NVDA Market Correction & Analysis of Fund GME Holdings

first off my bad outliers I realized that the video I did yesterday was like 20 minutes long when I start talking about the markets I kind of can do that so my goal for today is to keep this a little more palatable for people and I have two things I want to cover obviously the tech leading selloff will be the first thing and then the second thing is we have some really really interesting new data that's come out in GameStop specifically with this and I want to talk about some of the homework that I started doing about this specific fund that supposedly holds uh just tremendous number of shares in this case actually technically speaking it's more than the entire float and then some so there's some very specific things we can learn about that and we'll get to that towards the end of the video so let's start with the broad Market though because there's important activity going on and this is again exactly what I've been talking about where I don't know which way the market is going to go but for leading into this week and throughout last week it just felt like we were in a bit of a rotational period where didn't have a sense where things were going to go but it felt like we were going to break one way or the other and one of the things that you've heard me note a few times as we take a look at the broad markets is that Tech does not look good and I've said that multiple times so and I also in the context of wanting to unwind my teach Q's position which I finally got out of today so this is looking across the S&P 500 we're looking across all of the individual sectors and take a look we see xlc Communications going down hard we see xlk technology going down hard there's a couple others that are falling moderately so xli would kind of be the next closest in the pack as well as xlb but guess what the same tickers I've been talking to you about are showing strength still hitting highs xlp hit a new high xlre hit a new high xlu hit a new high XLV hit a new high XLF hit a new high so this is the entire idea behind a sector rotation strategy it's why I have exposure in real estate it's why have exposure in xlp products individual tickers not xlp itself it's why I have exposure right now in XLF and I also have exposure in XLE which is not uh you know not really playing ball as much you know there's got to be one in the group that's not doing what I wanted to do but really this is more of a a individual strength play Within the sector even though XLE is not doing great it's the the NM trade that I was reviewing earlier which is doing still well and realistically even NM which is kind of funny because if we take a look at it NM is more related to Gold but it actually has a really high correlation to energy so I will use this to kind of play both at the same time the gold commodity in and of itself but then also the energy sector because especially in short-term correlations this will tie very very closely to energy so it's little bit of a a duplicative play so when I'm talking about it tying to energy it's not a direct play on energy it's actually more of a direct play on materials but it does carry over massively into energy like right now energy was down today and so was um NM but materials also didn't fly off the shelf today so kind of a little bit of both I suppose now looking across the market I continue to see the same thing I always do opportunity there are things we can trade to the upside there are things we can trade to the downside there are things we can trade sideways xly has been trading sideways so you can look in there for individual products that are just sideways trending same thing for XLE tons of things in there rotating sideways some things in there showing strength still so I always try to remind people that whenever the market starts throwing some of these curve balls that we might feel some type of way about right Nvidia is down almost 10% today 9 and a half% that's literally a correction almost in a single day that's not an insignificant move especially on a gap down especially following three preceding down days this I'm not even going to lie this looks uglier than I was expecting I really am a bit surprised because after the earnings I understood this move I understood this move these two to me looked like most people were getting shaken out of the position and then you know the people that wanted to be in were going to be in and then today there's just this big continuation so one of the things to highlight here is that the the markets they do have momentum in drift and that's kind of what you're seeing here people late comers to the party people that were figuring out what they wanted to do with their portfolios and then submitting orders it's just really interesting to me to see this starting to to pair down so far now really critical point here for me if this does not start to base before we start getting down to kind of this level in here I don't like that and I don't like that specifically because even though we're starting to rotate down if this begins basing here and creating a higher low I'm still okay with it we're still in an uptrend it's a little it's obviously a correction from here at this point but it's not egregious this is still completely okay what's not going to be okay is if this starts rotating down into this value area and again that doesn't mean immediately that we're falling out of bed but that starts to in my opinion really really call into question the strength of this trend and all Trends reverse at some point at least temporarily so we have this little bit of a a double top almost but we're starting lower highs right so there's our high lower high lower high we have higher low then we come to lower lows lower lows so if this comes down to another lower low that is in my opinion clear clear sign that we're starting to rotate over on this trend so for me and I I mean I have no direct exposure to Nvidia I don't care to I'm typically trading things like tle Q's or Nasdaq futures which both of those obviously have a ton of