Ticker Reports for December 9th
How to Master Trading Discipline: Overcome Emotional Challenges
The most successful traders have found a way to overcome these emotional challenges and achieve success. The good news is that you can, too. Trading discipline is a skill you can develop. It's not just about self-control; it’s about building habits and tools that keep you focused, rational, and prepared for any market condition. Let’s take a look at a few practical steps you can take to refine your discipline and improve your trading.
Step 1: Identify Your Emotional Triggers
Emotional awareness is the foundation of trading discipline. Start by recognizing the specific situations that provoke strong emotional responses. Fear often arises during market downturns, while greed can surface when a trade is highly profitable. Overconfidence or frustration may appear after consecutive wins or losses. You may even find that not getting enough sleep or having a poor diet can lead to heightened emotional reactions.
One effective way to spot these triggers is by keeping a trading journal. Document each trade, including your emotional state before, during, and after. Ask yourself:
- What was I feeling as I entered this trade?
- Did I stick to my plan or make impulsive decisions?
- How do I feel about the outcome, regardless of profit or loss?
Over time, patterns will emerge, helping you anticipate and prepare for emotional reactions. For example, if you notice you overreact to losses, setting stricter stop-loss orders can mitigate emotional trading. If you find yourself chasing trends out of excitement, establish predefined entry and exit points to stay grounded. Identifying these tendencies allows you to create actionable strategies to counteract emotional triggers.
Step 2: Build a Detailed Trading Plan
When emotions are high, having a clear plan acts as a safety net. A trading plan sets predefined rules and limits, which helps you avoid making impulsive trades or chasing losses. This reduces the chances that you will be swayed by market noise or emotional impulses.
Here are some tips to consider when building your personal trading plan.
Set Clear Goals
Clear goals help you evaluate your progress and stay motivated. Start by identifying specific and measurable objectives for your trading, whether it’s daily profit targets, long-term portfolio growth, or risk management benchmarks. Be realistic about your expectations, as overly ambitious goals can lead to frustration and impulsive decisions. For example, setting a goal to achieve a 5% monthly portfolio growth might encourage steady, calculated trades rather than high-risk gambles.
Establish Entry and Exit Points
Predefine the conditions under which you will buy or sell to remove guesswork during trades. These criteria could be based on technical indicators, chart patterns or price levels depending on your goals. For example, you might commit to entering a trade only when a stock closes above its 50-day moving average or selling a stock if it falls below your stop-loss point. These predefined rules help you avoid reacting emotionally to market fluctuations, ensuring your trades are based on strategy rather than impulse.
Outline Your Risk Tolerance
Specify how much capital you’re willing to risk on each trade, typically a percentage of your total account. A common guideline is to risk no more than 1-2% per trade to minimize the impact of losses. This requires you to calculate position sizes based on your stop-loss levels and ensure that even in the worst-case scenario, a single trade won’t significantly dent your portfolio. Knowing your risk tolerance also helps you stay calm during volatile markets, as you’re prepared for potential losses within a manageable range.
Step 3: Utilize Mindfulness Techniques
Mindfulness can be a powerful tool to keep emotions in check during high-pressure trading moments. Practices like meditation, deep breathing, or journaling throughout the day promote clarity and better decision-making by calming your mind and helping you manage your emotions in real time.
- Breathing Exercises: Take slow, deep breaths to reduce stress and center yourself before making a trade. A simple method you can start with is the “4-7-8 method,” where you inhale for four seconds, hold for seven seconds, and exhale for eight seconds. When repeated, this breathing exercise resets the nervous system, reducing fight-or-flight instincts and impulsivity.
- Meditation Apps: Set aside time each day to quiet your mind. You can also use apps like Headspace or Calm to develop regular meditation habits.
- Journaling: Reflect on your emotional state at the end of each trading day to gain insights and improve self-awareness.
Step 4: Master Risk Management
Effective risk management is the cornerstone of successful trading. It reduces the emotional stakes of trading and allows you to approach decisions with greater confidence and less fear.
Key risk management tools include:
- Stop-Loss Orders: These automatically close trades when they reach a predetermined loss level to prevent emotional panic selling and protect against sudden price dips.
- Position Sizing: Limit the size of each trade relative to your account to minimize the impact of any single loss.
- Diversification: Spread your investments across multiple asset classes or sectors to reduce overall risk.
- Drawdown Limits: Set predefined maximum permissible loss thresholds over a specific time period or a particular account.
To further solidify your risk management strategy, set maximum drawdown limits for your trading account. For example, you might decide to stop trading for the day if you lose 1% of your total trading capital.
Step 5: Develop a Consistent Routine
A consistent routine is essential for maintaining focus and minimizing emotional distractions. Your daily routine should be made up of three distinct phases: preparation, execution, and review.
Preparation
This phase sets you up for success. Begin your day by reviewing market news, analyzing charts, identifying potential setups from top stocks, and ensuring your trading plan aligns with current market conditions. This step doesn’t only help you find profitable opportunities—it also lays the framework for your strategy, which reduces the possibility of impulsive decisions.
