How retail traders won the Nvidia rout on Monday
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Buy the dip. By following that mantra in massive volume, retail investors have made billions of dollars on Nvidia stock in a mere 24 hours.
Why it matters: Individual investors didn't get caught up in the wave of selling that hit Nvidia on Monday — quite the opposite.
- Instead, they were net buyers, in almost unprecedented volume.
By the numbers: Almost 800 million shares of Nvidia changed hands on Monday, at a volume-weighted average price of $120.95, for an astonishing total volume of just under $100 billion.
- That marks Nvidia's highest dollar volume ever.
Follow the money: Retail investors saw the stock's price drop as a buying opportunity.
- Nvidia comfortably tops the Interactive Brokers list of the most-traded stocks over the past five days.
- Buying volume exceeded selling volume by more than 200,000 shares — up from a surplus of less than 5,000 shares the previous day.
- "As accustomed as we've come to seeing active traders seeing almost every sell-off as a 'buy the dip' opportunity, I found the preponderance of net buying activity to be astounding," wrote Interactive Brokers chief strategist Steve Sosnick in a note.
- "I don't ever recall seeing an imbalance of that magnitude."
By the numbers: Nvidia stock closed at $128.76 on Tuesday, up 8.73% from where it closed on Monday and up 6.5% from Monday's average price.
- That's a healthy pop, rewarding everybody who bought the dip.
The intrigue: If retail investors were net buyers on Monday, who were the massive net sellers?
- It can only be institutional investors, but those are, broadly, high-information market professionals who have been aware of the new DeepSeek AI model since it was released on Jan. 20.
- It's not obvious why they would wait a full week to sell on that news.
The bottom line: Retail traders seem to have outsmarted the smart money yet again.
- "Perhaps my greatest concern is the invulnerability that many smaller traders must be feeling right now," says Sosnick.
- "The track record for dip buyers is extraordinarily good in recent years. The longer we go without a sustained bout of market declines, the more emboldened the dip buyers become."
