NVDA Going to the Moon

Chipmaker to use moon cheese in new AI chip design.

A Little Freebie for Free Subscribers (?)

NVDA was added to the portfolio this weekend. I'm experimenting with how to share a simplified view of this system, primarily focusing on SPY, but perhaps also on other big names we all know.

The coloured backgrounds represent hourly data, with each colour indicating a different trend level.

Here, you can see how often NVDA spends time in each trend level.

I calculate the trend levels both for upward and downward movements.

You’ll notice that the time spent in each level varies significantly. For example, if we used one of these levels as a measure of “overbought” for NVDA—say, ∆3, as I use for SPY—you might miss a substantial portion of the upside performance.

So, how should these levels be used?

Without getting into the complexities of passive flows, structural hedging programs, or the nuances between different tickers, it’s important to recognize that equities have a bid. Whether you call it passive, manipulation, or something else, it’s there.

From my research, I use ∆2 for the downside and ∆3 for the upside as my “bands.” I’m not claiming to have a silver bullet that’s covered in diamonds, dipped in gold, and rolled in pixie dust.

But it’s good enough.

This approach is a reasonable approximation that I can apply across many tickers. It may not be perfect for every ticker, but it’s close enough.

The bulk of the visual focuses on what I believe is most important: the downside levels. The “bands” are then overlaid. The lower band simply reinforces the main chart colors, while the upper band, by distribution, indicates where the asset spends most of its time. This should not always be used as a target.

It’s crucial to understand how the price moves between these levels, and how that determines how each level should be used. We’ll save that explanation for another day.

I'm not entirely sure if this made things simpler or not.

Simplifying something to appeal to a mass market is never easy. Simplification removes nuance. Nuance is often where we make the best trades.

What I’m saying is that this subscription might feel useless 82% of the time, but it’s during the remaining 18% of trading days that you’ll see all of your returns. Probably not the best business strategy to admit this, right? :)

There will be specific moments when you’ll buy something and then not touch it for a week, a month, or even a year—although, given that my system is shorter-term, a year is unlikely.

I’m just a random person on the internet, and none of this is trading advice. We’re all adults here, and we should each do our own research and make decisions for ourselves.

If you read a mountain climbing magazine, do you assume you can climb Everest? If you watch a football game and track player statistics, does that mean you could play in the NFL next Sunday? Just because you have access to trading doesn’t mean you should be doing it.