Time for Some Profit Taking in Stocks
I am going to Trust the Plan, even though I feel like no storm is coming yet. And here I mean only my highly personal investment plan, as usual. And that's exactly the reason why I immediately fixed profit on all my stakes in NVIDIA (NVDA), without regrets or hesitations, as soon as I saw the quotes above $950 this Monday. I was honest with you when underlining a few points to give you the nearest market perspective on NVIDIA in my previous post last week, including that smart investors may launch profit taking without having to wait for $1000 per share. This was precisely what's happening. However, it doesn't mean that the entire rally is over. Some "too popular" assets came running ahead, including the highly bloated NVIDIA and other stocks like Elly Lilly (LLY), maybe Broadcom (AVGO) or Ferrari (RACE). Yet, even those stocks are still able to provide positive spring surprises, as the broader AI engine is still hot and running well, while the S&P 500 barometer continues to climb further.
Many of the recent developments could only confirm this bullish point of view. First, another cloud company is shining, this time it is Oracle (ORCL) which soared by double digits to follow its forward guidance after solid quarterly numbers. Second, large players of the segment like Microsoft (MSFT) and Amazon (AMZN) quickly added between 2% to 3% on the news, while Crowdstrike (CRWD) even bounced more than 4.5% from its dips. Then, the share price of NVIDIA climbed about 5% soon after the opening bell on Wall Street on March 12 to return slightly above $900 again. And finally, the S&P 500 futures tried to go higher and then managed to hold last week's gains at least, ignoring fresh and persistent US consumer inflation data.
The so-called "core" index of consumer prices, without food and fuel components, only cooled from 3.9% to 3.8% YoY, which was above consensus expectations of larger declines, and it came at 0.4% MoM. The headline number was also 0.4% MoM and 3.2% YoY, vs 3.1% notched a month ago. Potentially bad news for rate cuts prospective, and therefore no good at all for keeping the sentiment still bullish. This cut of inflation cards may unfavourably shift the timing of Federal Reserve's first dovish moves, yet the Wall Street crowd showed it doesn't care too much. So, it is still probably ready to find refuge from inflation headwinds in shares, rather than in bonds, and so will I.
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