Did They Just Ring The Bell?

They say they don’t ring a bell at the top. So reading such a thing into this today’s wild action would be a bit fraught. But along with most of the rest of the world, I’ve been watching Nvidia and bitcoin, the poster children of the market mania du jour.

Going into 10:30 EST this morning, they met for a joint moonshot, first surging higher, then collapsing like a pole-axed tent. Hours worth of normal trading action were compressed into a few minutes around 10:30. Had it been confined to either Nvidia or bitcoin alone, it still might not have been noteworthy, but the apparent conspiracy of fundamentally different securities is odd. No doubt high speed algorithmic trading was involved, but the synchronized swimming nevertheless is notable.

Bitcoin recovered most of its losses. The dollar retreated and gold advanced to a new record high, though stocks at large (VT) did not, ending the session 48 bp below yesterday’s close.

Nvidia went on to lose a quarter trillion in market cap over the next few hours, declining from a momentary peak of $974 ~10:30 to $851 in after hours trading, a -12.6% plunge.

They say they don’t ring a bell at the top…

One thought on “Did They Just Ring The Bell?

  1. Finster says:

    A week later, I’m starting to wonder, seriously, if maybe they did ring a bell this time. Our poster bubble babies, Nvidia and bitcoin, are both spitting up. After that quarter-trillion-dollar hammering, the NVDA chart looks like it’s bouncing off a glass ceiling, failing to penetrate at least twice, and bitcoin went into a nosedive overnight and failed a recovery attempt this afternoon. Your correspondent’s fling with the rebound spike netted exactly $1. Considering today’s lunch cost $11, it serves as yet another confirmation that in investing, there is no free lunch.

    High profile as they may be, even symbolic of the whole market zeitgeist, it’s still just two assets. But the broader market has lost its starch too. This week’s CPI and PPI data have severely dented the already highly questionable Fed-rate-cuts-are-coming narrative, with the bond market saying FU Fed and hiking rates instead.

    This in turn led to an increase in the value of the dollar. All the world’s securities compete in the same centatrillion-dollar global market … currencies, bonds, stocks … and the dollar has been losing purchasing power relative to the rest. It took more dollars to buy them and their prices rose. The cumulative effect was the dollars lost purchasing power in the consumer markets too. But when data was released showing that, markets began to price in a change in policy that would be more supportive of the dollar. The value of dollars increased, so it took fewer of them to buy other things, meaning the prices of most everything else fell. How much more there may be to come depends on what the markets have yet to price in.

    If there’s more to come, then the bell did ring.