We last commented on Nvidia (NVDA) - Get Report in the middle of October, where we said, "sell side analysts have been raising their price targets on NVDA to the point that I think this is 'crowd behavior,' and could mean that the stock has become "over owned." Aggressive traders with a high average cost could consider a sell stop below $180 now and investors should continue with stops below $170." With NVDA reporting quarterly earnings Thursday evening (and with the main stock-market averages sinking) a fresh look at the charts and indicators is in order.
In this daily bar chart of NVDA we can see that prices have slipped lower in recent sessions:
Prices are still above the rising 50-day moving average line and the On-Balance-Volume (OBV) is still pointing up, but notice something we did not have in mid-October -- a bearish divergence. As prices made a higher high in November, we can see a lower high from the 12-day momentum study in the bottom panel. This divergence may have foreshadowed the current price weakness.
In this weekly bar chart of NVDA, we can see that prices are above the rising 40-week moving average line:
The weekly OBV line is still very bullish -- but again, as with the daily chart, we can see some slowing in momentum on this time frame. The peak in the 12-week momentum study in late October/early November is lower than the peak in July.
Lastly, this sensitive Point and Figure chart shows a projected downside target of $189.44:
The bottom line: I think my suggestion last month still works -- aggressive Nvidia traders with a high average cost could consider a sell stop below $180, and longer-term investors should continue with stops below $170.
(This column originally appeared at 1: 51 p.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Jim Cramer and other writers even earlier in the trading day.)
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