Monday Takeaways: Nvidia and the Magnificent 7 Are on Shaky Ground

Shah Gilani|March 11, 2024

Investing sure has changed over the 40 years I’ve been at it.

Long gone are the old rules about trading on fundamentals… and technicals.

Now it’s all about the narrative.

That’s certainly been the case with Nvidia (NVDA).

It’s been the poster child of AI… and has soared nearly 300% over the past year.

But Friday’s action should give investors pause.

That’s my main takeaway for this week.

The Magnificent 7 are looking shaky.

It could be a make or break week for them…

And I explain why – and what to do about it – in today’s video.

Click on the image below to watch it.

 

Transcript

Hi, everybody, Shah Gilani here with your Monday Takeaways in workout mode, because not only do I have to work out, but the market has to work out and pump itself up because the Magnificent Seven are looking a little shaky.

So what happened last week? On Friday, what has become the new hot narrative, and if you missed it, what happened on Friday was a rollercoaster ride for Nvidia, the leader of the Magnificent Seven, the keynote speaker on all things AI. And why the market has done what it’s done, which is explode, is the bloom off the rose for Nvidia?

The takeaway this week is going to be watching Nvidia and the rest of the Magnificent Seven. This week could be make or break.

So what happened if you missed it on Friday?

I did a little number crunching. It wasn’t that hard. So what was crazy about Nvidia is it closed on Thursday at $926 a share and some change. It opens on Friday at $951, up 2.7%. Great way to start the day. Proceeds to go higher and hits an intraday high of $974. So on the day, it was up 5.2%, and then the bottom falls out. The stock gets absolutely hammered. Nobody really knows. Profit taking, change in narrative, is this a bubble? Any number, you pick your poison.

But Nvidia, the leader of the Magnificent Seven, all of a sudden comes crashing down and on an intraday low basis drops from the previous day, $926 to $865 and some change, down 61 points on the day, down 6.6%. From the intraday high to the intraday low on Friday, Nvidia fell 11%, 11.2% to be exact. That’s a huge intraday move, 11.2% drop intraday from the intraday high to the intraday low. Then Nvidia closes 10 points above its low of the day at $875, down 51 points or 5.5% on the day.

Now, that got a lot of people talking.

So your takeaway, and there’s only really one for this week because it’s that important…

What happened on Friday to Nvidia is telling. It’s telling because it has been carrying the Magnificent Seven.

Tesla, sorry, Tesla fans, dead meat. The stock, it’s a mess. And frankly, I’ll just say just a shade above $170. If Tesla can’t hold that support… that’s minor support. Well, better be more than minor. Who knows where Tesla’s going to go. So not part of the Magnificent Seven anymore.

Apple, which by the way, you might want to read my Total Wealth article on Friday because it’s about the shine being off Apple and why and where I think it’s going. And believe me, there’s a lot of stuff there you may not know that’s going on with Apple. So you might want to read my Total Wealth piece. It’s free on Friday. Apple flailing and bringing down the Magnificent Seven. So it’s not punching its weight.

Meta today, trading down. Google, trying, struggling. So it’s really been about Nvidia, people. So you can go elsewhere with the other chip stocks. You can go anywhere you want to go. But really, when it comes to the Magnificent Seven, it’s really Nvidia now holding the boat. If Meta rolls over, the pressure on Nvidia is going to be even greater.

So if it doesn’t get in shape and start pumping itself up, if investors don’t pump the stock back up, if Nvidia starts to falter here… your takeaway this week is keep an eye on the Magnificent Seven.

If they roll over, especially Nvidia, then guess what? That narrative is going to not crescendo, it’s going to take a little while for it to crescendo, but we’re going to start to hear a louder and louder noises about this being a bubble, about how dare these stocks do all this, go up 300% in such a short time. As far as Nvidia, more.

And there’s no selling, there’s no correction. And that might be the time to think, oh, should I take my profits? Because people who are certainly investors were certainly thinking that on Friday.

So your takeaway this week, people, is watch the Magnificent Seven, watch Nvidia. If the tide changes, if Nvidia becomes a weak link in the Magnificent Seven – I mean, this can’t be any weaker than Tesla – but if it weakens, then guess what?

The air might come out of this exuberant market. So your takeaway, be careful out there.

Catch you guys next week. Cheers.