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.
Moving averages legend: red – 200 day, blue – 100 day, yellow – 50 day
On the next chart, I plotted NVDA stock with a daily time frame in the top half and the aforementioned SMH ETF on the bottom half. Note the steady and steep incline of the SMH ETF of late. It too has reached the very upper end of its multiweek trend and thus in my eye does not offer good buying opportunities at this very juncture from a trading perspective.
NVDA stock itself, meanwhile, is just a couple of dollars away from the round $200 mark, which also coincides with the stock trading well above its yellow 21-day simple moving average.
All of this, to me, makes the current juncture in NVDA stock a better spot to take at least some near-term profits then piling into fresh long-side trades.
So you know, Nvidia is scheduled to report its next batch of earnings in three weeks from today, on Nov. 9. I will revisit this stock in this column at the latest following this next earnings report.
Check out Anthony Mirhaydari’s Daily Market Outlook for Oct. 19.
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