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Nvidia (NASDAQ: NVDA) is making headlines once again, closing October 10 at $134.81, up 1.63% for the day, and trading near its 52-week high. But despite the apparent momentum, some analysts are raising red flags about the nature of the recent activity.  Michael Kramer, founder of Mott Capital Management and stock market analyst, has called out Nvidia’s trading behavior, describing it as “casino-like.” Kramer’s concerns stem from the nature of trading volumes. While Nvidia has been trending upward, actual stock volume on October 10 was down nearly 15% compared to its 20-day average.  Instead, short-dated options, especially weekly calls, have dominated the trading landscape.  NVDA heavy call volume. Source: Michael Kramer This kind of speculative frenzy has led Kramer to question the quality of the recent rally, noting that much of the activity seems disconnected from the company’s fundamental outlook. High stakes NVDA trading: Is it all just a gamble? The rise in short-selling is another point of concern.  On October 10, short-sale volume climbed to 82.9 million shares—nearly a third of the total shares traded that day. NVDA short volume. Source: Fintel This uptick in short interest suggests that more investors are betting on a potential pullback, even as the stock approaches a resistance zone between $134.82 and $135.59. Despite all the buzz, Kramer remains skeptical of the hype, noting, “At least on the surface, the stock appears to be a gambler’s haven, and this has probably less to do with the actual outlook of the business since most of the options are in weekly contracts.”  The investment expert highlighted the heavy focus on short-term options indicates that traders are treating Nvidia like a high-stakes bet rather than a long-term investment.  Moreover, the lack of significant changes in analysts’ revenue estimates for the company despite recent price movements further…

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Filed under: News - @ October 11, 2024 11:21 am