SMCI completes all stages of Minsky model. What's next for AI?
Over the last couple years SMCI has done a speed run through all the phases of the Minsky model. Ending with a near perfect expression of all stage.
Let's go through the steps one by one;
First - the macro trend was starting to run out of steam when we tagged the 4.23 (As so often happens).
Next we had the classic fake crash and then final spike out, characteristic of bubbles.
Then we had the tell tale W butterfly top.
And then it was just a matter of time.
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Classic. By the boom stuff.
So, where does that leave us now? As someone who likes trading reversals best, this gives me one main thought. One of three things should be true. SMCI is a long. NVDA is a short. SCMI and NVDA due to fundamentals will diverge massively from each other.
I'm a TA trader, so I just discount the third option as an occupational hazard. I do not know nor care enough about the fundies of either of these. If the fundies overrule my TA thesis, I'll just hit a stop. Wait a while. Then make a new decision.
My goal in trading isn't to always be right or make my money off one wonder trade. The whole goal for me is over my trading lifetime to lose about 50% of my trades. Win about 50% of them. Average about $3 per $1 lost. I pre-accepted a long time ago I'd lose half my trades, what order they come in or why does not matter. They're all part of the plan.
So ... that brings us down to the decision, is it fade the NVDA bull or buy the SMCI knife?
There's some nuances to this. For one, SMCI has complete the low hanging fruit rally. We have a quite simple method for this. If and when the low of the parabolic phase is spiked out, this is when we usually see reversion to the trendline. Here's the setup in CVNA.
Using the same rational as used for the CVNA low call, it was easy enough to see the potential for a low being made in SMCI. Here's a real time mention of the SMCI knife catch at the low.
The dilemma here is this is the easy target for the long. Can run more, 100% bounce to the trendline was the low hanging fruit. But CVNA is now over 100% higher than the same level.
SMCI could have a lot more to run in theory but I find it hard to be bullish here because we're, literally, at my bull target level. I did the SMCI knife catch thing. It went well. Now we're at resistance. It might run more, but it feels more like chasing to me.
So to the next question. Does NVDA happen to look anything like SMCI did at the high?
Yup ...
If the Minsky model is again in play here, we're be somewhere close to the optimal shorting levels.
===
Did SMCI lead NVDA? One would think at this point we can't be more than 18 months away from knowing. If the AI bubble is going to fully pop, it'd seem it has to be at or close to full maturity now.
Let's go through the steps one by one;
First - the macro trend was starting to run out of steam when we tagged the 4.23 (As so often happens).
Next we had the classic fake crash and then final spike out, characteristic of bubbles.
Then we had the tell tale W butterfly top.
And then it was just a matter of time.
===
Classic. By the boom stuff.
So, where does that leave us now? As someone who likes trading reversals best, this gives me one main thought. One of three things should be true. SMCI is a long. NVDA is a short. SCMI and NVDA due to fundamentals will diverge massively from each other.
I'm a TA trader, so I just discount the third option as an occupational hazard. I do not know nor care enough about the fundies of either of these. If the fundies overrule my TA thesis, I'll just hit a stop. Wait a while. Then make a new decision.
My goal in trading isn't to always be right or make my money off one wonder trade. The whole goal for me is over my trading lifetime to lose about 50% of my trades. Win about 50% of them. Average about $3 per $1 lost. I pre-accepted a long time ago I'd lose half my trades, what order they come in or why does not matter. They're all part of the plan.
So ... that brings us down to the decision, is it fade the NVDA bull or buy the SMCI knife?
There's some nuances to this. For one, SMCI has complete the low hanging fruit rally. We have a quite simple method for this. If and when the low of the parabolic phase is spiked out, this is when we usually see reversion to the trendline. Here's the setup in CVNA.
Using the same rational as used for the CVNA low call, it was easy enough to see the potential for a low being made in SMCI. Here's a real time mention of the SMCI knife catch at the low.
The dilemma here is this is the easy target for the long. Can run more, 100% bounce to the trendline was the low hanging fruit. But CVNA is now over 100% higher than the same level.
SMCI could have a lot more to run in theory but I find it hard to be bullish here because we're, literally, at my bull target level. I did the SMCI knife catch thing. It went well. Now we're at resistance. It might run more, but it feels more like chasing to me.
So to the next question. Does NVDA happen to look anything like SMCI did at the high?
Yup ...
If the Minsky model is again in play here, we're be somewhere close to the optimal shorting levels.
===
Did SMCI lead NVDA? One would think at this point we can't be more than 18 months away from knowing. If the AI bubble is going to fully pop, it'd seem it has to be at or close to full maturity now.
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