date – and it was becoming clear NVDA management would need to report a huge beat and strong guidance to keep the party going. Somehow, that’s exactly what happened. Not only did NVDA smash top- and bottom-line expectations, it also raised guidance for the third quarter due to strong chip demand. Analysts tripped over each other to raise price targets, while speculators swooped in to bid the stock higher after-hours. The circus continued through early Thursday morning as NVDA shares broke above $500, posting an 8% gain from the previous day’s close. The financial media was already running victory laps, proclaiming NVDA shares would open at all-time highs and ignite a fresh rally that would spread throughout the tech sector. This is where the situation takes a turn. Almost immediately after Thursday’s opening bell, NVDA began to wobble. Shares quickly retreated back below $500. Then, they dropped some more. By midday, there wasn’t much left of the huge after-hours gain. Unfortunately, the also-rans in the semiconductor space fared much worse. Semiconductors not named NVDA began to break down, dragging the rest of the tech space lower. [Your Credit Card: Declined?]( [Click here to learn more]( Take a moment and picture this scenario: The line at the gas pump is getting longer as you insert your credit card for the second time. You decide to head in and ask the cashier what’s going on. There’s a long line inside. The woman in front of you looks frustrated. Everyone does. “There’s nothing I can do. You’re declined,” the cashier says to the man at the front of the line. It’s not just you. Everyone is declined. Something doesn’t seem right. A sinking feeling sets in as you realize something has gone terribly wrong. [Click here now for an urgent new prediction from a former advisor to the CIA and Pentagon.]( [LEARN MORE]( A Tired Trend This is the type of action you see when a rally is getting a little long in the tooth. Typically, these exhaustion moves are preceded by good news. In this case, strong earnings were first regarded as a bullish catalyst. The only trouble was there were no sidelined buyers left to take the plunge. NVDA’s year-to-date dominance was no secret. It leads its mega-cap peers (and the entire tech space) by a wide margin. Jim Cramer’s pumping the stock on TV and social media on a daily basis. When the dust cleared Thursday afternoon, we were left with some ugly exhaustion moves – big reversal candles that opened above the previous session’s highs that gave up most or all of their gains before the end of the day. [chart] You can clearly see the attempted move above the July consolidation highs toward $500 and subsequent flameout. NVDA continues to retreat from these highs, closing lower on Friday and trapping any late bulls who piled in following the strong earnings announcement. While I don’t believe this is a death blow to NVDA, it will probably take some time before it gets back on its feet again. In fact, it could easily drop back to $375 and retest the gap from May. More importantly, the NVDA debacle is telling us that the tech bulls are a little too eager to get the party started again. Don’t Anticipate — React! Outsized rallies usually need adequate time to digest the gains before posting a new leg higher. As evidenced by today’s chart, NVDA marched higher with virtually no interruption until the stock dipped in early August. The timing of this consolidation makes perfect sense. Remember, we’re still experiencing the dog days of summer trading. Choppy, sideways action could stick around for weeks — or even into the fourth quarter. Only a total lunatic (or Wall Street analyst) would believe NVDA could post another uninterrupted 200% gain into 2024, especially without a hard reset or lengthy consolidation. Putting the move into context with the market, NVDA could also be acting as a tech bellwether. The entire sector could require more consolidation or downside action heading into the fall. This would also line up with seasonal trends and rotation plays we’ve been tracking this summer (energy and industrials, for example). Speculators will likely try to force long-side tech trades and front run any potential bounce over the next several weeks. I don’t think that’s a viable strategy. Attempting to anticipate bounces in these tech names is a great way to get stopped out and chopped up in a sideways market. From a swing-trading perspective, you’re probably better off shorting these tech rallies. Save your longs for other sectors that could begin to stand out heading into September. Best, [Greg Guenthner] Greg Guenthner Contributing Editor, Morning Reckoning feedback@dailyreckoning.com [New LIVE Demo Video STUNS Crypto Investors]( In [this short 3:28 video…]( Crypto genius James Altucher reveals his most shocking crypto secret yet… A little-known secret that’s delivered over $1,170 in FREE crypto income per month. If you AREN’T using this affordable little device… You’re missing one of the best, easiest ways to earn real cash with cryptos. [Click here to watch this short 3:28 video NOW.]( [LEARN MORE]( In Case You Missed It… “No” Is the Magic Word Sean Ring, Editor [Sean Ring] SEAN RING Dear Reader, I’ve been running around Europe lately with the family. But there’s one skill that I’m so pleased I’ve developed. And that’s negotiation skills. Because even in Europe, people try to take advantage of you. So enjoy this piece and, by God, read Jim Camp’s books! Develop This Skill at All Costs There are many different skills that any person — especially a businessperson — must develop. Presentation, writing, and networking skills, among others, are crucial to developing both the self and the business. Imagine your prospective customer, and you are discussing a potential business deal. You’re able to navigate the conversation without any theatrics effortlessly. The dialogue feels like a sharp, rewarding tennis rally. It goes back and forth between the two of you for a time. Then, the conversation concludes with a deal. This deal gets you paid… and gets the client everything they want. You both benefit and realize a vastly increased scope of your agreement. Moreover, there’s even more potential to expand your business dealings. Dreamworld scenario? Sometimes, sure. But more often than not, this results from a conversation where you display excellent negotiation skills. What They Really Mean by “Don’t Give Up!” Roger Fisher and William Ury penned a “classic” text on negotiation skills called Getting to Yes. Reading this book is the surest way to have your head handed to you in a negotiation. I never understood the psychological mumbo-jumbo that getting someone to say yes to something would get them to say yes to everything. It’s garbage. Worrying about ZOPAs (Zone of Potential