Chart of the Day: Give Nvidia Time to Settle Down
The big chip company has been volatile of late but now needs to settle down and find where buyers/sellers meet.
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Just prior to the Nvidia (NVDA) earnings release last week, the stock popped to new highs on moderate volume, but reversed hard just after. The stock ran out of gas above $200 and slipped down into a range from prior months. We would like to see the stock just "hang out" here in the $170-180 range, build a nice base before moving higher.
There are few catalysts to move the stock higher or lower other than news like this week's headlines about Alphabet's chip competition.
The indicators are bearish. See in the second pane that the Moving Average Convergence Divergence is on a sell signal and money flow at the bottom of the chart is still weak. The price chart shows a downward sloping channel of lower-highs and lower-lows, which is our textbook definition of a downtrend. We see a chance for this downtrend to finish up, the Average Directional Index in pane three is flat as a pancake, meaning no trend whatsoever. Stochastics (momentum) is starting to move up but it is too early to tell if this is bullish.
We think Nvidia is still a name to have in most portfolios, but it got a bit too expensive last month. After selling off about 12%-14% we are looking for this stock to go sideways, become boring as the big institutions start adding this name back into their portfolios before end of the year. If the stock just stops going down this might be a great opportunity to pick up this name.
We like Nvidia in TheStreet Pro Portfolio and rate it one, buy at anytime.
At the time of publication, The Street Pro Portfolio is long NVDA and GOOGL.