exposure to Nvidia inherently leveraged from the jump but I'm seeing a lot of people getting really antsy to start buying into Nvidia and I don't blame you especially if you like the company Long Term but as per usual I always think wait for strength there's no reason to buy it here at 108 if it's going to drop down to 9 1 we don't know where it's going to drop but the way that I typically handle these is I'll literally just set an alert on both sides so I'll be like okay if we get a break below here that tells me we're continuing to the downside if I get a break above here to the high of this candle then I start liking it more to the upside and I can play it that way if I'm so inclined and still get it at a relative discount within that range so it all depends on your trading style your trading time frames but the one thing I try to remind people is if when you buy things at a discount they're typically at a discount for a reason Nvidia is a really interesting case here because I still think it's an incredibly strong performing stock but it is rotating down like it's objectively the case if you had bought up here or up here you are currently down money and again if you're a long-term investor literally nobody cares that's totally fine and when I say nobody cares it means this little down move that's inconsequential if you're going to hold this for years and I mean if I had to bet I absolutely would bet in video will be worth more in a year or two years than it is today but that's an investors's perspective where there's a giant opportunity cost for that Capital being parked there that for me as a Trader I'm uninterested in I want to trade things as they're doing things that I can tie along with so for this little bit different approach and again you can see what I would do is just see okay which way do you want to break down or up and then depending on that if I want to get some sort of thematic reversal position to the upside cuz that's what I would expect to see at some point it just depends on where does the market decide that the floor starts to get priced in and we don't know yet so Nvidia very interesting case and very clearly just driving the tech sector down and then when we look across the indices there's still excessive weakness in iwm down over 3% today Q's Tech heavy down over 3% today so these two really dragging and the S&P 500 was only down 2% so the S&P 500 continues to be propped up by all these other sectors now the question is how long do they hang on so for me in the way that I trade also I realize that the video is already 9 minutes long I'm doing the same thing I did yesterday sorry but when I look at the S&P 500 it does look like it's maintaining at least some residual strength but the question is for how long and for me with stuff like this what I try to do now is keep a really sharp eye on everything that's propping up the S&P 500 right now which again are those same sectors that I was highlighting before and if those start showing weakness or rotating over and this continues to be the case then I mean that's essentially alignment to the downside very difficult to slow down until people decide that there is value at that point and they want to buy back in so that is what I am keeping a very close eye on now let's pivot over to GameStop because we did see some kind of interesting news today from a trading perspective we had a little bit of a gap up which was nice to see that was kind of shunted pretty quickly still continues this uptrend so I'm digging that no no issues with it and I don't I think I still have my calls on I haven't looked actually in a little bit to see what they're doing but they're going to be coming up on soon that I have to do something with them it's the uh short calls oh yeah and for those that are wondering about the conversation before about numont and XLE you can see in these shorter term time frames it correlates pretty heavily so 3 days 99% correlation 5 days 85% and then 10 days 77% so sometimes when I'm trying to trade the kind of both of those ideas in one ticker numont is one that I will take a look at again it's not like a Pure Energy play so that's not what we were coming here to look at though we were coming to look at GameStop so if we take a look at the open interest we have 560,000 calls against 269 on the put side so not quite 2:1 or maybe actually right about 2: one but it's still scattered all over the place when I see what expirations are hot it's actually not the six seep I'm seeing 13 seps starting to catch up a little bit here but you'll notice like I'm seeing a lot of green which is 18 o I'm seeing a lot of 20p which is this kind of salmon color then we have these gray boxes which are further out in time 17 GN 25 so we're just kind of all over the place which just means that we don't have a clear ch that we're leaning on right now when I look at volatility this looks completely normal now short-term Vol 133% 140% for earnings VA right because we know earnings right now is still scheduled for the 10th after the market so this is the interesting news that came out today though this popped up I think on super stunk and then a couple folks in the Discord brought it in there just because it's an interesting observation and we see that we have this entity that essentially has a what 4 billion shares which 4.7 billion which you know if you're I'm not good at math but there's not that many shares so then what does this tell me it tells me more likely than not one there could be some sort of reporting error that can be the case now what I also would imagine to be the case here is this could just be use of derivatives so when I took a closer look at the fund itself this is the non- lending variation which this one is the lending variation just showing you that there's a difference between these funds so there is a non- lending variant of this that's not what this one is this one that corresponds with this clearly says lending so we can find the lending variation here and we can see this the fund may make limited use of Futures Andor options for the