'Weaponized FOMO' has been the theme of the market rally, Nvidia.

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Shares of Nvidia ( NVDA ) rebounded in Tuesday's session after a three-day selloff. Interactive Brokers Chief Strategist Steve Sosnick joins Market Domination to discuss Nvidia's stock movement and the broader tech rally.

“This is Nvidia's market and we're all just trading in it,” explains Sosnick. He notes how Nvidia is leading the tech sector's growth (XLK) and the broader market rally (^DJI, ^IXIC, ^GSPC). While the tech sector's rally may raise concerns, he notes that its recent decline isn't a problem “because late-end factors have made it more volatile.”

“These companies make a lot of money. And someone asked me today, 'Would you buy Nvidia at these levels?' And my comment was neither here nor there because it's not cheap, but it's not expensive either, because they make ridiculous amounts of money, it's just how much development costs.”

He points to “arms-fed FOMO” as one of the themes driving the market rally:

“For institutional portfolio managers, that's the real deal. And that's because they can't get behind their peers. So, if that guy is making a ton of money at Nvidia or that guy at GameStop (GME) I may not have put all my chips on the table, but if I were an institutional investor, I wouldn't have given up on the rally, Sosnick added is where the stock becomes heavily weighted.

For more expert insights and the latest market action, click here to watch this full episode of Market Domination.

This post was written by Melanie Riehl.

Video transcript

Let me ask you this, Steve.

So uh, Peter Bowa today, who was a very smart strategist, as you're telling your clients this morning, he's been telling Steve for the last month or so that NVIDIA is what he's looking for. Creating a line.

No, not period.

He goes straight to NVIDIA, like his gauge, his general barometer.

Is that what you're doing, Steve?

Are you focused on NVIDIA Jetson Wang's company for better or worse?

I have no choice but to explain why you say Steve because this is Nvidia's market and we are all just trading in it.

I mean, realistically, um it's taking us up and, you know, you can see now that we're in an interesting little cycle where, where, the index, you know, if you look at , if you look at the big industries and I'll describe them as the S and P 500 NASDAQ 100 they go with NVIDIA and you know, yesterday, for example, they didn't sell, you know, S and P not as big as the difference was the advancers on nyse dropped 2 to 1 today.

It is the opposite.

So you've got NVIDIA and big-cap tech driving the market higher.

Um, while most stocks are low.

So it's a weird NVIDIA and friends compared to everyone else.

And it's a weird dynamic right now.

Now, it's interesting because, um, I know you saw the piece that our Josh Shaffer featured today with some research from Blackrock that tech, tech, oh megacaps leading is not necessarily a bad thing because these Earnings are getting good.

So it's not like they're leading behind it at all.

Do you see things this way?

Yes, but I, I mentioned, I saw Josh on the way.

He would have told us that.


But, and my, and my reason, the reason is, you know, I'm not going to fight the data, you know, and, and, and I guess there's, you know, not necessarily death. If it's a, if it's a tight rally, but the only thing that bothers me is, you know, because if everybody's trying to rally in a certain sector, what if they get out? Try?

And it becomes very difficult?

We didn't see it being a problem yesterday.

I think it's because of the end-of-quarter factors that are making it more skewed.

Yes, these companies make a lot of money.

And somebody asked me today, you know, is NVIDIA, would you buy NVIDIA at these levels?

And my comment was kind of like neither here nor there because it's, it's not cheap, but it's not expensive either because they make ridiculous amounts of money.

It's just how much development costs.

And if, if they meet their growth targets, if they continue to grow at this rate, then it's not, it's not an expensive stock.

If there is even a slight stumble, their value reaches perfection.

And this is where the danger comes in.

But are you surprised?

Because obviously this has been a big topic.

Rally has been, you know, tight, right?

Are you surprised that it's tight?

Because some people would say Steve, of course, these are the companies that are leading the way.

These are, you know, so the argument would go for our biggest, most innovative dynamic, disruptive companies, of course, they should lead, they should lead.

But, you know, the question of how far they should go and leave everyone else behind is more, you know, one of my themes for years now is weaponized FOMO.

And I think that's really what drives a lot.

What do you mean by armed fomo, fear of losing fomo?

You know, it's something that we all have, you know, we, you know, just go on Instagram one day and you'll find, and you'll find it when you see that What is a friend of yours doing?

But in reality for institutional portfolio managers, it's the real deal and the reason they can't keep up with their peers.

Okay fine.

So, you know, if, if, if something, if you know that guy over there is making tons of money in a video, that guy is making it in games, stop.

Well, I'm not, I'm not, maybe I haven't put all my chips on the table.

Okay fine.

But if I'm an institutional investor, I can't be at that bottom professionally.

I can't miss this rally.

I don't, I can't hear from my, my investors.

And what are you doing there?

So I think what happens is that the effect piles up and we see it.

Some of them, you know, in the stock itself, I, are very heavy.

Some of them are using options because they don't want to put all their eggs in one basket.

So they will buy call options that expose them to the upside while limiting their downside.

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