Skip to content
Subscribers Only
Investment Alerts

When Share Prices Fall Remember the Charts Look Good

February 14, 2024

This is a chart you may have seen before. It’s positive with a golden cross buy signal. The only proviso is that it is early days in 2024 so if prices collapsed that blue line could turn down but it would be unusual for that to happen so soon after it turned higher. On this very long-term chart, the 2023 buy signal is the only one we have although there would have been one roughly where I have marked it if we had figures going back further into the past.

The spectacularly exciting background fundamentals encourage me to believe in the chart buy signal. Shares I like including Nvidia (NVDA), Super Micro (SMCI) and E.L.F. Beauty (ELF) are growing amazingly fast and investors have reacted very positively to recent results by companies such as ARM Holdings, Meta Platforms and Monolithic Power Systems. This is characteristic behaviour in the early stages of a new bull market.

It is not exactly a new bull market. I now regard what happened in 2022 as a correction in a continuing bull market. This makes me think we could be shaping up for a sustained move higher in a new multi-year stage of what I regard as THE GREAT TECHNOLOGY BULL MARKET!

Starting in 2009 I think the world is experiencing the biggest bull market of all time. US stocks lead it with Indian and Japanese stocks performing well and many other world stock markets including the UK stuck in a seemingly endless stagnation. The only UK share I hold is ARM Holdings and I bought the shares priced in US$ on the US stock market.

Below is a slide from a recent presentation to show why I think ARM is shaping up as a key AI stock. There is a lot of Nvidia about ARM which is probably why Nvidia wanted to buy it.

As I write share markets are being hit by profit-taking. Famous last words but I would pay no attention. Shares don’t go up in a straight line and the day traders have to take profits sometimes. Famed commentator Jim Cramer says ARM should be $85. He is a clever guy but ARM is not about the valuation, it is about the future and about AI. Thanks to him I was sold out of nearly quarters of my ARM holding (at a profit). I shall be buying them back.

This is another chart which encourages me to stay bullish. The Nasdaq 100 index has broken higher from a two to three-year consolidation. We have a rare moment when the shorter five-month blue moving average has turned up after flattening out. Such signals have worked well in the past.

As well as the strong uptrend and the recent chart breakout there are some significant dates on this chart. The shares moved sharply higher in 2013, 2019 and 2023 and according to an interview I watched featuring Colette Kress, CFO of Nvidia, who sounds uncannily like Meryl Streep, some events may have helped trigger those moves. Now I can’t find them but key things technology-wise happened in 2012 and 2018 I promise you and in 2022 we had the arrival of ChatGBT which was almost like a black swan event introducing the world to the power of generative AI.

The arrival of Colette Kress as CFO at Nvidia in 2013 Added Focus to the Vision of Jensen Huang

One key thing which happened at Nvidia in 2013 was that Colette Kress arrived as CFO. She is very impressive and may have helped add focus to the visionary genius of Jensen Huang rather like Tim Cook did as chief operating officer with Steve Jobs at Apple.

The Colette Kress interview also featured Mark Stevens, a venture capitalist who sits on the board of Nvidia and knows the company incredibly well. In the interview, he said that Nvidia was “probably the most important computer company in the world, like IBM in the 1970s and 1980s when it was THE computer company.

CUDA is a Transformative Development for Nvidia

Colette Kress talked about the introduction of CUDA around a decade ago as being a transformative development for Nvidia, which took the company away from its almost exclusive gaming focus into areas like autonomous cars, machine learning and artificial intelligence. What is CUDA?

The need for enhanced computation power is increasing day by day. Manufacturers across the globe are now facing challenges to further improve CPUs due to limitations i.e. size, temperature, etc. In such a situation, solution providers have started to look for performance enhancement elsewhere. One of the solutions that allow a drastic increase in performance is the use of GPUs for parallel computing. The number of cores in a GPU is far more than that of a CPU. A CPU is designed to perform tasks sequentially, a set of tasks can be offloaded on the GPU which allows parallelization.

Compute Unified Architecture (CUDA) is a platform for general-purpose processing on Nvidia’s GPUs. Tasks that don’t require sequential execution can be run in parallel with other tasks on GPU using CUDA. With language support of C, C++, and Fortran, it is extremely easy to offload computation-intensive tasks to Nvidia’s GPU using CUDA. CUDA is being used in domains that require a lot of computation power or in scenarios where parallelisation is possible and high performance is required and allow parallelization. Domains such as machine learning, research, and analysis of medical sciences, physics, supercomputing, crypto mining, scientific modeling, and simulations, etc. are using CUDA.

