The latest competitive threats to the once unstoppable Nvidia (NASDAQ:NVDA) have challenged some investors this week. But with varied strong positioning and catalysts up its own sleeve, bullish investors shouldn’t give up on the end game in NVDA stock yet. Let me explain.
As most any investor with a passing interest in the stock market knows, not too long ago NVDA was a growth superstar off and on the price chart that could do no wrong. The sky was seemingly the limit for Nvidia. Unsurprisingly, a couple years of the overly-bullish narrative, those cocksure days ended abruptly in late 2018.
The latest challenge to NVDA resurrecting its former glory comes from Advanced Micro Devices (NASDAQ:AMD). As InvestorPlace’s Brad Moon recently discussed, AMD’s roll-out this past week of its new Ryzen 3000 processors and Navi-based Radeon 5700 graphics cards and what the company calls the “Ultimate PC Gaming Platform” is living up to that boast in the early innings.
But as Nvidia investors also know, but maybe need a reminder of, NVDA isn’t a one-trick pony. And the big picture for this tech powerhouse remains very promising despite challenges from the likes of AMD or more ubiquitous geopolitical challenges such as today’s trade war with China.
Bottom line, Nvidia has a strong presence in markets ranging from autonomous and driverless vehicles, to data centers, artificial intelligence, a re-emerging cryptocurrency market and yes, even still the gaming industry. What’s more, on the price chart the bottom line for NVDA’s big picture looks equally promising in more than one way for bullish investors.
NVDA Stock Monthly Chart
Technically speaking, the ‘end game’ or big picture amounts to appreciating NVDA’s constructive, not destructive monthly chart since last October. Bottom line, all stocks, in particular companies with once-glowing growth expectations, have large price corrections at one time or another.
From Amazon (NASDAQ:AMZN) to Microsoft (NASDAQ:MSFT), corrections are an investing commonality which no company is immune. Of course, each incident will have its own unique reasons for this once unthinkable inevitability occurring and an in-tow bearish narrative getting the best of investors. Such is the case in Nvidia stock.
The good news for NVDA investors is what’s done, is likely done as far as the correction is concerned. Despite overall sentiment remaining bearish to cautiously optimistic at best, the price chart has established a confirmed lower-high double bottom backed by a key test of long-term Fibonacci supports.
Positioning in NVDA Stock
From where I sit, investors have two ways to play NVDA. One method is to put shares on the radar for buying above the market if a higher high pivot is formed to confirm a monthly uptrend. Set your trade alert for the April high of $193.25. Investors can then decide whether to buy momentum or wait for the next meaningful pullback to establish a long position in Nvidia.
The second strategy simply purchases NVDA today. With shares near the confirmation price of the bottoming candle’s high of $165.37, buying the stock right now is a reasonable venture. For managing risk I’d suggest an initial stop 10% below the purchase price.
In a volatile stock like NVDA this exit strategy contains risk as reasonably as can be expected. It also serves the purpose of technically exiting the position if shares fall deep enough into June’s monthly range. In our technical opinion, that kind of price action would strongly suggest NVDA stock still has a long road ahead of itself, before possibly securing its place among other legendary investments.
Disclosure: Investment accounts under Christopher Tyler’s management currently own positions in Advanced Micro Devices (AMD) and its derivatives, but no other securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.