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[TradeSmith Daily logo] June 27, 2024 Why the NVDA Dip Is a Screaming Buy By Lucas Downey, Contributing Editor, TradeSmith Daily Tech stocks are making waves lately... Last Friday saw a monster rebalance occur in one of the largest technology ETFs on the market, the Technology Select Sector SPDR Fund (XLK). Thanks to Nvidiaâs meteoric rise this year, gaining 156.89% YTD, the company briefly became the largest in the world... overtaking both Apple (AAPL) and Microsoft (MSFT). With Nvidia joining the $3 Trillion Club, the XLK fund made the announcement that they were increasing NVDAâs weight to 20% of the ETF, while at the same time reducing Appleâs slice of the basket to 4.5%. According to Bloomberg, this shift created $10 billion of inflows to NVDA shares â and roughly $11 billion in outflows from Apple shares. The resulting trading mania didnât disappoint, as over $8 billion was added to the XLK ETF on Friday... the most in years. See the inflow (the blue line) in the chart below: Source: FactSet So, XLK went from about $71 billion in assets under management (AUM) to $79.6 billion AUM overnight. If you noticed a lot of trading activity in your tech stocks, now you know why! But after these exciting events, thereâs always a cooldown period. On Monday, Nvidia shares suffered a 6.6% pullback, the second-largest daily drawdown in nearly 18 months. Iâm sure many reading this are curious what that could mean for the future of arguably the most important company in the world. Turns out, thereâs a strong pattern that emerges after these violent selloffs. One that tells us nowâs the time to buy NVDA stock with both hands. But before we dive into the data-rich study, letâs take a look at Mondayâs action and put it into some much-needed context... SPONSORED AD [Americaâs Cash Bubble Set to Burst on July 31st, 2024]( For the first time Iâve ever heard of... we know the exact day (and time) a bubble is going to burst. This is insane and something we only have access to because of Jasonâs findings (that heâs sharing with his ultra-elite clients). To find out what the cash bubble is and why youâre vulnerable to it without even realizing... [Watch His Free Video Here](
The Second-Worst Trading Day for NVDA This Year Until now, waiting for a dip to buy into NVDA shares has required patience... a lot of patience. In 2024, the stock has ramped by the triple digits. Mondayâs 6.6% drop is the second ugliest this year â the last time we saw a similar wipeout was on April 19, when the stock plunged 10%: From this limited lens, it appears that we should buy the dip in NVDA. But letâs expand our range a bit to confirm. On a five-year horizon, thereâve been 25 price meltdowns of 6.5% or more in a single day â not counting NVDAâs Monday drop. That sounds like a lot, but keep in mind that this includes both the bear market of 2022 and the COVID pandemic plunge of 2020... two of the nastiest market-wide pullbacks in recent memory. Iâve culled together the five-year chart and detailed all 26 of the daily plunges greater than 6.5%. Hereâs a quick takeaway: - In 2020, there were seven instances of NVDA dipping 6.5% or more
- In 2022, the tech bear market took NVDA shares down 6.5% or more on 13 occasions
- Most importantly: Investors were paid handsomely to hold through the weakness, as shares vaulted nearly 3,000% over the last 5 years Look, as Iâve pointed out many times in these pages: [Nvidia is a superstar stock](. Itâs a rare breed of company that has seen relentless institutional buying over the years. The companyâs growth has also been second to none. But hereâs where understanding history can make you a better investor... SPONSORED AD [âAmericaâs Top Traderâ Who Predicted the Biggest Financial Events of The Last 30 Years, Issues New WARNING:]( Eric Fry has called every major market-event of the last 30 years... Recommending 41 stocks â EACH one hitting 1,000%+ returns... But today, Eric releases his biggest WARNING of 2024. In short... [The worldâs wealthiest investors (Jeff Bezos, Mark Zuckerberg, 48 members of Congress, and more) are about to exploit a massive âtransfer of wealthâ at the cost of your own personal savings](. The last time this happened... In the 2020 crash â the top 1% added $15 trillion to their net worth... Meanwhile, the middle class has suffered ever since... [But now â another major âtransfer of wealthâ has just begun](. Today you have ONE final chance to follow alongside the wealthy, in what may be the [greatest investment moment of 2024](. [Click here]( Since 1999, Nvidia has fallen 6.5% or more 199 times... roughly seven times a year. If you think these bouts of volatility are a negative... try again. In fact, these dips tend to ignite ferocious rallies. Since 1999, whenever Nvidia shares fell 6.5% or more in a day: - Three months later, they ripped up for an average gain of 20.8%.
- Six months after, they soared 43.8%.
- 12 months later, we see them book a 76.5% gain. If youâre second-guessing holding onto Nvidia, donât let the decision have anything to do with Mondayâs beatdown... The data has spoken â keep holding. Pullbacks are necessary and part of the process. So, donât avoid them... use them to your advantage. Nvidiaâs recent setback shouldnât last long. By next month and even next year... history will likely be on your side. Regards, Lucas Downey
Contributing Editor, TradeSmith Daily P.S. If thereâs one person who loves Nvidia, itâs Louis Navellier of [Breakthrough Stocks](. Heâs been clear about that with his fellow investors as far back as Aug. 5, 2005, before NVDA rose up to 37,000%. But you should know â there is a new class of AI stocks that Louis is just as excited about today. In his free briefing, Louis explains that [a new wave of AI is coming to America](. One that will create profitable new companies and reshape existing occupations on a scale we havenât seen since the dot-com era. Those dot-com days were good to investors like Louis who got in on stocks like Lam Research, before it rose up to 4,350%... Micron Technology, 2,050%... and Qualcomm, 6,235%. Now, Louis predicts that history is about to repeat â in the LAST financial mania of this scale for the next 25 years. [Click here to watch now](. To thank you for your time, Louis gives two free recommendations to put you on the right side of this trend. Get Instant Access
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