A flagship stock like Nvidia (NVDA) takes a month-long breather and many investors want to throw in the towel on the uptrend and say enough is enough. Don’t be afraid of strong powerful trends in leading stocks within transformative industries that are making ridiculous amounts of profits with a multiple year head start on competitors. I say that NVDA is just resting its legs gearing up for another move, but this time it’s bringing more friends along for the run. There are quite a few different names in the semi-industry setup in a similar fashion telling me that once again the chips are ready to rip. The last time we spoke about NVDA was on Feb 21st just before the earnings report, while I was on a ski vacation. I was a bit concerned as the sellers came in before the report and we isolated a downside support level of $664 as a point that I would possibly reduce my position from 8% to 6% in the wealth management portfolio if broken. It traded down to a low of $662 and held, but I reduced my holdings to 6% anyway. I tore my Achilles tendon skiing later that day and the stock rallied about 50% from that low. Ouch. It’s ok, we’re still overweight at 6% and I’m healing up nicely after surgery. I want to talk about adding back to the core position and a trade opportunity I just took in my shorter-term trading accounts. Nvidia’s target price Since NVDA emerged from the 2023 range breaking $500 resistance, it’s been straight up That powerful uptrend created a beautiful parallel channel that identifies overbought conditions on the top green dashed line, oversold conditions on the bottom green dashed line, and mid-range conditions on solid middle line. In this month-long correction I mentioned above it took us from ‘overbought’ to ‘oversold’ within the uptrend channel and notice it did so on decreasing volume . Look to the bottom of the chart. The white shaded line is the 50-period average of the volume and you’ll notice selling interest is waning quickly into the support zones labeled in green and orange. I’m also using Elliott Wave analysis (the letters and numbers on the chart) to gauge the maturity of the trend and by my assessment we have one more wave-5 move to my 2024 target of $1,150. Turning down to the 195-minute chart (that is a half-day chart), we can fine tune our entry on this idea. The March-April sideways corrective range is still intact but following Thursday’s slightly weaker PPI report the growth trade rallied led by semis. I added a one-half position size to our short-term Active Opportunities portfolio with stops just below the $832 low. Should we break the topside of the March-April channel I will add the other half position size, trail stops to the original entry, and hold on for the breakout hopefully unscathed. I’m done skiing this year and only coaching baseball so hopefully no more injuries in that time. But I should be back on my feet in time for May 22nd earnings so we may need to watch out. -Todd Gordon, founder of Inside Edge Capital, LLC DISCLOSURES: (Gordon owns NVDA personally, in his research business TradingAnalysis.com, and in his wealth management company Inside Edge Capital Management, LLC) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
