Shares of Nvidia Corporation (NASDAQ:NVDA) are having another stellar performance year. Despite the 17% pullback over the past couple of weeks, NVDA stock remains higher by about 80%. Because chasing stocks higher is a low-probability strategy in my 20 years of experience, I have abstained from trading NVDA stock from the long side since late October.
The recent pullback, however, now has the stock once again at the lower end of its six-month trading range where thus better reward to risk opportunities provide themselves on the buy side.
So you know and for perspective, when I last offered my take on NVDA stock on Sept. 15 I wrote that the stock was ready to get on a next leg higher toward $190. A few weeks later this upside target was reached and the stock in fact continued to climb as high as $215-ish on a daily closing basis.
As a reminder, the year-end dynamics that I once again see playing out for leading stocks like Nvidia is that fund managers will need to keep the bid (i.e. buy more of or at least not sell) the stock before year-end. This should keep the stock afloat for now at least into year-end and thus possibly provide active investors and traders another trading opportunity.
NVDA Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
On the multiyear weekly chart, note that the “pullback” over the past week and a half has moved NVDA stock off the upper end of the trading range (black parallels) and down toward the lower end.
While the stock remains well above its longer-term moving averages, this is a trend following story that thus far continues to work.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
On the daily chart note that the roughly 17% pullback over the past week and a half has brought NVDA stock back to a confluence area of technical support made up of the blue 100 day simple moving average and the lower end of the six-month up-trend.
From here traders have good reward to risk to try a new long position against the $180 area with a next upside target closer to $210. Any break and hold below $180 would serve as a stop loss but a next bullish reversal could set up another rally attempt.
Check out Anthony Mirhaydari’s Daily Market Outlook for Dec. 8.
Tell us what you think about this article! Drop us an email at editor@investorplace.com, chat with us on Twitter at @InvestorPlace or comment on the post on Facebook. Read more about our comments policy here.
Take Serge’s quiz to find out which trading strategy best suits your personality.
