To The Moon

$NVIDIA Corp(NVDA)$ 's journey to be the "world's largest stock" lasted only one day.

After it became the world's most valuable public company on June 18th with a market capitalization of $3.34 trillion, it retreated in flames and fell below $3 trillion. Looking at the changes in the market over the past week, it's clear that the pace of sector rotation has also given consumption, energy, and financials a chance to catch their breath and rally.

I. Sectors Rotation

NVIDIA's gains since its earnings report have basically come at the expense of other tech stocks as well as other large-cap weights. And the U.S. stock boom is all about symbiosis, so whereas when one stock phases in and out of other sectors, sooner or later it has to pay back some of that blood.

On the other hand, since NVIDIA represents market sentiment, it has to follow the rhythm of money flows.

Historically, a pullback in the third week of June is no surprise. Over the past 50 years, the third week of June has been ranked as the 5th worst performing week of the year, and this year it is only the first week of the year.

II. Speculation on Index Rebalancing

Coincidentally, NVIDIA also surpassed $Apple(AAPL)$ on June 14, the S&P index transfer benchmark date, to become the second largest company in the index thus receiving a weight boost and capital inflows.

Rush funds before the June 21st transfer date on the "Sell the news", resulting in the already small passive funds into the transfer, but did not bring support, but instead, there is a "more kill more" stampede.

Precisely these events are consecutive: the announcement of earnings - stock splits - index positions, it happens to be all positive events, the long side naturally will not let go of the opportunity, the short side will not be so stupid to raise the bet, and speculative funds also want to short-term game a hand, so the water rises .

But here's the thing, even if it becomes the second largest weighting in the S&P Technology Index $Technology Index ETF- SPDR(XLK)$'s second-largest weighting doesn't mean that NVDA is in the driver's seat, and if it doesn't stabilize its second-largest market capitalization or surpassing $Microsoft(MSFT)$ become the largest by the corresponding date in Q3, then the index's shift will drop its weighting back down.

III. Option expiration

The expiration of a skyrocketing number of options expiring on June 21 (roughly one-third of the previous open options volume), especially Call's, has diminished the long boost in the market.

This comes on the heels of back-to-back rallies where Gamma Squeeze trades continue to roll. Once the institution stops this trading, it is likely that even the simplest of profit-taking orders will pressure NVDA's share price in the short term.

This week's June 28th expiration Call has a large number of 125-140 seller Calls, although most of them are probably Covered Calls, but there are some "hard to renew" signals. 135 Calls are dead on.

Lastly, this is not a downer on NVDA, but rather a typical "what goes around comes around" principle in the stock market. If you look at the open positions in PUT, you can see that many investors are starting to prepare for the bottom.

The previous important mark of 100 (1,000 before the stock split) has also become critical.