Not to burst your bubble, but I wonder how much of today's rally was related to short covering verses truly interested buyers. I think most people now belive the market will go higher for awhile and it is not a good time to be short anything. TSLA action was ridiculous this week--mostly due to a 50% short float. I should have bought call options today on TSLA and rode the wave. Anyways, back to NVDA. After reading today's article that points out that NVDA was the #34 highest shorted stock on NASDAQ, I wonder how many shorts threw in the towel today and bought to cover. (approx 26 million shares short)
I am afraid that a significant % of today's volume (maybe 5 to 7 million?) was short covering because of NVDA's report and the overall recent freight train of a bull market. If that is true, a pullback next week (maybe $14?) may be likely. If no pullback, then the shorts alone will move NVDA higher next week. However, I suspect today's $14.40 to $14.50 floor will be much weaker next week if (1) a large # of shorts with weak stomachs cashed out today and (2) the longs who bought in the $12 to $12.50 range over the past 6 months are happy to walk away with a 12% to 16% gain. Not all current NVDA shareholders believe NVDA will move to $20 anytime soon and many may have their eyes on another stock that they believe has a better chance of a 40% to 50% gain than NVDA.
Of course, more short covering will occur next week as well. My guess is the short covering volume next week over a 5-day period will be approximately equal to the short covering volume that occurred today. After next week, my guess is the floor created by the shorts is gone and we will then see if NVDA can keep its share price moving higher without short support.
FYI--I shorted NVDA today and am now thinking it will be a breakeven trade for me.. (Which SUCKS mainly because I was this close to buying calls on TSLA this morning but then thought the short squeeze from yesterday wouldn't carry over