Volatility Is Back - NVIDIA Is Not Our DarlingTHESIS:
SPX lacks diversification due to mega cap dominance.
Year end looks towards projections regarding 2nd Trump term in office (tariffs price concern, Geopolitical policies, uncertain stance on Taiwan defence.)
Prolific investors are seeking opportunities elsewhere as US Mega Cap stocks overpriced (Buffet as example selling Apple and BoA shares.)
Institutional ownership at approx 65%, sell side orders outweigh buy-side, reverse repo down from 2.3 Trillion to 116 Billion on Treasury.
NVDA trend is currently downward, looking to correct value - I am looking for those key areas.
Several large gaps persist, leading to opportunities to buy later $75 a share is the target.
Housing market cycle is coming to an end, yield curve has just about normalised to upward sloping, treasury yields jumped on FED meeting Dec.
Final piece of inflation puzzle is asset prices, SPY rejection from 600 is key indication of end of bull trend, large volume flows and VIX spikes indicative of further retracement.
ACTION
Hedge US mega stock exposure using VIX derivatives whilst premium is low.
Short NVDA and other mega caps using mid dated options, plenty of Theta, ATH strikes.
Look for where the newly created liquidity from the mega caps goes to - potentially mid-caps with strong fundamentals, potentially to currently very underpriced treasuries offering strong yields.
