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Thursday, December 21, 2023

Taking a closer look at yesterdays sudden sell-off $NVDA $MU #Taiwan #Stocks #FlashCrash

Yesterday afternoon - a little after 1 PM CST - I noticed stocks take a sudden dive, and panic selling continue into the close. 

The market rally was already looking really tired; and I alerted to the fact that upside momentum had dried up. This was the perfect opportunity for a serious market reversal. 

Whether I was Net short at the time, I'll leave that up to your imagination.   

Lame Steam Media 

I noticed Bloomberg report that stocks had taken a dive, but nothing of substance... 

Brilliant! lol  

I watched a little Fast Money yesterday evening to see what their take on the situation was, and they were clueless... as usual. Guy Adami, who is usually pretty sharp, pointed to some - "Taiwan" - news which came out yesterday morning.  

Top Republicans alarmed by 'beyond unnerving' report Xi warned Biden that China WILL reunify with Taiwan in blunt message during crunch talks in San Francisco

It could be that some top republicans put in sell orders, and that those execute a little earlier than the rest of Wall Street, just as we saw several corrupt senators in DC liquidate their portfolios ahead of the release of the covid story. 

And The Band Played On 

Technical Reversal 

Whatever the case, someone with a heavy hand came in and sold everything, and that caused some selling contagion. The selling was broad based, unlike the rally of the past few weeks.   
I don't see anyone wanting to build a big short position ahead of the Christmas break, and volume and volatility is already very light. 

Maybe this was only a shot across the proverbial bow. We probably won't know until traders return from holiday. 

One reason for a plunge this deep - on an intraday basis - is that the market is so thinly traded. There's just not much of a bid. 

The only thing that kept yesterday's plunge from turning into a flash-crash, is the fact that the volatility is so low. The market just isn't able to make gigantic moves with the $VIX trading around these 12 - 13 levels. 

A couple things to note:  

This kind of thing is really rare, for markets to make a new recent high, only to give back all the gains of the past week. 

Last time we saw a mid day reversal this bad, was the one which marked the top back in July. 

For that reason it's worth keeping a close eye on over the next few days/ weeks. 

The Taiwan situation could be the catalyst for the next big market crash, but not when the controllers are waiting until 2024 to take profits on their AI rally. 

Stocks to watch is NVIDIA $NVDA 

This stock seems to be the only stock that matters to Wall Street, and you can see the technical pullback, which in part is to blame for yesterday's sudden reversal. 

NVIDIA $NVDA - you should also be watching the 200x moving averages on the 15 min. charts, since this is what the AI programs are trading. If these levels break, then we are going to see plenty more days like yesterday.  

Micron $MU - beat earnings just in time for another short squeeze...

Merry Christmas! 

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