Is Nvidia The Whole Stock Market, What Does The Data Say?

Benzinga

Tim Quast, Founder/CEO of ModernIR and Market Structure EDGE joined Benzinga's Premarket Prep team to look at supply and demand on Nvidia stock, NVDA.

Transcript

00:00And I said we should go from NVIDIA to broad market, but you asked me, is NVIDIA basically

00:05just the broad market now? Is NVIDIA the whole stock market?

00:08Well, it's over half of the S&P 500's gains. There's that. One stock is contributing that

00:17much. The joke to me about one stock becoming the market is something I got from a guy who

00:25used to be the head of investor relations for a UnitedHealth Group. Long time customer of ours,

00:31not right now. The regime could change and somebody thinks that they know what they're

00:37doing and they stop using our data. But this guy observed. He said, you know, Tim, I think

00:42at some point the stock market will become one giant stock owned by one giant ETF. That's all

00:48it'll be. And in a sense, that's happened because SPY is the market and it is completely dominated

00:57currently by NVIDIA. In a sense, John's prediction came true. But this is the year to date view.

01:04So when you're looking at something, you want to say, how much time does it spend above five

01:10or at 10? Momentum stocks spend a lot of time at 10. Well, from January 2 to present, look at the

01:17amount of time NVIDIA has spent at 10. When it's not there, you don't want to own it. So in this

01:23period in April into the beginning of May, you should go do something else with your money

01:27because it didn't produce any gain. That gray part of the graph is closing price. But everybody

01:31covered. See that? So this set the stage for it to resume its rise. And you can always see that.

01:39You know, it's a very easy way to understand in basic economic terms what's occurring,

01:43supply and demand. And this huge run we've had, people have had, this is his actual squeeze.

01:50So with earnings, there was more demand than even the pretty sophisticated traders expected.

01:57And they've been forced to cover. Now, what happens next? I don't know. At some point,

02:02demand will falter and supply will rise and the price will stop rising. And as with everything,

02:08it's not going to continue to post these gains. But if you look at the data, pretty clear why

02:13NVIDIA has become the stock market.

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