Market Milestones: NVDA, Because What Else Is There?

Good Morning ! Since the markets were closed on Wednesday, Thursday had to deliver the excitement of two days in one, and it delivered. The market leaders, semiconductors, and more specifically NVDA, gapped up at open making new all-time highs. This gap up on NVDA firmly solidified its place as the most valuable company in the world, a title it held since Tuesday. However, by the end of the day on Thursday, it had stumbled its way back to the 2nd most valuable company in the world, as it formed a bearish engulfing candle, with large volume, at the all-time high. NVDA has been dragging this market higher for weeks now, but it’s possible that NVDA will stop going up 3% every single day and actually do normal stock things like rest, retest, pullback, or distribute. I know the previous line is blasphemy, and I am surely doomed to regret those words. When we sold NVDA in the RLT Newsletter Portfolio just a few weeks ago at $120.00, we said that NVDA would likely make that exit look foolish in the short term, but that there would be better opportunities to buy it lower in the future. The first has already happened, but it looks like the second could be right around the corner. The last time NVDA formed a large bearish engulfing candle at the all-time highs was on March 8th, 2024. From the high on March 8th to the low, NVDA pulled back 22% before resuming its face-melting, earth-scorching, short-destroying, bullish trend. NVDA also pulled back 22% after the August 24th, 2023 bearish reversal candle. This means that the biggest pullback NVDA has had since January 1st, 2023 is about 22%. If Thursday’s candle is a top, it could easily pull back to $110.00, which is 22% lower than the all-time high. This level also lines up with the 23.6% retracement of this entire bull run. However, considering how extended and stretched the NVDA chart is, it is very possible that the next larger pullback exceeds 22%. There is a gap fill from May 21st, 2024 at $96.00, which is 31% lower, and the 100DSMA is currently around $90.00 which also corresponds to the 38.2% retracement level. Both of these levels should act as pretty solid support for NVDA. The sheer size of NVDA has made these gains extraordinarily extraordinary. If NVDA gets to $160.00, it will be a 4 trillion-dollar company, the first ever to reach such amazing heights. It seems like it needs to cool off a little before making history once again. After all, everyone, their grandma, their cousin, and their aunt’s dog Rufus is buying NVDA and wants to own a little piece of that up-only chart. That is usually a time to get a bit cautious. NVDA I didn’t start this newsletter planning on throwing down 500 words about NVDA. But it has accounted for about 1/3 of the June gains in the SPY, which is totally wild and therefore it earned every word. That statistic shows just how critical these big tech and semiconductor names are to this market right now. AAPL, the 3rd biggest company in the world, by just 3 billion dollars, looks due for a retest of its previous all-time highs. This would be a 5% pullback for AAPL, giving back the majority of it’s AI hype gains before possibly moving higher. AAPL The rest of the chip stocks, minus AMD, followed NVDA lower Thursday with a few of the main leaders putting in gnarly reversal candles. SMH, a semiconductor ETF, as well as [TSM](, [AVGO](, [QCOM](, [MU]( and [ON]( all have topping candles in place. SMH just hit the upper resistance in its trend channel which has held since the start of this bull run in October 2022. The 100DSMA and the lower band of the trend channel are about 20% lower around $222.00. [AMD]( had a solid day on Thursday, at one point up 8% and closing the day up 4.62%. It has been getting zero love recently as it continues to slam its head against the $165.00 - $170.00 resistance. If it can break through that level, it will certainly be worth keeping an eye on. However, if AMD breaks below Tuesdays low, it is likely headed back to the 200DSMA and its lower trend line around $133.33. SMH The markets are in a weird situation right now. The big tech companies are investing billions of dollars in artificial intelligence, which means spending those billions at semiconductor companies. Both the semiconductor companies receiving the billions and the big tech companies spending the billions are going higher, some much more than others. The rest of the market is chopping around, unsure if it wants to join in on the bullish trend, continue sideways, or move lower. There could be a big rotation into small caps and value stocks, which would bolster the markets and prevent any larger dips from occurring. However, the small caps and the more economically sensitive companies could lead the market lower as the AI names run out of steam. We will let price action be our guide over the upcoming weeks. Either way, NVDA is sure to be the talk of the town for many, many months to come. Strive On, Yates Craig, RLT Market Analyst support@RLTNewsletter.com STAY CONNECTED! Disclaimer Each portfolio in the Official Trading Journal is a hypothetical paper trading account. Real Life Trading and its analysts use these portfolios as an educational tool. It's important to note that Real Life Trading nor its analysts are actively managing live, real-money portfolios. The analysts and moderators may or may not trade any of the given equities. CFTC Rule 4.41 These results are based on hypothetical or simulated performance results with inherent limitations. 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