By: Jeff Cooper

Hit and Run Trading Morning Report - September 5, 2023

Nvidia Nirvana?

“Well, it’s the second time I’ve caught you talking to him
Do I have to tell you one more time, I think it’s a sin”
-The Beatles, You Can’t Do That

“Oh what a tangled web we weave
When first we practice to deceive.”
-Sir Walter Scott.

This video about NVDA reminds me of a Michael Burry line in “The Big Short”:

“One of the hallmarks of mania is the rapid rise in complexity and the rates of fraud.”

Watch this video.

In this century alone we have had three mania’s blow up:

The Tech Bubble Top in 2000

The 2007 Pre-GFC Crash

The late 2021/early 2022 Post Covid Blow-off Crash

NVDA is the 3rd largest weight of the XLK behind AAPL and MSFT.

Let’s take a look at XLK.

A monthly XLK shows a parabolic boom and bust into the end of 2021.

Notice how XLK snapped a vertical trend channel in May of 2022 and rebounded to backtest the bottom of the channel in July…in keeping with our Time and Price July major turning point.

360 degrees down from the 181 ATH is the 130 region which ties to a trend line connecting the March 2020 low and the October 2022 low.

A daily XLK shows a Head and Shoulders Top at the July test/Pinocchio of the December 2021 peak.

Breaking the 162.50 Neckline projects to the 143 region which is 270 degrees down from the high.

This ties to a Bottoms Line connecting the October 2022 low and the January 2023 low.

In sum if the decline off the July 2023 top was a Wave 1 down and the current rally is a corrective Wave 2 rally, the presumption is a Wave 3 decline could see a drop to the 143 region.

If there is any fire behind the Coreweave/Magnetar/NVDA smoke, then history may rhyme with the Enron scandal which occurred in October 2001---just after the top of the late August secondary/Intermediate Wave high.

Is it possible July was an Intermediate Wave 2 high in the SPX (with XLK tracing out a double top) following an Intermediate Wave 1 down from January to October 2022?

“Everybody’s green…
But if they’d seen.”
-The Beatles, You Can’t Do That