purpose of maintaining Equity exposure this fund May participate in Securities Lending lot of questions I don't have answers yet so this is something I'm actually going to chat with Newton about a little bit because he might have a better sense on this particular topic than I do I don't know if this is part of this kind of uh creation Redemption cycle I also don't know the way that these run because it's flagged as an index fund which is fascinating because if you go to their we site and we want to take a look at their funds they have Equity Funds and then if we break down these Equity Funds management style there's actively managed funds and then there's index style funds the whole point of index style funds is they're supposed to represent an index so it's very very curious to me that we see this kind of structure I I I don't fully understand what it is or why it is the way it is the other thing that I can't find is just a ticker for this if any of you all know what the ticker symbol is for this product I I would love to hear it I literally don't know what the ticker is for this because as I go through their funds I don't see anything labeled this right so if I literally copy this directly the terminology perfectly I uncheck any filters right so that we're seeing everything that they have I drop that in nothing returns so then I was like okay well maybe somehow it's in something else maybe it's in this or the multi- asset so check out maybe the cash fund and see if there's anything in here obviously not this is looking at um typical security so then let's go to multi-asset and see if there's anything like this in here which again this is I I just don't see it because this is talking about completely like a completely different set of products right this is global tactical asset allocation so this is using stuff from all over the place [Music] so yeah I'm confused I don't know where this is on their website so if anybody maybe all funds I didn't check in here yet see I like I don't get it maybe if I get rid of some of the extra tail on the words nothing like as I'm going through none of those are popping up so I don't know where this is I'm actually like like kind of I'm kind of confused so CU I went to the website directly from here and I was trying to find the specific details for this again for this specific product so that I could try to look more closely because the other thing is again like if this is 1.56% of the fund and this is Uber Technologies and we can figure out how much the fund is 4.38 billion so if we take handy dandy calculator we go 438 billion got to turn it sideways so we can get enough uh zeros that is million there's billion 4.38 billion and then we just multiply that by 1.56 time 1.56 oops by 0156 my badtimes 0156 so it gives us 68 million 68.3 million why do I care about this because I can figure out at least about what what this is right because if this is telling me that in this fund there's again 68 B million dollar of uber well then how does this other stuff fit into their fund because this is telling me that they control $4.7 billion of GameStop which again even if you're using derivatives the notional exposure matters which I mean let's just do the math it's going to be significantly more than that so if we do um 4.7 billion shares I'm just going to round it so 4.7 billion times current market price 23 to $ 108 billion notional value so just something weird is happening here and again I don't know what it is so this is something I intend to look more deeply into to try to sort this out and again this is why for the people that are kind of like Eric why do you spend time looking at GameStop it is because of like this it's because this doesn't make sense I am not quite as far as like the full tin foil apes and I'm not jumping to the idea of like it's all it's immediate manipulation although there's a solid part of me that looks at this and says it kind of looks like manipulation of some sort I don't know so then the objective part of my analysis wants to try to find an objective analys an objective output that I can prove right because I have my instincts which says this looks weird but just because my instincts say that I don't take those to the bank and just say yeah it's all rigged very well could be but I'm going to try and analyze it to see if I can find an answer which right now I don't have one I don't know what this is but I know just in terms of the notional size it doesn't make sense relative to GameStop which leads me to believe based on again this perspectus that I cannot find this freaking fund on their website but it tells me that they do use Futures and options and that they might participate in Securities lending it's just weird man it's just weird so yeah just like I said at the beginning of the video I'm sorry cuz here we are at 20 minutes again but these are just two really interesting topics to me right now that I want to understand more deeply this one's going to take me some time because everything I look at with this it's there's no clear simple answers I actually just set up a call well I reached out to one of my friends who's a market maker because I'm literally going to ask about this cuz I'm I'm just curious how this kind of thing structures itself specifically with respect to the fund and he runs some different funds as well for um white labeled uh clients and so I I have a bunch of questions not just about this but also just about the creation Redemption cycle as far as he sees it from a market making perspective so this will be just another thing I'm adding to the list last time I spoke with him we we literally spoke for like 3 and a half hours so it'll probably be a long conversation but hopefully I can learn a little bit more because again this is why I'm fascinated with GameStop is every time I look at it there's some that's completely anomalous to me that I don't understand and I want to learn and I'm learning a ton even with something like this it's a blast so as always anything I should take a look at let me know be an outlier I will see you all later