Abie From Brooklyn Calls for a Top in Nvidia’s Shares
From Abie from Brooklyn:
Over the last decade Nvidia’s shares have scaled Mr. Everest. But no one lives there and the descent may now be beginning.
One of the most difficult things to ascertain in markets is when the moment at top is reached. In the cases of spectacular rises, many are usually watching and a brave (foolhardy?) few are trying to identify the top before it happens.
Few efforts have been more intense than this same effort in the case of NVDA. It is often said that tops in such spectacular arcs are identifiable only afterwards in hindsight.
But i believe the top in NVDA could now be signaled by the combination of the stock’s price response in the market when earnings were released last night and the details of the company’s cash generation and use.
The stock price response to the report could not have been more subdued. A nominal wiggle up and down around the last price and now a price drop. The cash from operations part of the release offered no reason for any upside either…just a requirement that the bald facts of it – that the company has been using every last dollar of cash left over from actual operations to continue to finance the circular flows supporting revenues – all in the service of finally providing NO FURTHER SURPRISES.
And that is what moonshot tops look like. NO FURTHER UPSIDE SURPRISES!!
After every possible penny has been used to inflate results and still no further surprise beyond the most bullish expectations have already driven the stock to all time highs, then the rocket engines have exhausted their fuel, the momentum has reached its peak and the inevitable rollover must now be discounted in the market. At the stratospheric projections of future positive surprises that are built into the stock, a no-meaningful surprise report and reaction is THE time to leave the ship in the lifeboat.
Expect any further new high producing manipulations to be used by the smartest with the largest positions to begin manning the lifeboats and dropping off into the icy seas that may await this modern Titanic.
Position: None
