The Bottom Line:
- Ricky is choosing to trade against the greatest trader of all time, Nancy Pelosi, who recently invested more money into Nvidia.
- Ricky believes there is potential downside for Nvidia based on recent patterns and the company’s overbought status.
- Ricky has planned out his entire trade, including an entry at $104.50, an exit at $100, and a stop-loss at $106, resulting in a 3:1 risk-to-reward ratio.
- Ricky’s trade size is approximately $313,000, with a potential profit of $13,500 and a potential loss of $4,500.
- Ricky acknowledges the risks involved in shorting Nvidia, especially after Pelosi’s investment, but he believes the market may have to correct itself due to the lack of progress in AI.
Ricky’s Contrarian Bet Against Pelosi’s Nvidia Investment
Contrarian Approach to Pelosi’s Investment Strategy
I am choosing to trade against the greatest Trader of all time, Nancy Pelosi. Despite her recent investment in Nvidia, I believe that based on recent patterns, there is potential downside for the stock. It’s important to note that my intention is very different from Pelosi’s, as she swing trades or invests in companies for a long period of time, while I am focusing on a day trade.
Planning the Trade and Risk Management
Before entering the trade, I carefully planned it out using my risk calculator. My overall entry is set at $104.50, with a plan to cover around $100 per share. I will cut losses if the stock breaks above $106, giving me a risk to reward ratio of 3:1, which aligns with my golden ratio. With 3,000 shares, the trade size is approximately $313,000. In a perfect world, I could potentially make $13,500 or lose $4,500.
Market Sentiment and Nvidia’s Valuation
Many in my LPP team do not agree with shorting Nvidia, especially after Nancy Pelosi’s recent announcement, as her trades often bring in more demand. However, I believe that Nvidia is overvalued, despite being a bullish company, particularly in 2024. The market’s focus on AI advancements has been a significant factor in Nvidia’s hype, but as AI continues to lack progress, I think the hype will diminish, leading to a potential market correction.
Analyzing Nvidia’s Overbought Status and Recent Patterns
Contrarian Approach to Pelosi’s Investment Strategy
I am choosing to trade against the greatest Trader of all time, Nancy Pelosi. Despite her recent investment in Nvidia, I believe that based on recent patterns, there is potential downside for the stock. It’s important to note that my intention is very different from Pelosi’s, as she swing trades or invests in companies for a long period of time, while I am focusing on a day trade.
Planning the Trade and Risk Management
Before entering the trade, I carefully planned it out using my risk calculator. My overall entry is set at $104.50, with a plan to cover around $100 per share. I will cut losses if the stock breaks above $106, giving me a risk to reward ratio of 3:1, which aligns with my golden ratio. With 3,000 shares, the trade size is approximately $313,000. In a perfect world, I could potentially make $13,500 or lose $4,500.
Market Sentiment and Nvidia’s Valuation
Many in my LPP team do not agree with shorting Nvidia, especially after Nancy Pelosi’s recent announcement, as her trades often bring in more demand. However, I believe that Nvidia is overvalued, despite being a bullish company, particularly in 2024. The market’s focus on AI advancements has been a significant factor in Nvidia’s hype, but as AI continues to lack progress, I think the hype will diminish, leading to a potential market correction.
Ricky’s Detailed Trade Plan: Entry, Exit, and Stop-Loss
Identifying Resistance and Overbought Signals
There was an obvious resistance that Nvidia was showing signs of, and the stock became very overbought. I saw the potential for a pullback, which led me to plan out my entire trade using my risk calculator. While markets are generally more bullish than bearish, and Nvidia is a very bullish company, especially looking ahead to 2024, I still believe it is currently overvalued.
Recent Patterns and Selling Pressure
On the 1-hour time frame, Nvidia is getting rejected by the moving average and continues to form lower highs and lower lows. Despite the recent upswing, every time the stock has experienced such a move, it has been rejected once again. I believe that this selling pressure is just getting started, and the market has not completely shrugged off last week’s sentiment regarding the lack of progress in AI advancements.
Letting the Charts Dictate the Trade
At the end of the day, it doesn’t matter what I think; I prefer to let the charts do the talking. I wanted to share my trade plan with you in advance, before the actual trade comes into play, and to see how it actually unfolds. I will keep you updated via Instagram, and if you have any questions, feel free to ask me in the comments section.
Weighing the Risks of Shorting Nvidia After Pelosi’s Move
Identifying Resistance and Overbought Signals
There was an obvious resistance that Nvidia was showing signs of, and the stock became very overbought. I saw the potential for a pullback, which led me to plan out my entire trade using my risk calculator. While markets are generally more bullish than bearish, and Nvidia is a very bullish company, especially looking ahead to 2024, I still believe it is currently overvalued.
Recent Patterns and Selling Pressure
On the 1-hour time frame, Nvidia is getting rejected by the moving average and continues to form lower highs and lower lows. Despite the recent upswing, every time the stock has experienced such a move, it has been rejected once again. I believe that this selling pressure is just getting started, and the market has not completely shrugged off last week’s sentiment regarding the lack of progress in AI advancements.
Letting the Charts Dictate the Trade
At the end of the day, it doesn’t matter what I think; I prefer to let the charts do the talking. I wanted to share my trade plan with you in advance, before the actual trade comes into play, and to see how it actually unfolds. I will keep you updated via Instagram, and if you have any questions, feel free to ask me in the comments section.
The Potential Profit and Loss in Ricky’s Nvidia Trade
Potential Profit and Loss Breakdown
With 3,000 shares and a trade size of approximately $313,000, I could potentially make $13,500 if the stock reaches my target price of $100 per share. On the other hand, if the stock breaks above $106, I plan to cut my losses, which could result in a potential loss of $4,500. This risk to reward ratio of 3:1 aligns with my golden ratio and is a key factor in my decision to enter this trade.
Contrarian Stance and Market Sentiment
Many in my LPP team disagree with the idea of shorting Nvidia, especially considering Nancy Pelosi’s recent investment in the company. Pelosi’s trades often bring in more demand, which could work against my short position. However, I maintain my belief that Nvidia is currently overvalued, despite its bullish outlook for 2024. The market’s focus on AI advancements has played a significant role in Nvidia’s hype, but as progress in AI slows down, I anticipate that the hype will fade, potentially leading to a market correction.
Sharing the Trade Plan and Keeping Followers Updated
I wanted to share my thought process and trade plan with you in advance, before the actual trade unfolds. It’s crucial to note that this is not a recommendation for others to copy, but rather an encouragement to always plan your trades carefully, regardless of how risky or conservative they may be. I will keep you updated on the progress of this trade via Instagram, and if you have any questions, feel free to ask in the comments section below.