Execution
During execution, stick to your plan. Follow your pre-identified entry and exit points, adhere to your risk management rules, and stay focused on high-probability setups.
Review
After the trading session, dedicate time to review your performance and reflect on your trades. Analyze what went well and what didn’t and whether your trades aligned with your plan. This process helps you better refine your trading and hold yourself accountable for deviations or emotional trades.
Step 6: Analyze Losses Constructively
Losses are an inevitable part of trading—even the most successful trader doesn’t win 100% of the time—but how you respond to them can shape your long-term success. If you approach them constructively, losses offer a valuable opportunity to learn and refine your trading strategy. Instead of reacting emotionally, analyze your losses to identify what went wrong and how you can improve. If you have been keeping a trading journal, this is where it comes in very handy.
Ask yourself:
- Was the trade executed according to your plan?
- Did you follow your risk management rules?
- Were external factors, such as market news, a contributing factor?
- What can I do differently next time?
Separating emotional reactions from the facts will help you identify actionable insights you can use to reduce future losses. Embrace a growth mindset and turn setbacks into opportunities to fine-tune your strategy—not beat yourself up.
Discipline as a Long-Term Strategy
Discipline in trading isn’t about being perfect; it’s about being consistent. Every trader faces moments of doubt and financial setbacks. But by recognizing emotional triggers, following a structured plan, and committing to mindfulness, you create a framework that helps you stay focused—even when the markets test your resolve.
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Does China Investigation Change NVIDIA's Outlook; Yes, No, Maybe?
NVIDIA's (NASDAQ: NVDA) stock price dived after reports that China is investigating it for violations of its anti-monopoly laws. The move could impact NVIDIA’s business; China accounts for about 15% of the annual revenue, but how far is China willing to go? NVIDIA’s chips and CUDA framework are essential to harnessing AI power today; China’s investigation is more likely a warning than a real threat.
NVIDIA has competitors, and Advanced Micro Devices (NASDAQ: AMD) is one, but it is still in catch-up mode, leaving China with few options other than slapping NVIDIA on the wrist and letting it go about its business. As for who the warning is for, it’s questionable whether it was for NVIDIA, the United States Government, or both. The probe could be China’s retaliation for U.S. semiconductor sanctions, heightening tensions in the global semiconductor war.
NVIDIA Under Investigation for Monopolistic Practices in China and the United States
The potential violation relates to the acquisition of Mellanox in 2019/2020. Mellanox was a networking company focused on enterprise. Its fabless operations included a variety of adapters, switches, cables, and other silicon products for high-performance computing, data centers, cloud, and data storage.
NVIDIA announced plans to acquire the company in 2019 and closed the deal in 2020 for a valuation of $6.9 billion. Today, Mellanox is part of NVIDIA’s networking business, which includes high-speed ethernet and Infiniband solutions. China is upset because NVIDIA didn’t disclose Mellanox product information within a 90-day window intended to prevent a monopoly.
Meanwhile, the U.S. Justice Department is investigating whether NVIDIA has made it difficult for consumers to get rival products. The answer to NVIDIA actively working against its rivals is yet to be discerned. Still, it will likely center on the fact that its products set the stage for a technological revolution that CUDA unlocks.
Is it hard for NVIDIA semiconductor rivals to compete? Yes, it is. They are years behind the curve in developing similar technology and support infrastructure and demand for these products is enormous. The question is whether NVIDIA has market share to lose, and the answer is yes.
Most AI developers don’t care if the data center has an NVIDIA, Advanced Micro Devices, or other label so long as it can handle the workload, train the models, and power the apps.
What do the analysts think about China’s probe? Not much, at least not enough for any revisions to appear soon after the release. The news surely raises some questions, but the takeaway is that the revenue and earnings growth outlook is unchanged. As it is, the consensus reported by MarketBeat forecasts another 50% growth in 2025, sufficient to put revenue growth near 6500% since 2020 when the AI boom was getting started. Based on the trends, the forecast is likely low, and NVIDIA will outperform.
Institutional and Fund Money Flows Into NVIDIA
The institutional activity shows market support for NVIDIA remains high. The balance of activity has been bullish all year and is unlikely to change until there is a clear sign business has topped. Until then, institutional activity is a tailwind for the market that will likely support it on dips like the one created by the Mellanox probe news.
The market for NVIDIA stock is down more than 2.0% but still well above critical support targets and showing support intraday. The likely scenario is that NVIDIA stock continues to move sideways within its range, with a chance of setting a new high by the end of the year or early 2025. The analysts' consensus price target implies a 15% upside from the 150-day EMA in early December; the revision trend leads to the high-end range of targets or another 15% upside.
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Is Marvell Technology Chipping Away at NVIDIA's Market Lead?
There’s no disputing the dominance of NVIDIA Co. (NASDAQ: NVDA) driving the AI revolution for now and the foreseeable future as they make even faster advances with their chips. However, having a 12-month backlog on its next-generation architecture Blackwell GPUs is causing many computer and technology sector customer to look elsewhere in the meantime.
