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There are times when a company becomes the best-known representative for its sector, for better or worse.
It happened with Nvidia Corp. (NASDAQ: NVDA) shares more than a year ago as any mention of the semiconductor sector was prefaced or followed with talk of Nvidia. For those of you doing this long enough, Intel used to be the face of the semis.
Anyhow, I bring this up because everyone's focus on Nvidia's poor performance has cast a cloud over the rest of the semiconductor sector, a group that is wildly outperforming the rest of the market.
Here's the thing – Nvidia is trading 10% higher for the year, but you would think that it was down 25% the way that analysts and the media talk about the stock.
Truth is that the stock is potentially in one of the most powerful stages of a rally: the "disbelief" stage.
This sweet spot in a stock, sector, or market rally happens when investors are still shell-shocked from the last round of selling and are too nervous to jump on the bull that's already started to run.
About the Author
Chris Johnson is a quant - he's obsessed with building and perfecting mathematical models that allow him to predict, with startling accuracy, the direction of the markets, entire sectors, and individual securities. For the last year, he's been researching and building a new system that lets him move swiftly in and out of the hottest stocks in the market for life-changing gains - entirely on his own terms. The results of his newly-minted Night Trader system are nothing short of amazing.
Chris also contributes to Money Morning as the Quant Analysis Specialist.