Market After The Close, Monday 27 January

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Boom!

by Alex King, CEO, Cestrian Capital Research, Inc

Let's compare volatility charts.

Here's the one I posted in this note yesterday:

(You can open a full page version of this chart, here.)

And here's the Vix right now:

A thankyou to our Trading Gains service (here) for the idea of buying long $UVXY calls and a long position in the $UVIX ETF. I sold both in the middle of THE END IS NIGH sentiment right at the open today, when the Vix was right up at that "Too Much Worry" level, banking around 90% and 25% profits respectively, having bought them only last Friday. Nice. Vix chart, author's own; trade ideas, all Gains.

Want to learn to trade the Gains Way? Take advantage of his too-generous nature and sign up for a 7-day free trial, here.

Pop Quiz: Is It All Over For AI?

Today's royal dump in semiconductor and therefore the Nasdaq was due to:

1) The fact that a new-kid-on-the-block LLM which has had to be developed on yesterday's GPU array .... can in fact run on yesterday's GPU array?

2) The fact that bigs were dumping semiconductor and tech in dark pools last week and buying them back today and by complete coincidence there was a narrative about how you can run ChinaGPT on a creaking old Intel 486 PC as long as you have a math coprocessor fitted and a few spare floppy disks on hand?

Here's SOXX:

Yup, held and bounced at support.

I think there is a serious point here which is, one day someone is going to create a hardware platform for LLMs and other forms of AI which doesn't monopolize the local power grid and doesn't deliver 60% cashflow margins to the chip companies that provide it. You can count on this happening; AMZN, MSFT, META, TSLA and many others would dearly love to stop giving Jensen all their money. We aren't quite there yet but one day some unholy combination of, inter alia, $AVGO, $ARM, $MRVL, maybe even $INTC and others, plus a bunch of custom-designed ASICs, will mean that Monopoly Megacorps A-Z can run their own private Matrix worlds on cheap silicon that can run without having to also commission a new nuclear power station. And when that promise looks like it will become real, we can declare "Timber!" on $NVDA stock. That this will happen is a certainty in my mind; GPU will go the way of the IBM z-Series which is to say, to the Great Computer Museum In The Sky. But not today. Today I think $NVDA has upside ahead; I am long $NVDL and indeed added to it today heading into the close.

Let's get to work.

Short- And Medium-Term Market Analysis

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