Enter Marvell Technology Inc. (NASDAQ: MRVL) and its custom-designed application-specific integrated circuit (ASIC) AI chips on which the hyperscalers are loading up.
These chips are designed for specific tasks, often offering better performance at a lower cost for certain AI workloads. Marvell’s CEO Matthew Murphy proclaimed they are entering a “new era of growth” driven by demand for its ASICs.
Growing Its Niche Moat for the Hyperscalers
While NVIDIA's AI dominance is driven by the embedded nature of its full-stack ecosystem comprised of its powerful GPU architecture (Hopper and Blackwell), its software platform (CUDA) and development kits, networking solutions, partnerships and a loyal and growing developer community, Marvell’s ASICs aren’t replacing NVIDIA’s Hopper AI chips. Instead, they are enhancing specific AI workloads customized for the hyperscaler’s needs.
Custom Designed ASICs for Microsoft, Amazon, and Google Cloud
Marvell is generating rich data center revenue growth from four custom ASICs.
The Maia-2 ASIC is a customer AI accelerator designed for Microsoft Co.’s (NASDAQ: MSFT) Azure platform specifically for training and inference workloads.
The Axion ASIC is custom-designed for Alphabet Inc.’s (NASDAQ: GOOGL) Google Cloud. It's a custom CPU specifically designed for Google's data centers to optimize specific workloads for its cloud platform.
The Trainium is custom designed for Amazon.com Inc.’s (NASDAQ: AMZN) Amazon Web Services (AWS) for the purposes of training large and complex machine learning models and powering its AI services.
The Inferentia is also a custom-designed ASIC for Amazon. Like the name hints, it's specifically made to be an AI inference accelerator for AWS. It's designed to operate already-trained AI models efficiently and optimized for inference at scale.
Marvell competes with Broadcom Inc. (NASDAQ: AVGO) and their ASICs. Broadcom helped develop the Google Tensor chip and reportedly designs ASICs for OpenAI.
Growth Spurt Began in Q3: Data Center Revenue Surge 98% YoY in FQ3
Marvell reported its fiscal third quarter of 2024 EPS of 43 cents, beating consensus estimates by 2 cents. Revenues rose 7% YoY to $1.52 billion, firmly beating consensus estimates of $1.46 billion but grew 19% sequentially. Non-GAAP gross margin was 60.5%. Data center revenue rose 98% YoY and 20% quarter-over-quarter(QoQ) to $1.1 billion, accounting for 73% of total revenue, up from 40% in the year-ago period.
Non-Data Center Revenue Began Recovery in FQ3
Non-data center revenue started its recovery in FQ3. Enterprise and carrier revenue rose 4% QoQ. FQ4 growth is expected in the mid-teens. While automobile and industrial revenue fell 22% YoY, it rose 9% QoQ. FQ4 revenue is expected to grow in the low-to-mid single-digit percentage QoQ growth rate. While consumer revenue was down 43% YoY, it rose 9% QoQ. Marvell expects it to decline in FQ4 in the mid-teens QoQ seasonally.
Marvell Issues Upside FQ4 Guidance
For fiscal Q4 2025, Marvell expects to report EPS of 54 cents to 64 cents, versus 52 cents consensus estimates. Revenue is expected between $1.71 billion and $1.89 billion, versus $1.65 billion consensus estimates.
CEO Matt Murphy commented, "The exceptional performance in the third quarter and our strong forecast for the fourth quarter are primarily driven by our custom AI silicon programs, which are now in volume production, further augmented by robust ongoing demand from cloud customers for our market-leading interconnect products. We look forward to a strong finish to this fiscal year and expect substantial momentum to continue in fiscal 2026."
MRVL Triggers an Ascending Triangle Breakout
An ascending triangle is comprised of a flat-top upper trendline resistance converging with an ascending (rising) lower trendline support. The breakout occurs when the stock surges through the upper trendline.
MRVL formed the flat-top upper trendline resistance at $94.95, which converged at the apex point with the ascending lower trendline support. The upper trendline resistance tested and failed two prior breakout attempts, but the pullbacks were shallow at higher lows. The daily anchored VWAP support is at $92.16. The breakout triggered the FQ3 earnings release and raised guidance. Shares increased from $98.72 to $109.57, forming the gap fill levels. MRVL peaked at $119.88 initially as it set a 52-week high. The daily RSI is flat at the 74-band. Fibonacci (Fib) pullback support levels are at $109.57, $104.28, $98.72, and $87.58.
MRVL’s average consensus price target is $119.04, implying a 4.87% upside and its highest analyst price target is $140.00. It has 24 analyst Buy ratings and two Hold Ratings. The stock has a 2.3% short interest.
Actionable Options Strategies: Bullish investors can consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, writing covered calls at upside Fib levels executes a wheel strategy for income on top of the hefty 0.21% annual dividend rate.
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