Nvidia plummeted. Is the U.S. stock market about to crash?
NVIDIA suddenly experienced a heavy volume drop. Is the U.S. stock market doomed?
Bad news has been pouring in over the past few days:
1. On August 15, Trump tweeted before the market opened: High risk.
2. On August 18, OpenAI CEO Sam Altman told the media: AI investment is overheated in the short term but promising in the long run.
3. On August 19, The New York Times reported: Meta's AI department is downsizing, with some executives leaving.
On August 19, NVIDIA failed to resist a heavy volume drop of over 3%. So now, whenever the market enters a stalemate, ghost stories (negative rumors) start to spread.
As mentioned before, if NVIDIA experiences a significant drop without recovery, short-term sentiment will deteriorate. Institutional confidence won’t recover until key turning points emerge. At this stage, retail investors won’t dare to buy unless the price drops significantly.
Quantitative trading automatically places orders based on market news. Therefore, positive turning points could be either Powell’s dovish speech on Friday or NVIDIA’s earnings report.
In the past two days, I’ve also heard rumors that NVIDIA is developing a chip for CN with higher specs than the H20. If the media widely reports this, it could become a turning point, triggering quantitative buying.
Overall, panic sentiment hasn’t been fully absorbed, and tech stocks remain under heavy pressure. As mentioned in Monday’s morning video, if PLTR breaks the 10-day moving average and fails to recover, it’s very dangerous.
Citron Research’s reason for shorting PLTR is its high P/E ratio, which can’t support its current valuation.
In fact, PLTR is the most-beloved mid-cap stock in this cycle. If it collapses, it means all mid-cap tech companies will collapse.
OKLO represents the most popular small-cap tech stock. Despite having no earnings, its price surged due to big-name endorsements and its position in the highly popular nuclear energy sector. But if it starts to decline sharply amid disagreements, small-cap tech stocks will suffer heavy losses.
NVDA is the last line of defense for large-cap tech stocks. If NVIDIA collapses, the entire tech sector will face immense pressure, though the market is still propping up Dow Jones blue chips.
Thus, the market is in a polarized state. But if NVIDIA collapses, it will trigger massive institutional and retail sell-offs, putting enormous pressure on the entire index. Even defensive sectors will be impacted.
Therefore, the current market is extremely challenging. The best strategy is to reduce positions to below 50% and keep enough cash to hedge risks.
Of course, if your stocks have already halved or have been declining for a while, you can hold them because the market won’t be as tough as it was in March and April.
But if you’re holding high-flying tech stocks, it’s very risky.
2025 is destined to be a volatile year, requiring full digestion of the gains from the past two years. Thus, stricter personal discipline is needed. Everyone should plan their position management carefully. Those who prioritize discipline can consider joining our community.
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