While the stock went on an impressive rally — climbing 55% from the May low to the July high — we’ve seen Nvidia lose some air lately.
That also came as Advanced Micro Devices (AMD) - Get Advanced Micro Devices, Inc. Report stock has been struggling on the long side, too. The struggling stocks even drew a "hard look" from TheStreet's Jim Cramer.
It doesn’t help that the broader markets have been under pressure as well.
Trading Nvidia Stock
A look at the chart shows that powerful run from May to early July before Nvidia’s painful correction.
Shares cleared the $200 level, which was my price target in June (at the time, that price target was $800 when adjusted for the stock split).
Later, I turned to the $215 level as a possible upside target, that being the 261.8% extension of the 2021 range. Nvidia didn’t quite get there, but it did get close.
In any regard, the past few days have been quite volatile, with the $188 to $190 area failing to act as support. The 10-week moving average has stepped in for now.
From here, we must keep an eye on these two levels. Bulls want to see Nvidia move above $190 and clear the 10-day moving average.
If the stock can do that, it puts the 21-day moving average back in play, followed by $200-plus. It also puts the bulls back in control and allows for a potential run back to all-time highs.
On the downside, a break of the 10-week moving average puts this week’s low in play. Below this week’s low, and a test of the 50-day moving average may be in order. That doesn’t mean it will necessarily be the low, though.
Nvidia is a great company and the stock has been trading really well lately. As a result, we’re looking at it from the long side and looking at dips as an opportunity.
But if the technicals deteriorate, we’ll have to step away from it as a trading vehicle for the time being.