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Been lurking on this sub for a few years now, but this is my first post. And I promise this wasn't written with a shred of AI, but sometimes I do just sound like a damn bot - forgive me.
**Forewarning:** We're jumping into rabbit holes on this one. This is not trading advice nor a bull/bear case. As many of you were, I was also tracking the pullback on the semi-conductor industry closely and couldn't help notice some bizarre movement on another stock I hold a position in - Microsoft. I didn't find anything particularly weird about the broad pullback on semis, but Microsoft's rally made absolutely no sense to me given the current timing, since it seemingly broke completely from how the market was broadly moving. I couldn't shake the feeling that it was somehow related to the semi pullback, and the more I thought about it the more it actually wrapped up into one neat little conspiracy theory about massive market manipulation going on at an industry-wide level on semiconductors. So it's tin-foil hat time.
Here's the two main observations I had that I found weird, to say the least:
1.) MSFT rallied around 5% last Thursday (5/15) from 410 to a peak of around 427, and this rally broadly lasted up until today where it sold off back down to 416. Microsoft's day to day volatility isn't particularly noteworthy, but the jump on 5/15 essentially erased its entire post-earnings pullback in a single morning - at a time when the entire market was starting to go down on oil fears. While I don't know the exact amount, it would have taken at least 100 billion dollars of capital infusion to cause that level of movement since we're talking about a 3.1T market cap here. I was looking in the news to see what happened, and all I could find was news that Bill Ackman announced that he took a position, not that Microsoft themselves made any big announcements that would raise revenue target expectations. Against Microsoft's 3.1T dollar market cap, I didn't buy that this was all it took to get that amount of capital inflow in such a short amount of time, but hey, what do I know.
2.) Since the 5/15 rally, over the past 5 days MSFT has inversely tracked the broad semiconductor pullback to pretty bizarre levels of precision. Of course, repositioning between software and hardware isn't something crazy and has been going on all month, but over a 5 day period, I would expected a much higher degree of volatility given all the events that happened this week, such as oil breaking a new high.
[Shitty MS Paint rendition of MSFT 5 day moving averages compared to INTC \(flipped for viewing convenience\)](https://preview.redd.it/owrhfxmfj82h1.png?width=547&format=png&auto=webp&s=c8d57f099f062eda58790ff1d89d743ad927c880)
Now obviously all of this could be sheer coincidence or be better explained by something else, but what's interesting is what makes MSFT positioned in a unique way on this. ***Hypothetically speaking***, if a large scale market-maker were to want to manipulate a controlled sell-off on this scale (if its even possible) to temporarily drive prices down, they would need a liquidity ramp to put the money back into the market. This is important because without injecting that money back in, the market would treat this as a significant pullback that would likely cause a degree of institutional level panic - again, we're trying to be discreet here. However, at a scale of hundreds of billions in dollar volume, suitable liquidity ramps become extremely limited - only the top mega cap stocks could receive that amount of money and not raise everyone's eyebrows. Even Meta, with its 1.6T market cap, likely would not be enough - a one day infusion of 100B would likely raise its price somewhere in the neighborhood of 40-80 dollars per share, which would cause a ton of questions if it happened seemingly randomly. That leaves 5 names:
NVDA - 5.34T
GOOG - 4.69T
AAPL - 4.39T
MSFT - 3.10T
AMZN - 2.8T
All 5 of these companies have market caps that are high enough that they could absorb that level of capital infusion and not raise immediate red flags. However, market watchers likely see the obvious issue here - 4 of these 5 are currently trading near or at all time high valuations. Even at these cap sizes, a capital injection on that scale could cause it to break its all-time historic high seemingly randomly, which would certainly cause a lot of eyebrows to raise. Additionally, a capital injection into NVDA would run counter-intuitive to the goal of manufacturing an industry level semi sell-off, even if its the best equipped to handle such an infusion.
That leaves MSFT - the only top 5 megacap thats still nowhere close to its historic high and trading at a near consensus below-market value by industry analysts. So how do you justify over $100B going into the market and increasing the stock price around 5% percent within a single morning, when there's seemingly no news from the company? Simple - create the news. Get a famous billionaire in finance to publicly announce that they took a 2B dollar stake off the back of Microsoft being undervalued, and now you have an alternative explanation for the massive spike in prices. You now have the perfect liquidity ramp to keep the S&P 500 from dropping too much while being able to sustain mass selling pressure over the hottest industry in the market right now. Rising oil prices and negotiations breaking down in Iran create the perfect smokescreen for the market pessimism. Selling pressure continues to drive prices down until the day before NVDA earnings, when a 6-7% industry level correction happens slowly intraday for no apparent reason. All hypothetically, of course.
Now, all this sounds neat and dandy, but why go through such lengths? Even if you could secure your position at a lower price, you are committing an insane amount of capital on the chance that everything goes under on a disappointing NVDA earnings anyways. The payoff wouldn't be worth the risk unless you knew something the broad market didn't.
To that, I don't have an opinion. I just find it interesting that Nvidia CEO Jensen Huang, Blackrock CEO Larry Fink, and President Donald Trump were in the same place at the same time this weekend, in a country on the opposite end of the world.
Happy trading tomorrow, everyone.