Confused by NVDA Earnings? Read This By Michael Salvatore, Editor, TradeSmith Daily The poor, lowly bears have been starved for more than two years. But last week, they finally got a morsel to chew on. Thing is, even they didn’t expect it… Nvidia (NVDA), the AI stock that has defined this market cycle, delivered blockbuster earnings on Wednesday. Revenue growth blew past estimates. Sales of its new AI-native Blackwell chip hit $11 billion in a single quarter. And while it didn’t pull its usual trick of guiding well ahead of the most optimistic expectations, it still raised guidance above the average estimate. In short, everything pointed to NVDA’s continued dominance in the AI space. Then the stock shed nearly 8% of its value… hundreds of billions wiped out. That was the bear’s morsel. The market doomsayers came out of their cave to declare “the AI boom is over, Nvidia has topped, and the market is about to collapse.” You’ve heard it all before. And eventually, they’ll be right. But not today. What the bears are missing is that this price action isn’t unusual, and it doesn’t mean the market will crash. On the contrary, this is precisely what we always see during Mega Melt-Ups. If you look back at the great stock market surges in history – the Roaring ‘20s, the dot-com boom of the 1990s – these kinds of shakeouts happened all the time. This is why so many investors get it wrong. They panic and sell at precisely the moment they should be doubling down. I don’t want that to happen to you. Especially since Nvidia’s earnings report was actually bullish. So today, I’ll show you why this market still has a long way to run… and how we’re using a brand-new trading strategy to profit from the volatility along the way. | Recommended Link | | | | While China races to catch up, one American innovator has secured a breakthrough that could control computing’s next revolution. This company’s unique technology could potentially become as essential to AI’s next phase as Nvidia’s chips were to its first wave. Click here for the full story. |  | | Right Now, We Are Witnessing Something Incredibly Rare There have only been two other times in modern history where all the conditions aligned for a historic, exponential Mega Melt-Up: - The late 1920s, when electrification and mass production transformed the economy.
- The late 1990s, when the internet ushered in a new era of commerce and communication.
In both cases, stocks went parabolic. And in both cases, there were plenty of skeptics saying, “This rally is unsustainable.” Sound familiar? What’s happening right now in 2024 fits the same playbook. We have: - Revolutionary technology – Artificial intelligence is reshaping industries at a speed never seen before, and Nvidia is at the center of it.
- Democratized investing – Zero-commission trading apps have made it easier than ever for retail investors to participate in the market, and contribute to its momentum.
- Easy-money policies – The Federal Reserve has already started cutting interest rates, just like it did during the 1920s and 1990s Melt-Ups. Further, the 10-year yield has been trending down again.
We saw all of this during the past two Mega Melt-Ups… and as TradeSmith CEO Keith Kaplan showed you Thursday, we also saw a ton of short-term sell-offs, too. But this week saw an important catalyst: NVDA’s earnings… If this is a true Mega Melt-Up, why did Nvidia’s stock sell off after posting such an incredible earnings report? There was one fly in the ointment: Nvidia’s profit margins shrank from 75% last quarter to 73.5% this quarter. It also expects them to fall even further to 71% as Blackwell production continues ramping up. Not that margins of 70%-plus are in any way weak, but this shrinking in profit margins seems to be the reason investors used to sell the stock. But NVDA itself said this margin shrink is temporary, and it expects margins to rise back into the mid-70s later this fiscal year as Blackwell costs stabilize. And another important element to this is the fact that, simply, AI has moved on to a new phase focused on applications. Take Snowflake’s (SNOW) earnings for the proof. That company reported higher-than-expected revenue and earnings growth, citing its new AI tool offerings as part of the reason. So, Nvidia’s dominance in the hardware space isn’t fading. And AI appliers aren’t slowing down, just the opposite. The price action this week is just a sign that the Mega Melt-Up is on… and accelerating into its next phase. Which brings us to the real opportunity. How to Profit From Volatility Using Snapback Trades The biggest mistake investors make in bull markets is letting short-term drops scare them out of long-term gains. That’s why we developed the Snapback Strategy – a way to profit from these exact moments of volatility. Instead of fearing pullbacks, this system allows us to capitalize on them by pinpointing stocks that have dropped too far, too fast, and are primed for a short-term bounce. This strategy has worked time and time again during past bear markets and corrections. Across 338 historical trades in our backtest, we saw a 79.59% win rate – nearly 4 out of 5 trades were profitable. And even better, each trade saw a 15.83% average gain per trade, counting both wins and losses, with a 30-day hold time. During the 2020 COVID Crash, stocks like Royal Caribbean Cruises (RCL), Norwegian Cruise Line Holdings (NCLH), and EQT Corp. (EQT) all collapsed – only to snap back for massive short-term gains: - Royal Caribbean: +77% in 30 days
- Norwegian Cruise Line: +98% in 30 days
- EQT: +101% in 30 days
The Bumpy Road Ahead The key to thriving in this volatile market is understanding what it means. Too many pundits will try to tell you that the last week was evidence that the bull run is over. Don’t listen to them. You have to understand that this level of volatility is evidence of just the opposite… That we’re living in extraordinary times, with exponential gains on the horizon. The Mega Melt-Up is in full swing, and this Nvidia shakeout is just another blip on the way higher. Sure, some stocks will struggle this year. Some always do. But many others will rebound so quickly, so sharply, that you’d wish you “bought the dip” when you still could. That’s exactly why we’re featuring the Snapback Strategy – and Trade360’s other powerful tools right now. To make sure our subscribers catch every opportunity in real time. Make no mistake – this could be the last great Melt-Up of our lifetimes. And the next 12 to 24 months could deliver some of the biggest gains we’ll ever see. Let’s make the most of it. To your health and wealth, 
Michael Salvatore
Editor, TradeSmith Daily | 
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