Shares of Nvidia Corporation (NASDAQ:NVDA) after a monster performance year in 2016 are now again higher by 85% in 2017. Although the strength of the company in my mind should continued to be respected, NVDA stock itself does offer better buying opportunities for the active investing and trading community than where the stock currently trades at.
Semiconductor stocks as represented by the VanEck Semiconductor ETF (NYSEARCA:SMH) (to which Nvidia belongs) as I have continued to highlight in this column remain a nicely trending part of the stock market. From a trend-following perspective, thus, there is little to no reason to fight such a strong move in the intermediate term until the trend begins to crack.
My strategy around NVDA stock over the past year and a half has been to initiate a core long position for the intermediate-to-possibly-longer term and trade around this position in the more near term by capturing breakouts and selling again at overbought conditions.
To wit, when I last discussed NVDA stock before the market open on Sept. 15, I offered a breakout trade idea. In specific I said the following: “…a break above $174 could lead to the following upside price targets, one after another: $180, $185 and $190.” The last of the upside targets was reached two days later, after which NVDA stock again became immediate term overbought.
NVDA Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
On the multiyear weekly chart we see that NVDA stock thanks to the most recent two-week rally has once again reached the upper end of a steep ascent.
At the same time, from a momentum perspective as represented by the MACD momentum oscillator at the bottom of the chart, the stock might be stretched in this time frame.