Agreement) and BATNAs (Best Alternative To No Agreement) differs from where your head should be when talking to someone. The truth is that people often say, “No.” All the time, really. How you deal with that is far more important than getting someone to say a “yes” they may not even mean. Are you going to give up after the first “No?” Many do, especially the Ivy League/Oxbridge types, who are positively insulted when someone declines their “perfect deal.” Don’t they know who they’re talking to? Using a “no” as a signpost or a boundary is critical when speaking to customers. You’ll hear them often. You may as well use them as guiding lights to get a solid deal done. Who’s the Best to Listen to? I’m a big Ben Settle fan. Right now, Ben is perhaps the most renowned email marketer on the planet. One day, Ben talked about one of his heroes, Jim Camp. My ears immediately pricked up. What Ben relayed about Jim immediately resonated with me. This man not only trained FBI negotiators but seemed no-nonsense about it all. Suddenly, negotiation wasn’t an exercise in psychology or hypnosis but a method of finding common ground. Camp defines negotiation as “the effort to bring about an agreement between two or more parties, with all parties having the right to veto.” What happens when you give someone the breathing room to say no is impressive. It completely contrasts the “take it or leave it” boneheads bandying their “method” about. To be sure, at the end of a negotiation, you need to know whether you’re getting married. But that’s much farther down the road. Whenever I submit a proposal, I write in the email's conclusion, “Please let me know if you’d like to add/delete/amend anything.” That sentence gives my client the guilt-free wiggle room they need to alter things they don’t like. Keep your ego out of it. Shipping business and stacking paper are what matters. Not bullet points on a proposal. Let the market tell you what it wants. It’s easier that way! The Adult’s Magic Word “Micah, what’s the magic word?” “May I have some chocolate, puhleese?” Every child is ingrained with that lesson. “Please” is the magic word. And always say “thank you.” They’re great lessons every child must learn to function in polite and impolite society. Although I’m enjoying my four-year-old immensely, I can’t wait to say, “Micah, you know how I always told you the magic word was ‘please?’ Well, here’s your new lesson. You’re at the age where the new magic word is ‘No!’” I don’t know about you, but I used to be one of those dopes who used to say yes to everything. I like making people happy, so I must remind myself of the magic word. No, thank you. No, that’s not for me. No, I think you should find someone better suited for that job. No, that price doesn’t work for me. Practice if you must. You won’t believe the results you’ll start getting. And what’s better, you’ll have cleared the way to say an enthusiastic “Yes!” to the right projects and deals! Camp gives three pieces of advice concerning “no”: - Embrace “no” at every opportunity in a negotiation. - Don’t fear the word — invite it. You do not take it as a personal rejection because you are not needy. - Every “no” is reversible. Camp continues, “The moment you really internalize this principle, the moment you understand the honesty and the power of ‘no,’ you will have taken a long stride away from emotion-based negotiating toward decision-based negotiating.” “Maybe” is the worst answer you can hear. It gives you nothing. Wanna go out with me? Maybe... Not great, is it? How about this: Shall we do lunch? Yes! Have your people call my people. Is that a real “yes?” Maybe it’s something they said to shut you up. You won’t know until later. That’s why “no” is the golden word. You know exactly where a boundary is. There’s so much more to write about this topic, but let me touch on one more thing. Want is OK, Need is Not “You stink of fear!” Mr. Hyde screamed at Tom Sawyer in the 2003 film League of Extraordinary Gentlemen. Your customers smell this a mile away, as well. From now on, train yourself to want things from your clients. But from this point forward, you never need anything from them. You don’t need this deal. You want this deal. You don’t need to do this. You want to do this. You don’t need to close. You want to close. Badly. In fact, removing the word “need” from your vocabulary insofar as it’s reasonable to do so will do wonders for your body chemistry. Need produces stress. Stress causes cortisol levels to rise. It constricts your breathing. It raises your heart rate. Worst of all, it clouds your judgment — all bad stuff. Wants and desires don’t have that deleterious effect. But what if my client rejects me? They can’t reject you if you don’t need anything from them. Wrap Up I love Jim Camp’s books. Start with No: The Negotiating Tools that the Pros Don't Want You to Know, and No: The Only Negotiating System You Need for Work and Home are classics. I prefer the audiobook versions. Listen to them 10x each to ingrain the message. It may be a big change for you, but it’s worth it. All the best, [Sean Ring] Sean Ring Contributing Editor, The Morning Reckoning feedback@dailyreckoning.com Twitter: [@seaniechaos]( Thank you for reading The Morning Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Greg Guenthner] [Greg Guenthner, CMT,]( is chief strategist at Forge Research Group. He has spent the better part of the past two decades developing long-term and short-term strategies with a single goal in mind: to help everyday investors generate outstanding returns and control their financial futures. Greg’s charts, analysis, and insights have appeared in Marketwatch, Forbes, Yahoo Finance, and many other financial publications. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( © 2023 Paradigm Press, LLC. 808 Saint Paul Street, Baltimore MD 21202. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. We welcome comments or suggestions at feedback@dailyreckoning.com. This address is for feedback only. For questions about your account or to speak with customer service, [contact us here]( or call (844)-731-0984. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We allow the editors of our publications to recommend securities that they own themselves. However, our policy prohibits editors from exiting a personal trade while the recommendation to subscribers is open. In no circumstance may an editor sell a security before subscribers have a fair opportunity to exit. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. All other employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. Please read our [Privacy Statement.]( If you are having trouble receiving your The Daily Reckoning subscription, you can ensure its arrival in your mailbox by [whitelisting The Daily Reckoning.](