Nvidia Corporation (NVDA) Stock Is a Comeback Buy

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Shares of Nvidia Corporation (NASDAQ:NVDA) had a monster 2016 in terms of performance, but have largely trotted sideways over the past few months. There were trades to be had along the way, and the stock rewarded those who were willing to be adventurous. But there was little for pure bulls to like.

Beat the Bell: Nvidia Corporation (NVDA)Worry not. NVDA stock might finally be in better position to push higher again.

When I last mused about NVDA on Feb. 13, I offered that the pop-and-drop price action on Feb. 10 following Nvidia’s latest earnings report could keep a lid on shares for some time. I also said traders could even try to short Nvidia stock for a trade, with a first downside target around $105.

A few days later, NVDA stock reached my first price target. In fact, by early March, shares even tickled the $95 mark … then promptly began to bounce alongside sectormate Advanced Micro Devices, Inc. (NASDAQ:AMD).

Before digging into the charts allow me to make an important point as it relates to strongly trending stocks.

Almost any stock or index can offer trading opportunities, long or short, at almost any point in time as long as …

  • One has a well-defined time frame on those trades
  • The primary intermediate- and longer-term trends are respected

Case in point: Nvidia stock. Despite its massive rally in 2016, Nvidia did from time to time offer small shorting opportunities for the nimble trader that respected the strong primary uptrend.

NVDA Stock Charts

Looking at the bigger-picture chart of Nvidia, note that the 2016 rally has significantly moved the stock from its 50-, 100- and 200-week moving averages (yellow, blue and red lines, respectively).

NVDA stock chart weekly view
Click to Enlarge

From that perspective, NVDA stock might need more sideways consolidation until these moving averages catch up.

When I offered up my short trade idea in February, Nvidia also was notably overbought from a momentum perspective. The MACD momentum oscillator has in the meantime cooled off somewhat, which now is further “neutral” to marginally more positive for the stock.

On the daily chart, we see that since tagging the $95 level in early March, NVDA stock has rebounded.

NVDA stock chart daily view
Click to Enlarge

However, also note that the $95 area at the time was made up of confluence technical support, with horizontal support as well as the rising 100-day simple moving average. Also note that from the early February highs down to the early March lows, Nvidia stock did correct 20% — something it had not done for a long time.

In other words, NVDA, in the process of this correction, has shaken off plenty of weak hands. As a result of the recent multiweek bounce, this may have created renewed demand for shares.

For the past few trading days, Nvidia has been consolidating around its 50-day moving average (yellow) in what could end up being a bull flag formation. Simply put, traders could look to buy NVDA stock from a swing trading perspective upon a daily close above $110 using a next upside price target near $120.

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Article printed from InvestorPlace Media, https://investorplace.com/2017/03/nvidia-corporation-nvda-stock-is-a-comeback-buy/.

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