To The Moon

$NVIDIA(NVDA)$ $Roundhill Magnificent Seven ETF(MAGS)$ $S&P 500(.SPX)$ 

📅 20 October 2025, NZT 🇳🇿

I’ve spent years dissecting equity flows through every cycle, and what I’m seeing now feels eerily familiar. The Magnificent 7 have carried the S&P 500 for years, but that grip is loosening fast. Nvidia’s still standing tall, yet when one stock props up the weight of seven, that’s not leadership; that’s imbalance. I’m calling this phase a structural fracture where capital is fleeing the proven for the speculative, and the maths behind market breadth is starting to crack.

That Goldman Sachs ratio peaked at 311.67 in April 2025 and has now cratered to 204.86. It’s a textbook late-cycle bleed as liquidity tests its limits and momentum splinters. Quality is under-owned, beta is over-loved. I’m watching this carefully because it’s exactly how leadership transitions before volatility spikes.

Earnings Imbalance: Nvidia’s Burden in a Thinning Field

Only one of the seven, $NVDA, is expected to rank among the top five S&P 500 earnings drivers this quarter, alongside $BA, $LLY, $INTC and $MU. FactSet’s Q3 data shows the seven growing earnings 14.9% YoY versus 6.7% for the other 493.

That’s an enormous concentration of profitability. It means if Nvidia even wobbles, the entire market’s earnings momentum takes a hit. $NVDA’s guidance sits near $32.5 billion (+80% YoY), but at 45× forward P/E, perfection is already priced in. Apple, Amazon and Tesla have all lagged the S&P 500 YTD, eroding the group’s breadth. Meta’s running hot on AI ad monetisation but is stretched on valuation; Alphabet’s solid but facing cloud share erosion; Tesla’s down 28% YTD amid EV slowdowns.

Analysts aren’t blind to it. Morgan Stanley’s David Kostin sees MAG7 outperformance over the S&P 493 shrinking from 22% this year to 7% in 2025. FactSet projects their earnings share sliding to 33%. Cantor rates $NVDA at $200 and Loop Capital at $250, a tight consensus that signals respect, not exuberance.

Flow Dynamics: Where the Tape Turns Tense

Options flow confirms the fracture. On 17 October, $100 million in Mag 7 call premium crossed the tape, but beneath that optimism, a $2.52 million bearish put sweep hit $NVDA at the $170 strike (6.7% OTM) for 14 November expiry. Institutions aren’t doubling down; they’re hedging the hero.

Calls surged intraday, yet the underlying stalled around $183. That divergence is classic distribution under strength, the same footprint we saw before prior consolidations. I’m not ignoring that. Short interest in Nvidia has crept from 0.8% to 1.2% of float since August, and group-wide shorts have risen to 2.5%. This isn’t panic; it’s positioning discipline as volatility returns.

Macro Cross-Currents: Liquidity Meets Fragility

Real yields on 10-year Treasuries sit near 1.8%, up 20 bps since September, tightening valuation room for growth stocks. Inflation’s sticky around 2.9% core PCE even as Powell leans dovish, hinting at two cuts by year-end. Every 25 bps of real rate lift compresses tech multiples by roughly 2 percentage points on beta alone. Add to that Trump’s 100% tariffs on China goods slated for November, and you get macro pressure testing micro optimism.

Then comes the headline pivot; $NVDA and $TSM’s first U.S.-made Blackwell chip wafer from Phoenix Fab 21, unveiled on 17 October. It’s historic for AI sovereignty and symbolically bullish, yet production friction and power grid bottlenecks linger. It’s a moonshot with execution risk.

What I’m Watching Next

1️⃣ Index Concentration Squeeze: S&P top-10 weight near 35%; if it falls below 33% while price softens, I’m rotating to financials and industrial cyclicals.

2️⃣ Earnings Revisions Radar: Without guidance hikes, beats mean little. I’m keying on Nvidia’s 25 November print for forward revenue revision.

3️⃣ Liquidity Pulse Check: Buybacks slowed 15% last quarter; if real yields stay firm and QT doesn’t pause, beta compression intensifies.

4️⃣ Sector Rotation Signal: Healthcare and communications are quietly gaining alpha. Broadcom and UnitedHealth remain my defensive hedges.

5️⃣ Nvidia Sentinel: $183 support is critical. A break below $175 opens a path to the $170 hedge strike; above $190, momentum re-engages toward $222 consensus targets.

My Stance

I’m not bearish on innovation; I’m bearish on complacency. Nvidia’s Blackwell may redefine compute, but no stock can carry a market alone. I’ll trim over-crowded hype, rotate into self-funded cash machines, and scale back into quality when liquidity normalises. Early on defence, late on conviction; that’s how I’ve survived every cycle.

💬 If Nvidia carries the S&P through Q4, what happens when its momentum stalls? Does breadth return organically, or does the market reprice the illusion of leadership?

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