Nvidia Bulls Are in Control - Here’s Where to Buy the Stock

Analysts continue to praise Nvidia after its recent earnings. Here's what the latest one says - and here's how to trade the stock now.
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Nvidia  (NVDA) - Get Report shares keep pushing higher after the graphics-chip maker on Feb. 13  delivered better-than-expected quarterly results, with guidance coming in ahead of expectations as well. 

Since then, the bulls have been in control and the analysts have been enthusiastic, raising ratings and price targets.

The latest comes from Bernstein, which upgraded the Santa Clara, Calif., company to outperform and raised its price target 20% to $360 from $300. 

Even after Wednesday’s rally - at last check the stock was up 5.5% at $313 - it still indicates more than 15% upside.

No wonder that after such a powerful post-earnings reaction, Real Money selected Nvidia as the Stock of the Day.

Let’s take a closer look at the charts.

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Trading Nvidia Stock

Weekly chart of Nvidia. 

Weekly chart of Nvidia. 

When investors initially look at the chart, many may quickly determine that Nvidia stock has run too far, too fast. 

They may think that after the stock rallied significantly for three weeks, and for six of the past seven weeks, the shares are overbought.

Here’s the counterargument: While the rest of the market has been notching new high after new high, Nvidia stock hadn’t reached a record until last Friday. 

The stock has caught up with the overall market and its large-cap tech peers, and momentum is finally back on its side.

That’s not to say the stock can’t pull back or that a broad-market correction wouldn’t weigh on Nvidia. But it’s hard to argue against the idea that the bulls are back in control and have plenty of confidence in the stock.

Now, with the stock about $60 a share above the 10-week moving average, dip buyers will have to wait. Since Nvidia reclaimed this measure in September, it has been support on each pullback.

Getting there now would require a dip to $254, which would be quite discouraging at this point. Instead, let’s see that the $280-to-$290 level acts as support should Nvidia dip back below $300.

This was the breakout mark over prior long-term resistance and the old all-time high. Clearing this area was important on both technical and psychological levels. North of here and above $300, and it’s hard to be bearish on Nvidia.

So what’s the bottom line? If the stock stays above prior resistance, investors should remain bullish on Nvidia. On dips to the 10-week moving average, the stock is a buy.