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How to Trade Nvidia Stock at All-Time Highs

Nvidia and AMD hit new all-time highs, but that makes them increasingly difficult to trade. Here's how we're looking at Nvidia stock now.

Nvidia  (NVDA) - Get NVIDIA Corporation Report stock is on fire. On Monday, it hit all-time highs and on Tuesday, shares ignited higher by more than 8%.

While Nvidia has had bouts of underperformance, it’s hard to deny just how well this stock has done over the years. Or the last few weeks.

Like Nvidia, Advanced Micro Devices  (AMD) - Get Advanced Micro Devices, Inc. Report has also been red-hot. In fact, AMD actually kickstarted the rally between the two, with a powerful rotation earlier this month.

Nvidia followed suit and now both are enjoying new highs. Nvidia doesn’t report earnings until next month, but AMD reports on Tuesday after the close.

Neither stock has been deterred by the shortfall in Intel’s  (INTC) - Get Intel Corporation (INTC) Report earnings report earlier this month.

Consensus estimates have increased impressively for these two companies over the past 12 months. However, bulls may need to see that momentum continue to justify the rally we’ve seen so far in 2021.

Nvidia shares are up 91% so far in 2021, while AMD is up “just” 37%. Can Nvidia maintain momentum?

How the Long Tech Rally Evolved

Trading Nvidia Stock

Daily chart of Nvidia stock.

Daily chart of Nvidia stock.

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With Tuesday’s rally, Nvidia stock finally hit $250 a share, a level I have been looking at all month.

Why? Simple. Because the 161.8% extension of the current range comes into play near this area at $252. Not only that, but $250 is a psychologically relevant level. Further, on a pre-split basis, this was the $1,000 level.

Not that that matters too much at this point, but with all of these observations combined, it created an attractive upside target.

Now, evaluating Nvidia stock gets a little bit more difficult. Obviously, bulls would like to see the rally continue. They might think, why not go on a run like Tesla  (TSLA) - Get Tesla Inc Report?

From here, I would love a minor pullback or some consolidation. As long as Nvidia remains above the 10-day moving average and the $230 breakout level, bulls remain in control.

Regarding those two levels, they may be excellent buy-the-dip areas for Nvidia stock.

On the upside, over $252 unlocks further upside extension levels, including the two-times range extension at $265 and the 261.8% extension near $287.

Could Nvidia be setting up for a mammoth year-end finish? It could. But some consolidation would be healthy too.

Nvidia and AMD are holdings in the Action Alerts PLUS member club. Want to be alerted before they buy or sell NVDA or AMD? Learn more now.