Incredibuild/ Nvidia

Slowing Moore’s Law Passes Baton to Nvidia’s GPUs

Another key development for Nvidia was the ever slower progress of Moore’s Law which had dominated computer development for decades. This was happening at a time when people were looking for a dramatic acceleration in computing power. GPUs picked up the baton from CPUs and shifted the focus of the company towards new markets like AI.

All the signs are that this shift is very early days. Mark Stevens talked of autonomous vehicles having a huge impact on the insurance markets, urban planning and many other things. He also discussed the expected impact on medical research and health care and said this process of change was still nascent.

They also discussed how Nvidia operates which is very special. The visionary impact of Jensen Huang resonates right through the company. When they have a specific issue to address they use a technique they call swarming where myriads of engineers apply themselves to finding a solution. One solution was what Stevens called SOL, speed of light, where the company’s engineers swarmed to help get chips as fast as possible from the fab [fabication plant] to the customer.

Above is a chart of the growth in Nvidia employee numbers since 1996. What is notable is how growth has accelerated in recent years when other tech companies were laying off staff. A staggering 75pc of employees work in research and development and their salaries and bonuses are so eye-popping that many employees are in what the company calls semi-retirement mode. It must be incredibly exciting to work at Nvidia, where what they do is changing life on the planet.

If the shares fall on profit-taking as they undoubtedly will from time to time, be grateful and buy with open hands. You will be buying shares in possibly the most exciting company that has ever existed on planet Earth!

Another way of looking at this chart is that the shares have doubled since the previous peak in 2021. When you look at what is happening to sales, profits and earnings per share that looks eminently justified. Nvidia is a classic big-picture stock. Forget all the quarterly number crunching which the analysts obsess over and just think about where this business might be going over the next decade. And think also that Jensen Huang, who looks about 40 and founded the company in 1993, might still be in charge. He says he is going to live to 100 after which he will become a robot and live to 140. He is so cool!

Stop Press – Nvidia Introduces Personalised AI ChatBots

Nvidia Corp. NVDA has announced a new feature called Chat with RTX, allowing users to run an AI chatbot on their computers for free.

What Happened: Nvidia’s Chat with RTX technology enables users to customize a chatbot using their own content. Users can run the software locally on their computer, but they will need to have at least a GeForce RTX 30 Series GPU installed.

The AI chatbot leverages retrieval-augmented generation (RAG), Nvidia TensorRT-LLM software, and Nvidia RTX acceleration to introduce generative AI capabilities to local, GeForce-powered Windows PCs.

Users can link local PC files to an open-source large language model like Mistral or Llama 2, facilitating quick, contextually appropriate responses.

Chat with RTX supports a variety of file formats, such as .txt, .pdf, .doc/.docx, and .xml, and can also incorporate information from YouTube videos and playlists. The tool operates locally on Windows RTX PCs and workstations, ensuring rapid results and data privacy.

Chat with RTX requires a GeForce RTX 30 Series GPU or higher with a minimum 8GB of VRAM, Windows 10 or 11, and the latest Nvidia GPU drivers.

Why It Matters: This development comes in the wake of Nvidia CEO Jensen Huang’s call for countries to develop their own “Sovereign AI” to retain control over their data.

During the World Governments Summit in Dubai, Huang emphasized the significance of countries owning the intelligence they generate using their data and human efforts.

The release of Chat with RTX supports this vision, allowing users to maintain control over their data and customize AI capabilities locally.

Benzinga, 14 February 2024

Strategy – Keep Buying

Several alerts ago I said I was going to talk about portfolio strategy. My idea is that QV covers the whole gamut of risk. At the low-risk end of the scale, you can build a portfolio of 3G stocks, which could include unleveraged ETFs. The even lower risk would be to just buy selected unleveraged ETFs like SPY, which tracks the S&P 500 and/ or QQQ, which tracks the Nasdaq 100.

Next on the risk scale are leveraged ETFs like TECL (tech stocks), SOXL (semiconductors) and QQQ3 which tracks QQQ. As well as three times leverage these ETFs are rebalanced daily which turbocharges performance. They are much of a muchness these three ETFs so QQQ3 is a good proxy for the other two. It is perfect for a programme of regular purchases – on buy signals or just $-cost averaging every. month. Whatever you do should work with this one as long as you hold while the moving averages are climbing.

Next in the risk stakes is to buy shares and unleveraged ETFs in a CFD or spread betting account with between two and five times leverage.

The risk level can be amped up further by doing what I do which is to buy more shares every time I have additional equity in my account.

