The action in Nvidia (NVDA) - Get NVIDIA Corporation Report hasn’t been great lately, but that's not too surprising given that the company was one of the best-performing stocks in the S&P 500 from 2021.
Earnings and revenue growth was strong, guidance from both firms was solid and, most important, the stocks had momentum.
That’s true even as most growth stocks were getting demolished.
So when I look at Nvidia and see a peak-to-trough decline of 26%, I don’t think of panic. I think of opportunity.
Perhaps Nvidia stock rallied a bit too hard, too fast. But this is a high-quality megacap growth company and the stock has not hit its forever high.
We had a great buying opportunity in AMD yesterday and today Nvidia isn’t being left out in the cold.
Trading Nvidia Stock
Above is a four-hour chart, which I point out only because it can often look like a daily chart and thus can be misinterpreted.
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Ironically, Nvidia stock finally filled the gap near $267 from early November by gapping down on Monday. That gap has been filled, too, for those wondering.
Like AMD, the stock bounced hard off the 200-unit moving average (on the four-hour chart), along with the 21-week moving average.
The real long trigger was a reclaim of the $267 level, although the bulls have had a few shots at the stock near that mark since the reclaim.
Now it's back below yesterday’s high, and traders will want to see whether Nvidia stock can push back through this mark at $274.69.
If it can, it opens the door to the 10-unit moving average (on the four-hour chart), then the $282 to $284 zone. There, Nvidia stock finds the high from Thursday and Friday, as well as the declining 10-day moving average.
A move above $285 could open the door to the 50-day moving average and the $300 level.
Worth mentioning is that as long as Nvidia is above $271.45, then it is above the December low. Below this level opens the door to a monthly-down rotation.
On the downside, a move back below $267.50 could put this week’s low back in play, at $256.44. In that case, Nvidia stock could become vulnerable to more downside.
While Nvidia is an outstanding company, the stock can be susceptible to a deeper decline if the overall indexes are not done declining.
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