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Thursday, April 06, 2017

NVIDIA (NVDA) Topping? Stock Chart Review

NVIDIA (NVDA) shares have struggled to regain their former highs above $120. Has this new tech leader topped out or is the stock merely catching its breath and consolidating? 

NVDA is currently trading around $100 after falling back below its 50 day moving average. The stock is currently down -6% YTD.

NVIDIA stock NVDA price chart technical analysis


As you'll note from the chart annotations (click chart to enlarge), this is the second time the stock has dipped below the 50 day MA since topping out in early February. 

The stock made a short-term top at the end of 2016, with a bearish engulfing bar (the long red bar/candle on December 28, 2016). This down day marked the start of a brief decline, after which NVDA climbed back to challenge its former high. The stock failed to hold above the $120 level and quickly dropped back below its key moving averages.

I should note that NVDA pulled back sharply below its 20 and 50 day MAs back in early 2016. The stock soon bounced back and went on to make multi-year highs as it ran from $33 to $120, a nearly four-fold gain in one year.

The question is, do we see signs of a renewed uptrend coming on the heels of the advance we've just witnessed? With NVDA currently sporting a $59 billion market cap and fellow chip leaders like AMD and QCOM struggling lately, I will tread lightly here.  

Until I see renewed buying strength and a resumption of the upward trend, I will avoid buying the stock outright. NVDA is either in the process of consolidating or entering a decline. Until I get more information, I will focus on stocks with higher potential for upside.

While I don't own NVDA as an individual stock, I do own the shares indirectly via the semiconductor ETF, SMH. So while I'm realistic and cautious about a potential decline in NVDA, I'll be happy to see the stock firm up and move higher in the coming weeks. If the trend moves against me, I have a predetermined sell order (stop loss) in place for SMH.

Related posts

Chip Stock Rally Broadens: NVDA, AMD, BRKS, SMH Charts.

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