Kamikaze and Kamikaze Plus Investing for Thrill Seekers

There is an even more dramatic version of this strategy which I call Kamikaze investing. It has occurred to me that may not be a very felicitous name but I still like it. In this strategy when your shares fall you keep topping up your account while still buying more when rising share prices generate spare equity. Do this and your portfolio will scale at an astounding rate. This is undoubtedly exciting but will require great sangfroid in periods when prices succumb to profit-taking.

There is a variation on this strategy which I call Kamikaze Plus and this closely resembles what I do. I am an impatient investor. I go on about the long term but I like quick results too and I get this by surfing aggressively between stocks. What this means is that when I spot a laggard in my portfolio I sell and reinvest in one of the top performers. This is a bit like the daily rebalancing which turbocharges the performance of QQQ3. It is also great fun and may protect against a sell-off because if all my stocks suddenly become laggards then they all go.

Beware of Seller’s Remorse (and Buyer’s Remorse)

This happened to me in 2021 when my portfolio became ever more narrowly focused until there were none left and I ended up with a stunning profit, some of which I then dissipated by going back into some stocks too early. This was no doubt connected with a vicious condition known as seller’s remorse.

Kamikaze Plus is best followed in a Spread Betting account because then you do not have to worry about taxable events since no tax is payable whatever your gains.

As you might imagine it would take a lot to make me surf out of a stock like Nvidia but I am trying to discipline myself not to fall in love with stocks, however attractive. Even so, I am susceptible and fall in love only too easily with ladies and stocks.

As I write this share prices for exciting technology shares have suddenly dived on unexpectedly negative inflation numbers for the US. This is not remotely specific to any of these stocks so no reason for selling.

Nvidia Launches ‘Chat with RTX’

Indeed Nvidia has made what could be an exciting announcement.

Imagine a more private and personalized ChatGPT that allows users to talk to data stored locally on their own computers.

It is finally here.

On Tuesday, Nvidia publicly released a technology demo called “Chat with RTX.” The software is free to download and allows consumers to use open-source AI large-language models — including Mistral or Meta Platforms’ Llama 2 — to interface with their files and documents. Nvidia publicly released a technology demo called “Chat with RTX.” The software is free to download and allows consumers to use open-source AI large-language models — including Mistral or Meta Platforms’ Llama 2 — to interface with their files and documents.

After a user points “Chat with RTX” to a folder on their computer with .txt, .pdf, and Microsoft Word documents, they can ask the chatbot questions about any information contained in the files.

“Since Chat with RTX runs locally on Windows RTX PCs and workstations, the provided results are fast — and the user’s data stays on the device, ” Nvidia said. “Rather than relying on cloud-based LLM [large language model] services, Chat with RTX lets users process sensitive data on a local PC without the need to share it with a third party or have an internet connection.”

Barron’s tested “Chat with RTX” over the last few days on an Nvidia RTX 4090 GPU. We can confirm the answers to queries were nearly instantaneous and accurate.

Nvidia says the current version of the software is good for informational queries but isn’t as good for questions that involve reasoning across the entire data set of files. The chatbot performance also improves on a specific subject matter when it is given more file content on the topic.

“Chat with RTX” requires Windows 10 or Windows 11, along with an Nvidia GeForce RTX 30 Series GPU or 40 Series GPU with at least 8 gigabytes of video memory.

A GeForce RTX 4060 card that fits the requirements starts at $299.

The size of the download ranges from 50 gigabytes to 100 gigabytes, depending on AI model.

Dow Jones Newswires, 13 February 2024

Nvidia is as exciting a stock as ever but looking at a chart of US long bond yields it is probably fair to say that the longed-for fall in interest rates may not come as soon as investors were hoping.

Share Recommendations

QQQ3. Buy @ $174.85

SOXX. Buy @ $615.38

Nvidia NVDA. Buy @ $721

It is intriguing to look at a chart of Apple using 12m candlesticks and the associated very long-term moving averages.

If we take as our simple rule that shares are a buy/ hold as long as the blue shorter-term moving average line is rising above the red longer-term moving average line there has been no sell signal since 2003. This has been good advice since the shares have climbed 840 times in that period. The current message is still positive.

Further reading

More >
Subscribers Only
Investment Alerts

US Long Bond Yields Test New Peaks

April 19, 2024
Subscribers Only
Investment Alerts

But My Heart Belongs to GoDaddy

April 12, 2024
Subscribers Only
Investment Alerts

Zooming Higher, at Least for the Moment

April 11, 2024
Subscribers Only
Investment Alerts

Let’s Hear it for Spotify

April 9, 2024