Postcards: This Headline Means Nothing...

The Number 1 story on SeekingAlpha as we call it a day is news that a director has dumped shares at a major tech company. For right now... who cares? You should be watching these four NVDA technicals.                                                                                                                                                                                                                                                                                                                                                                                                                 Forwarded this email? [Subscribe here]() for more [Postcards: This Headline Means Nothing...]( The Number 1 story on SeekingAlpha as we call it a day is news that a director has dumped shares at a major tech company. For right now... who cares? You should be watching these four NVDA technicals. [Garrett {NAME}]( Dec 1   [READ IN APP](   [Upgrade to paid]( Dear Fellow Expat: That “Talking House” from Mickey Mouse is back. I’m no longer sick. It wasn’t a hallucination. Now that I’m fully healthy (I guess), I’ve made it back to the living room. My daughter, still wearing a gymnastics leotard, watches Mickey Mouse Funhouse while having dinner. Amelia is enamored with the episode because it’s winter-themed. The characters are frolicking in the snow (with some of the worst Elvis-themed music I’ve ever heard.) She knows what it means to live in Florida. There are no snowmen in Florida. No snowballs. No reason to wear a scarf. There are no reasons to wear layers. No sledding. No mittens. These are - as the economists like to say - tradeoffs. There’s always Southwest Airlines (LUV). We’ll be sure to look for a reason to visit the closest mountains or snowy weather for a few days soon - to remind her of the windchill we left behind in Chicago. And we can pay for it… with the taxes we saved by leaving Chicago. Win. Win. [Upgrade to paid]( Clickbait Silly My days end around 6 pm - as I take a quick look at the futures market and close the laptop. For the next 35 minutes, my daughter and I usually play cards, or she hits me over the head with a foam sword because I’m not allowed to win due to having a longer-arm advantage. But I always check headlines - to scan them. So I know what to look for in the morning. Tonight, I saw the No. 1 story from Seeking Alpha. The headline reads: Now, you know NVIDIA (NVDA). It’s a leading technology company specializing in GPUs (graphics processing units) for gaming, AI, and high-performance computing. The company that has blown the doors off the S&P 500 since bottoming out in 2022. Shares are up 279% in 13 months. Hudson, you may not know. She’s the former National Football League (NFL) CMO and used to run Pepsi North America. She’s been on the board of NVIDIA since 2013. The stock was under $4.00 when she joined the board of directors. An excellent 10-year run. Given the stock’s run, many traders and investors might look at her recent sale and think it’s a warning sign that the entire tech sector may come crashing down. Is this bearish for the company? That the Director sold the stock? No. Something else is bearish. Actually,… four things. Insider Selling Over at [Republic Risk Letter]( we highlight insider buying among executives and the number of purchases. When we see many executives buying their stock simultaneously, we view this as bullish. It is a process known as “[Cluster Buying]( - a particularly unique situation. That’s because many executives are all putting their cash down to buy the stock. But specific buying by just one executive can also be bullish - particularly the [purchases of the Chief Financial Officer]( whose buying is at six figures or higher. We’re always on the lookout for these sorts of purchases. One executive selling stock doesn’t mean much. Maybe Ms. Hudson is buying a Malibu home and doesn’t want to take on a mortgage. Or there may be a lot of insider selling (as there is a history of it in NVDA) because a lot of people are paid in stock. As you can see in the chart below from [SECForm4.com]( NVDA selling is prominent and likely due to stock-based comp. There can be any number of reasons why insiders sell. There’s only one reason - according to Peter Lynch - that insiders buy: They think the stock is moving higher. I will note that insider cluster SELLING can be bearish for a stock. When many executives - five or more - all start selling simultaneously - it can suggest that they view the stock collectively as overvalued or see potential headwinds in the future. But you need to dig deeper if you’re a trader or investor trying to make sense of it. Let’s go back to NVIDIA. [Upgrade to paid]( Use These Four Indicators As you know, I watch four technical indicators to understand how and when a sector or a stock may start breaking down. In simple terms, they are: - Relative Strength Index: A technical indicator (momentum oscillator) measuring overbought and oversold market conditions based on price strength. - Money Flow Index: A priced and volume-based indicator measuring market buying and selling pressure. - MACD: A trend-following indicator showing potential buy and sell signals. - ADX: An indicator of trend strength and potential market reversals. They all have an excellent track record of working together. Here’s NVIDIA’s chart. On November 28, the MACD started turning negative. Since then, we’ve seen the RSI and MFI move under 50 (the center of the 0 to 100 range). Meanwhile, the ADX is turning negative as well. It doesn’t mean this stock will tank. It doesn’t mean that it can’t snap right back around tomorrow and rally higher. But the odds favor technical sellers letting shares go - which means it’s probably a good time to hedge or sell covered calls if you’re a long-term stockholder. Based on the break under the 20-day moving average, this may return to the 50-day test. Or the 200-day. Or oversold (RSI <30, MFI <20). I have no idea what is coming next. No one does. I can study the technicals, liquidity, and momentum. It doesn't mean it’s time to [start shorting the stock with Naked Puts](. But if you’re a trader - you might consider the AXS 1.25X NVDA Bear Daily ETF (NASDAQ: NVDS), which is a reverse ETF with 1.25x positive performance for every 1% that NVDA falls (or 1.25x negative if NVDA goes up). But keep an eye on these indicators for NVDA ([Daily Reading on Finviz is what I use](. If they reverse higher, end the speculation. Dawn Hudson’s sale may have gathered headlines. But her $5.2 million sale is nothing compared to the selling its CEO and Chairman did at lower levels in September. Ignore one-off selling, especially in the tech sector where stock compensation is standard. Instead, you can just look at the technicals and see what the rest of the market is doing. Profit-taking is typical in this environment, especially with the recent run-up to overbought levels for tech stocks and the broader markets this month. Stay positive, Garrett {NAME} Secretary of Defense You're currently a free subscriber to [Postcards from the Florida Republic](. For the full experience, [upgrade your subscription.]( [Upgrade to paid](   [Like]( [Comment]( [Restack](   © 2023 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()