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Nvidia Rebounds On Raised Price Target, But No New High. Here’s How To Trade The Stock Now.

Nvidia
NVDA
rallied on Friday, September 3 but the stock stalled shy of its all-time intraday high of $230.43 set on August 30. The rebound was caused by positive comments by Jefferies. They reiterated their buy rating while raising its price target to $260 up from $233.

Nvidia designs graphics processing systems for gaming, automobiles, architecture, engineering and construction for data centers and software applications. Shares of Nvidia are one of the most popular momentum stocks.

The stock has a p/e ratio of 76.85% and a dividend yield of just 0.07%. If you are buying a momentum stock expecting continued new highs, please consider using a sell stop. Nvidia has beaten earnings-per-share estimate in 11 consecutive quarters.

The Daily Chart for Nvidia

Nvidia has been above a golden cross since August 30, 2019, which is not shown on this chart. Note how the stock tracked its 50-day simple moving average over the past 52 weeks until a breakout occurred on May 20.

The stock tested its 200-day simple moving average at $122.42 on March 4 as a buying opportunity. This average was tested again at $125.41 on March 25.

The breakout above its 50-day SMA at $142.00 on May 20 began the momentum runup for the stock. The first leg up stalled at $208.75 on July 7. The quarterly pivot (middle horizontal line) at $195.08 was a magnet between July 15 and August 19. The stock rebounded on August 19 on a positive reaction to earnings.

The stock set its all-time intraday high of $230.43 was set on August 30. The rebound on positive earnings was shy of this high at $229.86.

The top horizontal line is the monthly pivot at $215.18 and the horizontal line in the middle of the chart is the semiannual value level at $156.40. This lines up with 200-day simple moving average at $158.12.

The Weekly Chart for Nvidia

The weekly chart for Nvidia is positive but overbought with the stock above its five-week modified moving average at $207.00. The stock is well above its 200-week simple moving average or reversion to the mean at $83.23. The 12x3x3 weekly slow stochastic reading is rising at 92.69 well above the overbought line at 80.00. The reading above 90.00 puts the stock in an inflating parabolic bubble formation.

Trading Strategy: Buy Nvidia on weakness to the monthly pivot at $215.18. Reduce holdings on a sell stop given a close below the 50-day simple moving average rising at $202.99.

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