The Magnificent One

This is the morning market report for February 15th, 2024.

As of yesterday's close Nvidia has now surpassed BOTH Amazon and Google in market cap size, in the same week.

"Shares of Nvidia rose 2.5% on Wednesday, closing with a market capitalization of about $1.83 trillion, and topping the search giant’s value of roughly $1.82 trillion"

Since this AI rally began in October 2022, Nvidia has gained $1.5 trillion in market cap in just over a year. The amazing thing is that few pundits see this level of market concentration to be a risk. Since 2008, the market has become narrower and narrower. Eventually focusing solely on growth stocks, then within growth just Tech stocks, then within Tech just the Magnificent 7 mega cap stocks, now Nvidia is powering the entire market higher. Last night we got news that Cisco is the latest Tech company to begin layoffs. Since January, 144 Tech companies have announced layoffs. In addition, Cisco guided down on a full year basis. Ironically, Y2K-era Cisco is a much better indicator of what is going on in today's Tech sector than is Nvidia. Here we see Cisco declined off its 2021 highs in a five wave bear market. Then it rallied back in three waves to a June 2023 correction high (circled). Now it's imploding as expected. In addition, we see that the equal weight semiconductor index ETF follows a similar pattern.

And yet, thanks almost entirely to Nvidia, the market cap weighted momentum index is now more overbought than it was back in August 2020 which as we recall had been the largest 15 week gain for the overall market in decades until last week which tied the record.

Nvidia is the most levered stock in market history. As I showed on Twitter recently, there are now several single stock ETFs which are 2x levered to Nvidia futures. No surprise, these Nvidia-only ETFs are the top performing ETFs in 2024, including ALL ETFs levered and unlevered.

Here comes the punchline: Nvidia is the last of the mega cap Tech companies to report. Next week. The red down arrows show that Nvidia pulled back to the 50 day moving average after the last two earnings beats. This time, that's not really an option for this "market".

"The other mega-cap tech firms have already announced earnings, and Nvidia is slated to report Feb. 21"

“Expecting another strong report, but the bar has been raised”