Upon first glance, one can see that since we last studied Nvidia (NVDA) , the name has largely played by the rules, and colored within the lines. Notice the continued positives in Relative Strength and Money Flow. Your daily moving average convergence divergence (MACD) did suffer a bearish crossover during the recent flash crash, but take a second look at that MACD. Yes, the nine-day simple moving average (SMA) has gone negative, but with both the 12-day SMA and the 26-day SMA so far above zero, I would be careful with any bearish position at this point. (I am biased to the long side.)
Keep in mind this stock's strict obedience to the Pitchfork model. Even during Monday's flash crash, that rising trend line was tested, but ultimately held. I did get long a few down there. The stock also seems to obey our favorite Italian mathematician, Leonardo Fibonacci. Notice the precise 50% re-tracement experienced in early December, and the nearly precise 61.8% re-tracement seen just the other day.
You know who also sees that? The guys that the algorithmic traders pay to read their charts for them. That's why trading levels are so much easier to determine in the modern era than they ever were before. These guys read their charts, the other guys write their algos, and then everyone goes back to reading the sports page. We, who do not sleep at the wheel, can hunt these guys down, because they have forgotten how to compete. Nvidia is also a holding in Action Alerts PLUS, the portfolio that Jim Cramer co-manages as a charitable trust.
Target Price: $248
Aggressive Target: $270
Panic Point: $205
(This is an excerpt from Stephen "Sarge" Guilfoyle's Morning Recon, which now appears exclusively on Real Money, our premium site for active traders. Click here for a free 14-day trial and receive Morning Recon every day, along with exclusive columns from Jim Cramer, James "RevShark" DePorre, technical analyst Bruce Kamich and more.)
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